Regulating Recruiters in Digital Age: Maharashtra’s 2025 Placement Agency Law and Battle Between Worker Protection and Platform Freedom

[Shubhanshu is a student at Hidayatullah National Law University.]

The Maharashtra Private Placement Agencies (Regulation) Act 2025 (Act), tabled on 24 March 2025 and now cleared by both houses and having received Presidential assent, creates the state’s first comprehensive licensing regime for private recruiters. Spearheaded by the Skill Development and Employment Department under a 100‑day reform agenda, the Act targets fraud, imposes disclosure duties and replaces the earlier Gumasta business‑registration patchwork with sector‑specific oversight. Its sweeping definition of placement activity spans everything from advertising vacancies to screening candidates, raising doubts about whether passive digital portals such as LinkedIn must register. The analysis below explores that ambiguity, probes constitutional frictions with the Information Technology Act 2000 (IT Act) —particularly safe‑harbour protection for online intermediaries—and weighs possible repugnancy under Article 254. It also compares Delhi, Jharkhand and Assam statutes and benchmarks global standards, including ILO Convention 181, the UK Employment Agencies Act 1973 and EU Directive 2008/104/EC.

Scope of the Act and Definition of 'Placement Activity'

The Act stretches the definition of 'private placement agency' to include any non‑government person or entity 'engaged in placement activities for any private or public employer within or outside the State', expressly covering overseas recruitment. Because 'placement activity' is defined with sweeping breadth — 'all activities (electronically or manually) conducted … for facilitating the employment of job‑seekers' — the Act's reach is both territorial and functional. A Mumbai‑based recruiter placing engineers in Dubai must register; equally, a Delhi-based head‑hunter sourcing staff for a Pune factory must register. The statute illustrates the reach with non‑exhaustive examples: publication of advertisements, mobilizing job‑seekers, collecting and scrutinizing applications, training or assessing candidates, sponsoring shortlisted names to employers, and reporting each placement to government. The disjunctive drafting means that doing even one listed activity triggers regulation. Penalties are severe: operating unregistered can invite up to 3 years’ imprisonment and a INR 1 lakh fine, while lesser contraventions draw fines up to INR 3 lakhs. Agencies must keep digital registers, observe minimum‑age laws, protect candidates’ data and disclose service charges; a Registering Authority may suspend or cancel licences, subject to appeal. Campus placement cells are expressly exempt—institutions need only report hires within 60 days—highlighting the legislature’s capacity for narrow carve‑outs while omitting any for digital platforms.

Do Digital Job Platforms Like LinkedIn Fall under the Act's Ambit?

This omission creates uncertainty for online job boards such as LinkedIn, Naukri or Indeed. Because 'publication of advertisements' is itself a regulated act and the Act is technology‑neutral, a literal reading obliges such portals to obtain a state licence, maintain local records and report the outcome of each job lead within sixty days. In practice, a platform does not know who was ultimately hired, so compliance is impossible. Legal commentary notes the mismatch: the legislature appears to have targeted active recruiters who solicit, screen and place candidates, yet the text could sweep in passive bulletin‑board intermediaries. Other jurisdictions offer clearer lines: the UK Employment Agencies Act 1973 and accompanying Regulations exempt mere publishers of advertisements; EU Directive 2008/104/EC regulates temporary‑work agencies but not noticeboards; ILO Convention 181 contemplates licensing genuine employment intermediaries, not newspapers carrying help‑wanted ads. Absent analogous language, Maharashtra risks classifying passive portals as agencies, subjecting them to myriad, possibly conflicting, state regimes.

State Law v/s Online Intermediary Regulation

A further complication arises from overlap with the IT Act. Section 79 confers “safe‑harbour” immunity on intermediaries for user‑generated content, provided they exercise due diligence. The IT Act and the Act regulate the same field since the legal duties of online intermediaries that merely host vacancy advertisements. Section 79 of the IT Act grants such portals a “safe harbour,” limiting their obligation to act only after they receive a court or government order; they are expressly not required to monitor, verify or report user-generated content in advance. By contrast, Sections 8–10 of the Act compel every 'publisher of vacancy advertisements', digital or otherwise, to register, maintain a placement-outcome register and file a report on each successful hire within 60 days, with criminal penalties for non-compliance. Because a portal cannot file data it does not possess without first engaging in the very proactive monitoring the IT Act forbids, dual compliance is impossible.

Requiring online portals to register with, monitor for, and report every successful hire to a state directorate goes far beyond the IT Act’s due‑diligence matrix, burdening intermediaries with proactive policing and record‑keeping. Because intermediary regulation falls in the Union List (Entry 31) while labour regulation straddles the Concurrent List, imposing obligations that conflict with the IT Act invites a repugnancy challenge under Article 254. Unless Maharashtra seeks Presidential assent and narrowly tailors the rules, the Act's application to online platforms may be struck down as an unconstitutional intrusion into a field occupied by Parliament. Clarificatory rule‑making that excludes “passive digital noticeboards” or limits their duties to reasonable disclosures would align the Act's anti‑fraud objective with India’s harmonized safe‑harbour framework and prevent a patchwork of state‑specific internet rules.

Even if characterized as labour legislation (Entries 22–23, Concurrent List), the Act's extraterritorial sweep—regulating agencies with no Maharashtra presence that place candidates for Maharashtra jobs—may be deemed a substantial, not incidental, incursion into Union control of communications and e‑commerce. The Embassy Property decision underscores that statutory regimes must respect federal boundaries; a state cannot indirectly dictate operations that a central law already governs.

