HARYANA STATE EMPLOYMENT OF LOCAL CANDIDATES RULES, 2021

On January 10, 2022, the Haryana Government, in exercise of the powers conferred under section 24 of the Haryana State Employment of Local Candidates Act, 2020 (“Local Candidates Act”), notified Haryana State Employment of Local Candidates Rules, 2021 (“Rules”) in exercise of the powers conferred under section 24 of the Haryana State Employment of Local Candidates Act, 2020 (“Local Candidates Act”).

Local Candidates Act was passed by the Haryana State Legislative Assembly on March 2, 2021 and notified in the Official Gazette on November 6, 2021. The effective date of commencement of Local Candidates Act is January 15, 2022 and the Act is applicable for ten (10) years.

The term “employer” is defined, under the Local Candidates Act, to mean a Company registered under the Companies Act, 2013 or a Society registered under the Haryana Registration and Regulation of Societies Act, 2012 or a Limited Liability Partnership Firm as defined under the Limited Liability Partnership Act, 2008 or a Trust as defined under the Indian Trust Act, 1882 or a Partnership Firm as defined under Indian Partnership Act, 1932 or any person employing ten (10) or more persons on salary, wages or other remuneration for the purpose of manufacturing or providing any service or such entity, as may be notified by the Government from time to time, but shall not include the Central Government or the State Government or any organisation owned by the Central Government or the State Government. “Local Candidate” means a candidate who is domiciled in the State of Haryana.

Local Candidates Act provides for compulsory registration of Local Candidates and directs that every employer shall, register such local candidates receiving gross monthly salary or wages not more than INR 30,000 (USD 405 approximately) on the designated portal, within three (3) months of coming into force of the referred statute. Local Candidates Act thus mandates that every employer shall employ seventy-five percent (75%) of the local candidates with respect to such posts where the gross monthly salary or wages are not more than INR 30,000 (USD 405 approximately, provided that the local candidates may be from any district of the State, but the employer may, at his option, restrict the employment of local candidates from any district to ten percent (10%) of the total number of local candidates. It is further provided that no local candidate shall be eligible to avail the benefits under Local Candidates Act unless he/she registers on the designated portal.

Local Candidates Act provides for the imposition of significant monetary penalties ranging from INR 10,000 (USD 135 approximately) to INR 500,000 (USD 6,770 approximately) for non-compliance of its provisions besides a daily penalty for a continuing contravention. Local Candidates Act, inter-alia, provides that if the offence has been committed by a company, every director, manager, secretary, agent or other officer or person concerned with the management shall be deemed to be guilty of such offence, unless such person proves that the offence was committed without his/her knowledge or consent. Similarly, in case of limited liability partnership firms, if the offence committed by a limited liability partnership firm is proved to have been committed with the consent or connivance of its partner(s) or designated partner(s) or attributable to any neglect on their part, then such partner(s) or designated partner(s) as well as the limited liability partnership firm shall be guilty of the offence and shall be liable to be proceeded against and punished accordingly.

Definitions Under The Rules

The Rules define “domiciled person” to mean a bonafide resident of Haryana satisfying the conditions as may be issued by the Government from time to time and having Parivar Pehchan Patra (PPP) issued under the Haryana Parivar Pehchan Act, 2021.

“Employee” is defined under the Rules to mean any person employed by the employer on payment of salary or wages or any other remuneration, but does not include an apprentice engaged under the Apprentices Act, 1961.

Further, Haryana Udhyam Memorandum Identification Number (HUM ID) is defined under the Rules to mean unique identification number to be issued to all types of enterprises and businesses operating in the State at Haryana Udhyam Memorandum Portal.

Main features of the Rules

(i) Rules provide that every employer using its Haryana Udhyam Memorandum Identification Number shall register all its employees, who receive gross monthly salary or wages of INR 30,000 (USD 405 approximately) by providing the required details of each such employee, in the form as specified on the designated portal.

(ii) Rules provide that a Local Candidate who seeks employment under Local Candidates Act may register on the designated portal in the format as specified on the designated portal.

(iii) Rules prescribe procedure for filing of exemption application by an employer who seeks exemption from the provisions of Section 4 of the Local Candidates Act.

(iv) Process for disposal of the complaints (through electronic mode) made by a Local Candidate has been provided in the Rules.

(v) Rules provide that every employer shall furnish a quarterly report, with respect to Local Candidates employed and appointed, during the previous quarter, by 20th day of the following quarter, on the designated portal in the prescribed format. (vi) Rules provide for maintenance of records in digital form.

(vii) Rules have laid down a procedure for filing of an appeal, upon payment of prescribed fee and relevant documents, etc. An appellant is allowed to present its case in person or through an Authorized representative or a legal practitioner.

(viii) Rules have laid down procedure for inspection in case any information or complaint with regard to violation of any of the provisions of Local Candidates Act or Rules has been received.

Anhad Law’s Perspective

The Rules have provided clarity on the aspects that were missing in the Local Candidates Act. Further, Rules have prescribed procedure and guidelines relating to various provisions of the Local Candidates Act, however, several other provisions of the Local Candidates Act still require clarity.

It is still not clear that whether the compliances are required to be done by an employer set up/incorporated in the State of Haryana or it is required to be made by any employer having operations in the State of Haryana and employing ten (10) or more persons. It is not clear as to what will happen if after seeking registration, the strength of the employer falls below ten. Given that the Local Candidates Act does not provide clarity, a safe approach may be appropriate to be adopted.

Despite using the expression “Designated Portal” in the Local Candidates Act to mean a portal specifically designed and designated for the purpose of registration of local candidates and employees, no details of Designated Portal are provided in the Rules and it is possible that Haryana Government would issue further instructions/information in this regard.

The Rules, while provide for the process of registration of employees by an employer, lack in providing a Form or format for such a purpose. Further, no Form or format required for self-registration of Local Candidate on the designated portal has not been provided.

Several industry Associations and Faridabad Industries Association have filed writ petitions before the Punjab and Haryana High Court, and challenged the constitutional validity of the Local Candidates Act. The outcome of such petitions is awaited.

-Manishi Pathak, Founding Partner and Ranjan Jha, Partner

Disclaimer: The contents of the above publication are based on understanding of applicable laws and updates in law, within the knowledge of authors. Readers should take steps to ascertain the current developments given the everyday changes that may be occurring in India on internationally on the subject covered hereinabove. These are personal views of authors and do not constitute a legal opinion, analysis or interpretation. This is an initiative to share developments in the world of law or as may be relevant for a reader. No reader should act on the basis of any statement made above without seeking professional and up-to-date legal advice.