No job reservation in state-run firms post privatization

The Centre has assured private investors that they will not have to comply with caste-based job reservation after strategic disinvestment of the government’s stakes in state-run firms.

However, it will adequately protect existing employees, including those belonging to scheduled castes, scheduled tribes, and the physically handicapped, three people with direct knowledge of the matter said, requesting anonymity.

The government will negotiate the terms and conditions in the shareholders’ agreement (SHA) to ensure that once management control is transferred to a private entity, it adequately protects staff. Enforcing job quota is not desirable or legally possible, the people added.

Citing a policy document of the Department of Investment and Public Asset Management (Dipam) one of them said that a “trade off” is possible. This document says: “Government, in a welfare state, would like to look after the staff interest. There obviously has to be a trade-off, however, between the protection that the employees can be given and providing to the strategic partner a degree of freedom to run the firm. These competing interests would have to be carefully balanced in drafting the agreements.”

William Vivian John, partner at law firm L&L Partners said, “A shareholders agreement sets out the terms agreed between the shareholders on how the business will be run, the extent of control each shareholder will have and, how governance decisions will be taken regarding the business.” Being a document that governs future business, it can stipulate terms regarding existing employees, he added.

“The reservation issue has been also clarified in the Parliament vis-à-vis BPCL (Bharat Petroleum Corp. Ltd),” said the first person, who is advising the government on disinvestment matters.

Manishii Pathak, labour law expert and founder of legal consultancy firm Anhad Law said under the Constitution, only the state has been directed to make provision for reservation. “While central or state government run or controlled companies have been mandated to follow a reservation policy for scheduled castes/scheduled tribes/physically handicapped, no such policy applies to the private sector at present.”