The story so far: The Karnataka State Employment of Local Candidates in the Industries, Factories and Other Establishments Bill, 2024, which aims to provide reservation for Kannadigas in the private sector in the State, has been put on hold after severe backlash from business leaders and industry representatives. The Bill was cleared by the Cabinet, but is yet to be introduced in the Assembly. The government has promised wider consultations with stakeholders before it takes the next step. The legality and constitutionality of such quotas for local candidates, however, are in doubt, as similar steps elsewhere have run into legal impediments.
What does the Bill propose?
The Bill made it a rule that any factory, industry or establishment must appoint local candidates to 50% of its managerial category and 70% of its non-managerial category.
‘Local candidate’ is defined as anyone born in Karnataka, domiciled for at least 15 years in the State, and who can read, write and speak Kannada. Candidates not possessing a secondary school certificate with Kannada as a language must pass a Kannada proficiency test prescribed by a nodal agency.
Where qualified or suitable candidates are not available, the Bill gives three years to the establishments to train and engage local candidates. They may also apply to the government for relaxation of norms, but the relaxation cannot be less than 25% for management category and 50% for non-management category.
Why is industry opposed to it?
Business and industry responded with alarm on hearing of the features of the proposed Bill. They felt that such measures would drive out companies from the State and impact foreign investment. NASSCOM, the national lobbying body of the software industry, said it was deeply disturbing. The Bill, it felt, would “hamper the growth of the industry, impact jobs and the global brand for the State”. Many expressed concern over the impact of such measures on Karnataka’s leading position in technology and described it as regressive and short-sighted.
EDITORIAL | Wrongheaded policy: On the Karnataka jobs-for-locals bill
What about similar laws in other States?
Andhra Pradesh, Haryana and Jharkhand are among the States that have tried to bring in legislation to mandate reservation for domiciles or local residents in the government or private sector. The Andhra Pradesh Employment of Local Candidates in the Industries/Factories Act, 2019, sought to introduce 75% reservation for local people in any industry, factory, joint venture or project taken up in the public-private partnership mode. It also gave a three-year period for training and engaging local candidates, if suitable candidates were not available. The Act has been challenged in the Andhra Pradesh High Court, but the government itself has not been zealously implementing its provisions so far.
The Haryana State Employment of Local Candidates Act, 2020, was struck down by the Punjab and Haryana High Court, and the matter is now before the Supreme Court. It provided for 75% reservation in the private sector for jobs that entailed a salary of up to ₹30,000 a month. It also came with a sunset clause that said it would lapse after 10 years. The court held that the law violates fundamental rights and that it is beyond the State Assembly’s purview to legislate on the issue. It said such enactments would result in States putting up “artificial walls” throughout the country.
The Jharkhand Definition of Local Persons and for Extending the Consequential Social, Cultural and Other Benefits to such Local Persons Bill was passed in 2022. Jharkhand Governor C.P. Radhakrishnan returned the Bill with comments to the effect that providing for 100% reservation for locals in Class III and Class IV employment opportunities may be unconstitutional. The Hemant Soren government, however, got it re-enacted in the Assembly in December 2023.
What are the constitutional issues that arise?
In broad terms, these issues arise from the absence of any provision in the Constitution for private sector job reservation, the absence of legislative power in State Assemblies to prescribe residential criteria for employment, the constitutional guarantee of freedom from discrimination on grounds of place of birth or residence and the fundamental right to practise any profession, or carry on any occupation, trade or business.
Article 16 lays down that there shall be equality of opportunity in public employment. It prohibits discrimination on grounds of race, religion, caste, sex, descent, place of birth or residence with respect to any employment or office under the state.
Article 16(3) allows Parliament to make any law prescribing a requirement as to residence within a State or Union Territory prior to employment or appointment to a public office in that State or Union Territory. Article 35(a) says Parliament alone, and not any State legislature, will have the power to enact such a law as to a residential requirement.
Another constitutional issue is the effect local quotas have on the freedom of movement of citizens throughout the territory of India, guaranteed by Article 19(1)(d). Any curbs on people belonging to one State to seek employment in another will inevitably impinge on their right to reside and settle in another State, enshrined in Article 19(1)(e).
As far as individuals are concerned, the restriction on hiring people of their choice may violate their right under Article 19(1)(g) to carry on any occupation, trade or business.