Other Indian States’ Approaches

Comparative practice counsels restraint. Delhi’s 2014 Order, Jharkhand’s 2016 Act, and Assam’s 2019 Act license recruiters but centre on domestic‑work trafficking; none conflates passive publishers with placement agents. Internationally, the UK Employment Agencies Act 1973 exempts mere advertisement publishers, and ILO Convention 181 warns against over‑regulating non-recruiting platforms. The Act, by contrast, could criminalize a newspaper's “classifieds” page absent a licence—raising proportionality concerns under Article 19(1)(g).

The Union Labour Ministry’s 2022 advisory urged states to register private agencies but envisaged alignment with central digital‑employment initiatives such as the National Career Service portal. Maharashtra now faces a policy choice: clarify that only active recruiters fall within 'placement activity', or invite litigation that may eviscerate this otherwise path-breaking statute.

International Frameworks

ILO Convention 181 (1997) supplies the global template for regulating private employment agencies. It reverses the ILO’s earlier abolitionist stance, acknowledging that fee‑charging intermediaries add value when tightly policed. Core duties are licensing by a competent authority, an outright ban on charging placement fees to workers, non‑discrimination, respect for collective‑bargaining rights, and formal cooperation between public employment services and private recruiters. Convention 181 also insists on complaint mechanisms, sanctions, and special safeguards for migrant labour. India has not ratified C‑181 because it lacks a national statute, but the Act — with mandatory registration, disclosure of service charges, child‑labour prohibitions and data‑privacy clauses—tracks the Convention’s protective logic. To align fully, the rules should categorically bar agencies from billing job‑seekers, permitting fees only from employers.

The United Kingdom’s Employment Agencies Act 1973, reinforced by the 2003 Conduct Regulations, illustrates mature statutory practice. Agencies may not charge work‑seekers (save niche exceptions), must verify candidate credentials, and must present truthful vacancy information. Although the licensing scheme was repealed in 1994, the Employment Agency Standards Inspectorate still wields revocation‑and‑penalty powers for misconduct. Crucially, UK law distinguishes an “employment agency” (introducing workers to direct hire) from an “employment business” (supplying temps it employs). Official guidance helps a business self‑diagnose: merely hosting job adverts, without screening or recommending, usually escapes the Act’s full rigor. Maharashtra could emulate this clarity, carving passive digital noticeboards out of the Bill’s ambit or creating lighter‑touch compliance tiers.

The EU Temporary Agency Work Directive 2008/104/EC concentrates on labour standards, not licences. It guarantees agency workers equal pay and conditions vis‑à‑vis comparable direct employees and obliges member states to remove unjustifiable bans on agency work. Many EU jurisdictions complement this with prohibitions on worker‑paid fees and transparency obligations. For Maharashtra, the directive underscores that private intermediaries are legitimate so long as placed workers are not disadvantaged. Future rules might therefore stipulate that if an agency employs temps and second‑them, wages and social‑security benefits cannot undercut statutory or comparator benchmarks.

Taken together, these international models endorse robust oversight but warn against over‑broad definitions that snare passive advertisers or impose process burdens divorced from worker protection outcomes. The Act moves in the right direction; fine-tuned Rules should finish the alignment.

Recommendations

The Act is a welcome attempt to purge fraud from the recruitment sector, mandate transparency, and harvest labour‑market data. Properly enforced, its stiff penalties can neutralize fly-by-night operators and restore trust for millions of job‑seekers. Yet its sweep over 'placement activity' risks ensnaring passive digital portals and colliding with the federal safe‑harbour regime under the IT Act.

Preserve Section 79 immunity

Rules should state that compliance with the state law does not derogate from the IT Act’s s 79 safe‑harbour. Coordination with the Ministry of Electronics and Information Technology — or if necessary, Presidential assent—will fortify the statute against challenges that it encroaches on a Union domain.

Proportionate reporting

Traditional agencies that know placements should file outcome reports; job‑portals could instead submit periodic posting statistics or fraud alerts, ideally via integration with the National Career Service portal.

Codify worker safeguards

Rules should track ILO Convention 181 and UK practice by flatly banning fees to job‑seekers, mandating written contracts for overseas work, securing data‑privacy, and providing a grievance mechanism. These details convert the skeletal Act into an enforceable code and deter predatory conduct.

Industry dialogue and tiered compliance

Separate, lighter‑touch registration for purely digital aggregators would balance innovation with oversight. Under this model, Tier A covers “active placement agencies” that solicit, screen or shortlist candidates, negotiate terms or charge placement fees; these entities would continue to require full licences with annual renewal, outcome-reporting within 60 days, strict data-privacy safeguards and a ban on charging job-seekers. Tier B covers “passive publishers” (online job portals, classifieds pages or noticeboards) that merely host or transmit vacancy notices without further vetting; these would complete a one-time self-declaration (no discretionary approval), pay a nominal cost-recovery fee, display publisher contact details on each posting, submit only quarterly aggregate fraud-incident reports (not individual hire data), and comply with a 72-hour takedown rule upon court or government order, thus aligning precisely with Section 79’s “no proactive monitoring” safe-harbour. Because the same functional test applies whether vacancies appear online or in print, a hybrid operator needs only Tier B for its passive arm and Tier A if it also undertakes active recruitment, ensuring channel-neutral fairness while preventing any direct conflict with the central intermediary-liability regime.

Monitor constitutionality

Practitioners should test enforcement for adherence to Shreya Singhal (safe‑harbour) and Embassy Property (federal competence). Courts can read down over‑broad provisions or exempt passive intermediaries to maintain legislative validity.

With these refinements, Maharashtra can deliver a modern, constitution‑proof regime that shields workers, deters fraud and still lets technology efficiently match talent to opportunity.