Haryana Job Law: What are the repercussions?

The State government announced a major revision in the labour laws in October 2020

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The state of Haryana is home to a variety of industrial set-ups. Primarily regarded as an agricultural state, multiple industries — with automobile, chemicals and pharma being the prominent ones — have a significant presence in the state. In recent years, the expansion of IT and technological companies in the state’s economic hub, Gurugram, has also brought in significant business and revenue to the State’s coffers.

However, the Centre for Monitoring Indian Economy observed that Haryana was the most unemployed state in the country for the May – August, 2021 period. Pegging unemployment at 35.7 per cent, the think tank observes this to be one of the biggest causes of concern for the State at the moment.

In what could be seen as an attempt to reduce this alarming figure, the State government announced a major revision in the labour laws in October 2020. The Haryana State Employment of Local Candidates Bill, 2020, states: “On the date of commencement of this Act, every employer shall employ seventy-five percent of the local candidates with respect to such posts where the gross monthly salary or wages are not more than fifty thousand rupees or as notified by the government.”

“This is a real challenge for the industry. With respect to Haryana, there are not many great institutions imparting appropriate skills to the youth in order to make them employable. Further, the huge gap in terms of local talent is also fuelled by the fact that it is predominantly an agricultural state. Hence, not many people are inclined to take up menial blue-collar jobs. This leads to the industry looking towards other states to access viable talent”

Ravi Mishra, senior vice president- HR, Aditya Birla Chemicals

The Rs 50,000 cap was later revised to Rs 30,000. According to the 2018-19 Periodic Labour Force Survey, only 10.7 per cent of the salaried jobs in Haryana pay more than Rs 30,000 a month. Hence, the quota would be applicable to about 90 per cent of the employment opportunities in the state.

The legislation will come into effect in the state on January 15, 2022.

Further, the Bill mandates every employer with more than 10 people in their workforce, to furnish a quarterly report to the state, detailing the local candidates employed and appointed during that particular quarter. This will be examined by an authorised official of the government.

The government’s justification behind the move is that it will enable the minimisation of the large-scale influx of migrants coming from low-paying states to Haryana, seeking employment opportunities. “With the enactment of the present Bill, in the interest of the public at large, the State is also going to encourage all the private employers in Haryana to boost local employment,” the Bill says.

However, does it actually have a positive impact at the grassroots level, when we talk about the employment figures of the State? Local industrial bodies in the state are doubtful.

INDUSTRIAL CHALLENGES

In conversation with HRKatha, Dharamvir Nehra, president, Bhiwani Industrial Association, points out that finding reliable labour native to the state is a big challenge in itself for the industries. “The localities traditionally do not depend on looking for employment in the blue-collar labour market. Now, the state government has mandated taking in 75 per cent of the local population into the workforce. But, finding labour native to Haryana is extremely difficult. Even at the village level, the agricultural labour hails from other, low-paying areas of the country,” Nehra points out. He further elaborates that larger industries will be more deeply affected by the legislation, as smaller industrial setups generally have a lesser number of people employed.

In order to verify Nehra’s statement, HRKatha spoke with Ravi Mishra, who is the senior vice president- HR for Aditya Birla Chemicals. The Company operates a few industrial setups in the state, for its extensive cement business, Ultratech Cement.

Mishra admits that the legislation is extremely problematic and reflects the opinion of Nehra when it comes to finding local talent. Mishra elaborates that, for the state of Haryana, acquiring skilled local talent is an extremely difficult proposition.

“This is a real challenge for the industry. With respect to Haryana, there are not many great institutions imparting appropriate skills to the youth in order to make them employable. Further, the huge gap in terms of local talent is also fuelled by the fact that it is predominantly an agricultural state. Hence, not many people are inclined to take up menial blue-collar jobs. This leads to the industry looking towards other states to access viable talent,” says Mishra.

Citing the example of Aditya Birla Chemicals, Mishra explains that the Company requires specific tech skills to deal with chemical processes required to generate quality cement. For that, the Company needs people with diplomas or certifications in the same. Unfortunately, no educational institution provides that particular skilling course in Haryana, reveals Mishra.

