Analysis: When the Job Costs Too Much -Workers Facing Illegal Agency Fees
Migrant workers pay a lot to find jobs abroad. In fact, many pay far beyond what the law allows. Those amounts can reach many times their monthly salaries, keeping them deep in debt long after they have started work. These illegal fees are sadly one of the most common types of exploitation we encounter amongst our clients.
A Rampant & Prevalent Issue
The numbers are sobering. A 2017 survey conducted by Mission for Migrant Workers in Hong Kong found 96% of 1,045 Filipino workers interviewed had paid illegal agency fees, often in the name of registration or training fees. 119 employment agencies were also found to have charged above the legal agency fee limit.¹ In another 2017 survey conducted by Students Against Fees and Exploitation on 100 recruitment agencies in Hong Kong, 70% of those agencies had broken the law by overcharging domestic helpers or withholding their personal identity documents as collateral.²
Meanwhile in Singapore, a news article by the Straits Times revealed that from 2015-2017, the Ministry of Manpower had received more than 500 complaints against employers for not issuing itemised payslips. Following inspections, another 1,200 employers were asked to rectify their practices.³ Earlier this year in a training workshop by JWB for over 200 Filipino MDWs from Blessed Grace Church, over 90% of workers had paid more than two months salary and 30% paid more than 5 months salary for their fees.
These statistics suggest a structural practice of exploitation affecting large numbers of those working in Singapore and Hong Kong. In most cases, despite efforts from both governments to educate migrant workers of their statutory rights, many workers still have little awareness that they were overcharged and exploited by their employment agencies. These workers are thus forced to repay fees with a large portion of their income, leaving them in debt and without the means to send money back home.
What is Legal Versus What is Normal
Hong Kong law on this issue is straightforward. Employment agencies are not allowed to charge domestic workers more than 10% of their first month’s salary in placement fees.⁴ The Hong Kong Code of Practice also prohibits employment agencies to receive “reward of any kind, or any payment or advantages in respect of expenses or otherwise” from migrant workers, whether directly or indirectly.
Singapore law meanwhile, allows employment agencies to charge up to one month of salary per year of contract, with a two month’s salary fee maximum.
Laws in workers’ home countries also attach limits to what they can charge workers. For example, Indonesian law prohibits employment agencies from charging workers any placement fee. They are only allowed to charge for processing documents, paying for health checks, trainings, visa applications and similar out of pocket logistical costs. In the Philippines, recruitment fees for most categories of workers are set at a maximum of one month of salary, though it is illegal to charge any placement fee to domestic workers and seafarers.
In theory then, workers are thus protected across both their home and host countries from fees that would otherwise eat into their paychecks.
What is normal for workers is sadly far different. Employment agencies manipulate the system by blurring the distinction between placement fees and other fees they are allowed to charge. These fees are inflated and hidden under unrelated categories, which are further obscured by the lack of receipts or documentation they give to workers. To make matters worse, agencies in Hong Kong and Singapore often collect fees on behalf of their partner agencies back in the home countries, sending money that is not well documented and extremely difficult to trace. Such practices make moving illegally collected funds all the easier.
Even when workers do know they are being exploited, they are rarely in a position to speak up. Being new to the country and with little bargaining power, workers can rarely question the agency when signing documents they do not understand, nor ask for a copy of receipts or the loan agreements from the agency.
In almost all agency fee-related case undertaken by JWB, the clients did not fully understand the nature of the agreements they had signed. Neither were they ever given a list of the breakdown of charges imposed by their employment agencies.
Disrupting an Illegal Enterprise
JWB has been at the forefront of civil litigation efforts to help migrant workers from Indonesia and the Philippines seek just compensation against employment agencies that illegally overcharge them. Our role in litigation is to sunshine these hidden agency fee practices across borders and ultimately disrupt the flows of money stolen from workers. Doing so means advancing groundbreaking cases while educating workers on their rights so that more victims of exploitation can come forward and seek justice.
One recent breakthrough we achieved involved clawing back illegal agency fees for sixteen MDWs in a first-ever ‘reverse cross-border’ mass claim. Where our work had traditionally focused on recovery abroad, where host country agents usually collect these fees for their and their partners’ use back home, this legal action saw us pursuing an Indonesian agency on behalf of workers still in Hong Kong. In addition to a successful settlement, we also obtained critical evidence showing a breakdown of charges by the employment agency in question. The breakdown included charges for what can only be described as bribes.
Beyond this success, we are now launching multiple claims against agencies in Hong Kong and Singapore. The relatively small number of cases aim to secure large developments in the law, and in our sector’s understanding of how the business of illegal agency fees actually operates. These cases will proceed into 2020, with outcomes that stand to impact the two cities’ combined 640,000+ domestic workers going forward.
Conclusion
The business of exploitation is well established, and one that will take time, effort, and teamwork to disrupt. JWB’s role in this project is to maximize the use of local laws to hold bad actors accountable, while educating workers about their rights so that more victims can speak up. These twin approaches can help shift the balance of power, making migration safer for workers, and exploitation a riskier proposition for bad agencies.
[2] http://www.ejinsight.com/20170511-70-of-employment-agencies-overcharge-domestic-helpers/
[4] https://www.info.gov.hk/gia/general/201909/27/P2019092500606.htm