Jharkhand High Court stays law mandating 75% reservation for locals in private jobs

The Jharkhand High Court on Thursday stayed the implementation of a State law reserving 75 per cent of private jobs for local candidates [Jharkhand Small Industries Association & Ors v. State of Jharkhand & Ors]. .The Jharkhand State Employment of Local Candidates in Private Sector Act, 2021 requires private employers in the State with 10 or more persons in their workforce to reserve at least 75 per cent of jobs - those with monthly salaries below ₹40,000 - for local candidates..A Bench of Chief Justice MS Ramachandra Rao and Justice Deepak Roshan said that the 2021 Act prima facie is unjust and discriminatory and violates Part III of the Constitution of India, which guarantees fundamental rights to citizens.The Court also said that the 2021 law's implementation is not in public interest."Prima facie, we are of the opinion that the State of Jharkhand could not have enacted the impugned law and restrict the right of a private employer to recruit from the open market employees who would receive less than Rs.40,000/- pm. This is because a private employer cannot be compelled to do by the State what the State itself is forbidden to do by the Constitution," it added..The Court passed the order on a petition filed by the Jharkhand Small Industries Association and others who challenged the constitutional validity of the law enacted in 2021.The petitioners argued that the State has started demanding details of local persons employed and was threatening to initiate penal action for non-disclosure of the information..In its order, the Court said that Article 16(2) of the Constitution prohibits the State from discriminating in matters of public employment on grounds of religion, race, caste, sex, descent, place of birth and residence."Under Art.16(3) only Parliament is empowered to make a law prescribing any requirement as to residence within the State in regard to a class of employment under the Government of a State. Art.35 of the Constitution prohibits the State Government from making a law with respect to a matter under Clause (3) of Art.16," it said..The Court said that the law would severely hamper employers' freedom to choose their workforce and affect their fundamental rights under Article 19."The State of Jharkhand cannot be permitted to virtually build a wall around it’s territory of this nature and prevent private employers who have a fundamental right to carry on business anywhere in the territory of India to take into their employment persons of their choice skilled to do a particular work, and which workers also have a fundamental right to reside or settle anywhere and carry on their trade and occupation. The effect of allowing the Act’s implementation is that the employer‘s discretion to choose his work force gets severely hampered. Thus the right guaranteed by Art.19(1)(g) of the Constitution on private employers would get grossly impaired.".It also remarked that the implementation of the law would defeat the concept of one citizenship for all Indian citizens and the idea of ‘fraternity’ mentioned in the Preamble.Citizens residing in other states of the country cannot be treated as inferior to the local people of Jharkhand and discriminated against, it added."Other States also would be encouraged to enact similar laws to protect their local residents and the unity and integrity of the country will be seriously jeopardised," the Court said..The Bench also took note of a Punjab and Haryana High Court judgment striking down a similar law that was enacted in Haryana in 2021.Considering the apprehensions of the petitioners before it, the Court said there shall be an interim stay of implementation of the Act until further orders."If the implementation of the Act is not stayed, undoubtedly the State authorities would start penalising the private employers by levying hefty financial penalties mentioned in Sections 9 to 12 of the Act," it reasoned..It then listed the matter for consideration on January 31, 2025..Advocates Amit Kumar Das, Shivam Utkarsh Sahay and Sankalp Goswami appeared for the petitioners.Additional Advocate General Ashutosh Anand represented the State of Jharkhand.Additional Solicitor General of India Anil Kumar represented the Union of India..[Read Order]