While Mishra appreciates the fact that “they are trying to build employment for locals”, he questions, “unless the proper skilling infrastructure is provided, I don’t understand how sustainable employment can be created for them.”

LEGAL CHALLENGES AND INDUSTRIAL BODY OBJECTIONS

The Haryana government initially came up with the Bill in October 2020 and has faced immense industrial scrutiny ever since. The Punjab and Haryana High Court is set to examine the law on December 9. The matter was listed for hearing by the Gurgaon Industrial Association.

The petitioner body alleges that the law is against the provisions of the Indian Constitution. It is also alleged that the law infringes constitutional rights because private-sector employers are hiring based purely on skills of the talent.

“Non migratory employment, in my view, should be the focus of any industrialist or local entrepreneur. If somebody is building a factory in a location, by all fair means, people in that area should be given the first preference”

Jaikrishna B, president-HR, Amara Raja Group

To understand the case and how the petitioners allege that the law is unconstitutional, we spoke with Harmeet Grover, a lawyer privy to the issue.

“By excluding meritorious candidates belonging to other Indian states and mandating giving benefits only to candidates from Haryana in private-sector jobs, the violation of right to equality enshrined in Article 14 is clear as day. Further, such differentiation is not done with the intention of providing employment to SC, ST, or other backward classes. Therefore, the legislation does not attract the constitutional protection inherent in Article 15 of the Indian Constitution,” explains Grover.

He further points out that the apex court, in one of its landmark decisions in the case of Dr Pradeep Jain vs Union of India, (1984) 3 SCC 654, had observed that promoting regional loyalties and this ideology segregating deserving applicants from “sons of soil”, as in the instant case, is ultimately a threat to national unity and integrity, which will eventually destroy the quasi-federal character. “It is to be noted that such reservation in private institutions which do not receive any state support is a complete infringement of their right to carry on their business and financial activities in a manner they intend to. Thus, Article 19(1)(g) is also violated,” he adds.

Apart from legal challenges, major industrial bodies are also not in favour of the implementation of the law. “At a time when it is important to attract investments at state level, the Haryana government could have avoided imposing restrictions on industry. Reservation affects productivity and industry competitiveness,” said Chandrajit Banerjee, director general, CII, in a statement in May.

Punjab Haryana Delhi Chamber of Commerce had also flagged the move. “The Industry Body believes that the legislation brought about by the Haryana cabinet would have a disastrous effect on the state of Haryana for several reasons,” it opined.

Sanjay Aggarwal, president, PHD Chamber of Commerce and Industry, says that investors and businesses source the best human resources available in the country to be competitive and successful. Hiring is done on the basis of merit and talent rather than the domicile of the candidates. “The implementation of the legislation just when industrial and business activities are resuming after the COVID pandemic can result in exodus of investors from Haryana,” he says.

CAN THE LAW ADDRESS THE L&D GAP IN THE STATE?

Given the shortage of talent and human resources in the state, it is apparent that the move, if implemented diligently, would force industries to invest heavily on learning and development for the local talent. Jaikrishna B, president-HR, Amara Raja Group explains that this move could have a long-term positive impact on the state.

“Non migratory employment, in my view, should be the focus of any industrialist or local entrepreneur. If somebody is building a factory in a location, by all fair means, people in that area should be given the first preference,” he asserts.

Jaikrishna believes it is a required move in that direction and should be be implemented with a more balanced approach.

“It is important to give employment preference in the hiring in a particular area but it should be mandated in a balanced and a measured way. The industry will gradually incorporate skill development as a part of their business agenda and, thus, build local talent capabilities. Only then the benefits of non-migratory employment can be reaped by the area and its native communities,” he explains.

According to Jaikrishna, developing a solid L&D plan in the state may take some time and requires a collaborative effort between industry and local academia, such as the regional ITIs. The primary focus should be to initiative skill-development programmes that are specific to the industries.

In conclusion, employment of ‘the sons of soil’ should be prioritised, but only after ensuring that a solid L&D infrastructure is developed by industry-academia collaboration in the state, advises Jaikrishna.

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