Senior managers across sectors, especially information technology (IT) companies headquartered in the US, spent an anxious weekend glued to virtual calls as Haryana’s controversial law reserving 75 per cent of private jobs offering up to ₹30,000 gross monthly salary for local candidates came into effect from Saturday.

In the country’s “BPO capital” i.e. Gurgaon, senior leaders at various business process outsourcing/ management (BPO/BPM) huddled into different conference sessions as this particular sector fears losing talent the most. With the Haryana Employment of Local Candidates Act, 2020, coming into effect, all companies employing more than ten employees in the State, will need to furnish information regarding employees who receive gross monthly salary or wages up to ₹30,000. Companies will need to complete these formalities in the next three months. They will also need to furnish a quarterly report on the portal providing information regarding the local candidate employed and appointed in the previous quarter as per this Law. The Act will apply to new recruitments.

The Punjab and Haryana High Court has dismissed the industry bodies’ plea for early hearing of the petitions challenging the Law on Friday and has scheduled it for hearing on February 2. 

“This will clearly have an impact although they (Haryana government) have reduced the threshold to Rs.30,000 from Rs.50,000 earlier. When you look at it from the point of the BPM/ BPO segment and Gurugram being the capital of BPM capital in the world, the impact is going to be significant,” Ashish Aggarwal, Vice-President - Public Policy at Nasscom told  BusinessLine.

The law would impact not just the IT and startup economy but also the hospitality and retail industries that employ from other regions especially the north-eastern parts. The auto and construction industry similarly would have issues employing locally. There is anxiety across sectors.

Rajiv Chawla, Chairman, Integrated Association of Micro, Small and Medium Enterprises of India (IamSMEofIndia), which is among the petitioners who have moved the High Court for a judicial review of the controversial law, said, “There will be a lot of hiccups, approvals, documentations and GST-like quarterly filings. There is going to be a huge compliance burden even for micro and small enterprises. It will pose a huge challenge for sectors and trades such as construction, which are dominated by workers that come from certain clusters in the country. There are fears regarding shortage of labour especially during seasonal hiring for some industries.”

He said even the provision for exemption if an adequate number of local candidates of desired skill or proficiency are not available for a particular category of jobs is up to the discretion of the Government.

“We are deeply disappointed with the implementation of this law as any restrictions based on some state level reservations is definitely against the concept of one nation. Anyone should be free to work in any part of the country and not face any discriminations,” said Pradeep Multani, President, PHD Chamber of Commerce and Industry.

Industry bodies have been stating that this could impact fresh investments in the state and impact ease of doing business.

“The Government has implemented this law to provide employment. But it has been seen in the past that any rule which tries to artificially control the internal functioning of a private enterprise against the market, will affect its competitiveness in the market and hurt the enterprise, the State and the very people for which it seeks to protect employment,” said Harbhajan Singh, Chairman, Special Task Force on Ease of Doing Business in Haryana, CII.