HR Law Hotline
January 20, 2022
Update on Law on Employment of Local Candidates in Gurugram (Gurgaon): Part II
Amidst severe criticism, the Haryana State Employment of Local Candidates Act, 2020 (“HSELC Act”) has finally come into force from January 15, 20221. The HSELC Act has been enacted with the objective of ensuring 75% employment of ‘local candidates’ (that is, candidates who are domiciled in the state of Haryana) by employers (including private employers) in Haryana. For more details on the HSELC Act, please refer to our previous hotline available here.
While the provisions under the HSELC Act continue to remain the same, the Haryana state government has reduced the applicable salary threshold for an employer’s obligation to compulsorily register employees on the designated portal from INR 50,000 (USD 700 approx.) to INR 30,000 (USD 400 approx.)2. This means that employers will need to ensure that they have registered details of all their existing employees who are drawing monthly gross salary or wages of up to INR 30,000 (USD 400 approx.) on the designated portal within three months from the date of commencement of the HSELC Act.3 Employers will also be able to initiate recruitment process for new vacancies only after completing the online registration of their existing employees4.
Likewise, the government has reduced the applicable salary threshold for posts in which 75% of employees should comprise of local candidates5 from INR 50,000 (USD 700 approx) to INR 30,000 (USD 400 approx)6. This means that for posts where the monthly gross salary or wages are up to INR 30,000 (USD 400 approx.), every employer will need to ensure that 75% of such posts are occupied by ‘local candidates’7. The employer will however be able to recruit a ‘local candidate’ only if such candidate has registered on the designated portal8.
The Haryana labour department has, vide a notification dated January 13, 20229, specified https://local.hrylabour.gov.in as the “designated portal” under the HSELC Act and rules.
HSELC Rules: Key Features
The rules under the HSELC Act, that is, the Haryana State Employment of Local Candidates Rules, 2021 (“HSELC Rules”) has been notified on January 10, 2022 and has come into effect along with the HSELC Act. The key features of the HSELC Rules are as follows:
Other Recent Developments
The Haryana government has, vide a separate order dated January 17, 202214, exempted certain categories of employers/vacancies from the applicability of the HSELC Act. Accordingly, start-ups and IT/ITeS companies, commencing operations before January 15, 2024 shall be exempted from the HSELC Act for a period of 2 years from the date of commencement of business. The reservation requirement will also not apply to short term employment of up to 45 days and vacancies filled through promotion / transfer/ absorption of surplus staff of any unit of the same employer in Haryana. The order also enables the state government to exempt any class, post, skill and category of employment vide a separate notification, in which local candidates of desired qualifications may not be available.
In terms of representations by industry bodies against the law, a writ petition was previously filed by A.K. Automatics challenging the HSELC Act which was dismissed by the Punjab and Haryana High Court in March 2021 on the basis that the HSELC Act was not in force at that time and therefore not affecting the petitioner adversely15. The petitioner had argued that the HSELC Act was violative of several provisions of the Indian Constitution16 besides being violative of the fundamental rights of individuals to apply for jobs in all parts of the country. At present, a petition has been filed by the Gurgaon Industrial Association challenging the constitutionality of the HSELC Act, which is pending before the Punjab and Haryana High Court17. Reportedly similar petitions have been filed by other industrial associations of Rewari and Faridabad.18
While the Haryana state government strongly believes that the HSELC Act will go a long way in opening up new avenues of employment for the youth in the state, the government’s move to impose reservation requirements in private employment is being perceived by multiple stakeholders including employer associations as a very regressive step. It is feared that the brunt of the law will have to be borne by private-sector employers given that the jobs in such establishments are largely skill based and local resources having such skills may be scarce.
Industry associations therefore believe that the HSELC Act will make it difficult for industries to remain competitive in the state with acute shortage of skilled local manpower19. Reportedly the impact of the HSELC Act is already being felt in the industry rich Faridabad and Gurugram districts of Haryana where many offices in these areas are looking to move out to locations outside Haryana such as Delhi or Greater Noida (state of Uttar Pradesh).20
In the midst of the raging condemnation by industry bodies especially in the IT/ ITeS sector, it remains to be seen whether the HSELC Act ends up meeting the same fate as similar laws which were introduced in other Indian states such as Andhra Pradesh21 and proposed in states such as Maharashtra and Karnataka. With the pandemic having already impacted employers severely, the HSELC Act is expected to create more pressure for employers in Haryana. While the state government has envisioned a self-sustained state, such a protectionist law could derail India’s overall focus on ensuring ease of doing business and attracting foreign investment.
Industry associations and employers now eagerly await the High Court hearings hoping for some relief.
You can direct your queries or comments to the authors
3 Section 3 of the HSELC Act
4 As per FAQs published by the Haryana government on the HSELC Act available at: https://local.hrylabour.gov.in/home/faq.
5 As per Sec. 2(g), HSELC Act, “Local Candidate” means a candidate who is domiciled in the State of Haryana.
7 Section 4 of the HSELC Act
8 Proviso to Section 4 of the HSELC Act
12 Designated Officer with assistance of the Authorized Officer, as specified under the HSELC Act
13 See supra at 3
16 Articles 14, 15, 16 (2) and 16 (3), 19 (1)(g), 21, Constitution of India
The contents of this hotline should not be construed as legal opinion. View detailed disclaimer.