The government has given in-principle approval for strategic disinvestment of 34 CPSEs, including BPCL, Air India and Shipping Corporation of India.(Reuters)
The government has given in-principle approval for strategic disinvestment of 34 CPSEs, including BPCL, Air India and Shipping Corporation of India.(Reuters)

No job quota in firms being privatised: Govt

Such agreements, governing the transfer of management control from the government to private owners, will be negotiated to adequately protect employees, but enforcing job quota is neither desirable nor legally possible.
By Rajeev Jayaswal, New Delhi
PUBLISHED ON MAR 31, 2021 07:26 AM IST

The government has assured private investors that state-owned firms which are being privatised will not have to reserve jobs for under-privileged sections as they are currently expected to, but also told them that it will adequately protect exiting employees, including those appointed through quotas for people from scheduled castes (SCs), scheduled tribes (STs) and the physically challenged, through the shareholders agreement (SHA), three people with direct knowledge of the matter said.

Such agreements, governing the transfer of management control from the government to private owners, will be negotiated to adequately protect employees, but enforcing job quota is neither desirable nor legally possible, they added on condition of anonymity.

Citing a policy document of the Department of Investment and Public Asset Management (Dipam) one of them said a “trade off” is possible.

This document says: “Government, in a welfare state, also would like to look after the employees’ 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 company. 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 looks to the future and 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-a-vis BPCL [Bharat Petroleum Corporation Ltd],” said the first person, who is advising the government on disinvestment matters.

On March 23, 2021, the minister of state for heavy industries and public enterprises Arjun Ram Meghwal, quoting Dipam told the Lok Sabha that “the reservation policy is applicable only in Government companies and after strategic disinvestment of Bharat Petroleum Corporation Limited (BPCL), it will not remain a government firm.”

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, be it employment or promotion. “While Central or State government run or controlled companies/organisations have been mandated to follow a reservation policy for Scheduled Caste /Scheduled Tribes/physically handicapped, no such policy applies to the private sector at present.”

To be sure, some states have now announced reservations in the private sector, but these are likely to face strong legal challenges.

According to Dipam, “Strategic disinvestment will imply the sale of a substantial portion of the government’s shareholding of a central public sector enterprise (CPSE) of up to 50%, or such higher percentage as the competent authority may determine, along with transfer of management control.” The government has given in-principle approval for strategic disinvestment of 34 central public sector enterprises (CPSEs), such as BPCL, Air India and Shipping Corporation of India (SCI).

The government has set itself the target of raising 1.75 lakh crore from divestment, privatisation and asset monetisation in 2021-22.

The ministries of finance, petroleum and Dipam did not respond to email queries on this matter.

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