Karnataka Passes Bill to Create Quotas for Locals in Private Employment

Nitin Konde, Apoorva Bajj

Jul 18, 2024 — 4 min read

Karnataka Passes Bill to Create Quotas for Locals in Private Employment

A bill requiring private sector employers in Karnataka to hire locals has been adopted by the Siddaramaiah Cabinet. The law specifies a 50% quota for management roles and a 70% quota for non-management roles.

The decision was announced by Chief Minister Siddaramaiah on X, who said that on Monday, the state cabinet had passed a bill to require all private enterprises in the state to recruit only Kannadigas for lower-grade (Group 'C' and 'D') positions. The Chief Minister, however, removed the post in response to the criticism. The bill's draught language, however, omits any reference to the full reserve of positions in Groups C and D.

"It is our government's wish that Kannadigas should not be deprived of jobs in the land of Kannada and should be given an opportunity to build a comfortable life in their motherland," he explained, while explaining the decision.

With "looking after the welfare of Kannadigas" as its first goal, Siddaramaiah called his administration a "pro-Kannada" one.

The state government emphasized its commitment to consulting with the business and addressing the concerns after the announcement received strong criticism.

What Bill Exactly States

According to the bill, a local candidate must be a Kannada speaker, reader, and writer who was born in Karnataka and has lived in the state for at least fifteen years.

Applicants must have completed secondary school and have Kannada as one of their language choices. If they do not, the government-notified nodal agency will specify that they must pass a Kannada proficiency test, according to the Bill.

Companies and organizations, in tandem with the government, should work to train local candidates within three years if there is a shortage of qualified candidates.

Businesses can ask for a waiver if they still can't find enough qualified locals. The Bill states, however, that the relaxation must be at least 25% for management categories and 50% for non-management categories.

Penalties for violations of the Employment of Local Candidates Act may reach INR 10,000 to INR 25,000.

Eagerly Anticipated

Amidst calls for a complete quota of Kannadigas in government jobs, the bill was approved.

The Sarojini Mahishi report, which called for a local quota in both public and commercial sector employment, was proposed earlier in July by Kannada organizations, who had staged rallies across the state to demand its immediate implementation.

The 1984 report was filed by Mahishi, who was the first woman to hold the office of a member of parliament from Karnataka and a former union minister. A hundred percent local hiring for group C and D positions in Karnataka-based public sector enterprises (PSUs) and central government agencies was one of the 58 suggestions made in the study.

What is 50% and 75% Quota?

To comply with the law, businesses must hire locals for at least half of their managerial roles and three-quarters of their non-management posts. Except for the directors, everyone holding a supervisory, managerial, technical, operational, or higher position in any business, organization, or facility is considered to be part of the management team. Personnel engaged in non-management roles include those with clerical, unskilled, semi-skilled, skilled, information technology/information engineering, contract, or casual duties.

All private companies in the state shall employ only Kannadigas for C and D-grade positions, according to Chief Minister Siddaramaiah. Clerks, laboratory technicians, and chemists are examples of lower-level positions in the Karnataka Public Service Commission (KPSC) that fall under the C and D grade categories.

Sharing her views on this development, Shreya Sharma, Lawyer and Founder, Rest The Case opined, "For companies, this new regulation could mean additional administrative burdens and costs, as they navigate the complexities of ensuring compliance. There's also a concern that some businesses might think twice before investing in Karnataka, fearing these new hurdles could make it harder to operate efficiently."

"Therefore striking balance is the key and for that government needs to prepare a detailed map. A gradual implementation of the quota, coupled with strong local skill development programs, could help bridge the gap. This way, Kannadigas are better prepared to fill these roles without putting undue strain on businesses. Ultimately, while the quota aims to uplift local communities, it's crucial to strike a balance," she added.

Similar Move in Other States

The Haryana State Employment of Local Candidates Act, 2020, which imposed a 75% quota for state domiciles in private sector positions paying less than INR 30,000 per month, was declared invalid in 2023 by the Punjab and Haryana High Court. Because it prevented private companies from freely recruiting from the market, the court found that the Act went beyond the State's legislative power. Additionally, it determined that the Act discriminated against the rights to equality and freedom guaranteed by the Constitution in Articles 14 and 19, respectively.

The court claimed that the 75% local reservation violated the rights of people from neighboring states and could lead to similar nationwide restrictions, essentially creating "artificial walls" throughout India. The document stressed that these limitations unfairly limit employees' freedom of movement across the nation.