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BW Businessworld

The Need for a Uniform Employment Code

Apart from falling foul in terms of constitutionality, this law will cause compliance issues to arise.

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Even while we debate the validity of a uniform civil code, there is dire need for a uniform economic code which should, inter-alia, underline the essentials of any policy governing employment opportunities in the States. The recent Haryana State Employment of Local Candidates Act to ensure that 75 per cent of private sector jobs in the state, till a salary slab of Rs 50000,  are to be reserved for local candidates skews the playing field in favor of locals and validates a deleterious trend set in motion a year ago by the government of Andhra Pradesh. 

Haryana was beginning to fortify its reputation as the most prominent industrial hub for industry in North India with establishments like Pepsi, Coca-Cola, Google, Nestle, Hindustan Unilever, Reckitt Benckiser, American Express, Samsung, Maruti Suzuki and many others. However, this law will give an impetus to industry to migrate to Noida, Greater Noida and other places. It will also indefinitely damage the credibility of Haryana as a liberal, inviting state ready to do business.

Any corporate entity employing 10 or more persons falls within the ambit of this Act. Only a candidate “who is domiciled in State of Haryana” is a local candidate and shall be able to avail the benefit of this reservation while seeking employment in the private sector. While the candidate will have to register himself/herself on a designated portal while seeking benefit under this reservation all employers will have to mandatorily recruit only through this portal.

Apart from falling foul in terms of constitutionality, this law will cause compliance issues to arise. Employers will suffer penalties and even criminal prosecution for non-compliance. When a company commits an offence under this Act, every Director, Manager, Secretary, Agent or other officers or person concerned with the management shall be deemed guilty of the offence. The same is the case with LLPs and Trusts etc. Even the monetary fines are substantial.

It has been argued in defense of this law that Article 16 of the Indian Constitution guarantees equal opportunity to all citizens in matters related only to employment in the public sector and not the private sector. However, the very moment an employment policy with reservation clauses for locals is thrust upon the private sector and mandated by the government it is tantamount to a government take-over of the private sector and running it under its mandate. Such a law should, therefore, be challenged under Article 16 of the Constitution for it impedes the mandate of equal opportunities for all citizens of India by creating special and more favorable conditions for a particular segment of society – local citizens – who are not otherwise afforded a special status by the Constitution.

India has a federal polity within a unitary structure. Anything like this law will damage the ease of doing business, erode competitiveness of companies, stall post-covid recovery and dampen the momentum for further investments. It will harm start-ups and discourage top companies including multinational ones from expanding. In fact, it will propel them to look for alternative locales. At a time when superlative FDI inflows are giving the nation a reason to smile, such parochialism promotes discord, is definitely retrograde and harmful to the growth fabric of the nation. The Union Government must not condone such policies.

Even if the Central Government does not intervene, the Supreme Court should come down heavily, declare such a law as unconstitutional and deter other State Governments from enacting similar narrow laws in the future. 

The author is a former Secretary Government of India

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


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Raghav Chandra

Former Secretary Government of India

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