Philippines Taiwan

Philippines - Taiwan: Tackling fraud and abuse

The Philippines prohibits its recruitment agents from charging placement fees to some categories of migrant workers, including domestic workers. In theory, this means that a significant proportion of its overseas workers should not be required to pay placement fees to secure jobs abroad. The regulations on fees are detailed and clear. All migrant workers are required by law to meet some of the administrative costs associated with recruitment. In practice, legal loopholes mean that it is commonplace for Filipino workers to have to pay far in excess of what is required to secure employment abroad, even if they often pay less in fees than workers from other origin states. These excess charges for training, medical certificates, or temporary food and lodging costs are essentially recruitment fees, and they are exacerbated by the usurious practices of licensed money lenders. The Philippines has detailed and clear regulations on standard employment contracts. It has deployed significant governmental resources overseas in all of the countries to whom it sends workers in significant numbers to mitigate the risk of contract substitution or other contractual irregularities, as well as to ensure the fundamental rights of all its nationals, documented or undocumented. In practice, as the case of Taiwan demonstrates, the Philippines allows destination states to deviate from the terms of the standard employment contract.

Taiwan allows its recruitment agents to charge monthly service fees to its foreign workers. Placement fees are prohibited, but many workers still have to pay these fees, notably upon renewal of 3-year contracts, and the recruitment sector has lobbied the government to legalise placement fees. Regulations on fees in the Distant Water Fishing sector are not as clear, and recent research into the sector notes recruitment fees as one of the main problems affecting workers. Recruitment fees are often a factor in preventing workers from leaving abusive employers. Excessive fees are often a factor in preventing workers from leaving abusive employers. The cost to workers of securing jobs in the manufacturing sector has been high and in part inflated because Taiwanese employers have charged kickback payments to recruitment agents. Industry initiatives, notably in electronics and driven by the most reputation-conscious brands appear to have been partially successful in eradicating this practice and reducing and in some cases eliminating the cost of recruitment for foreign workers, but it is not possible to precisely assess the effectiveness of these initiatives, and the Taiwanese authorities could not claim any credit for any improvement in recruitment practices linked to schemes such as the Responsible Business Alliance. To compound the negative impact of recruitment fees, Taiwan has not adequately addressed the seemingly widespread practice of forcing workers to sign additional contracts that make provision for illegal salary deductions. These contracts provide a veneer of legality to arrangements that violate the law and this can prevent workers from challenging salary deductions, which is a key complaint. Recruitment agents often work in tandem with employers and against the interests of workers in these contractual disputes. Looking at the issue of recruitment fees from a corridor perspective, what we see in the experience of Filipino workers being recruited to work in Taiwan is a system whereby well-designed laws and regulations on fees and contracts can be critically undermined when the authorities fail to close legal loopholes that allow their recruitment agents to continue to pass inflated recruitment costs onto workers. An emblematic example of this, and one that we have not seen in any other corridor, is the system that allows Taiwanese courts to order deductions from Filipino workers’ salaries, based on debt assumed in the Philippines and then sold to Taiwanese lending agencies.

Recommendations to the Philippine government:

  • Adopt the ILO’s definition of recruitment fees and related costs and mandate that Filipino employment agencies require foreign employers to pay all the costs of recruiting Filipino workers, including training and medical costs.
  • Pass legislation that explicitly prohibits Philippine lending agencies from selling migrant worker debt to foreign lending agencies.
  • Refuse to allow states that recruit Filipinos for work to make modifications to the POEA standard employment contract that would result in workers being forced into agreeing to different contractual terms than those agreed in the Philippines.

Recommendations to the Government of Taiwan:

  • Amend the Employment Service Act to make employers liable for all costs associated with hiring private employment institutions to recruit workers, including the monthly service fees charged to workers.
  • Prohibit Taiwanese lending agencies from buying debt from foreign lending agencies that have loaned money to migrant workers to finance their recruitment, and deny them the right to seek court orders to make automatic deductions from foreign workers’ salaries.
  • Pass legislation to explicitly prohibit and meaningfully sanction contract substitution or other practices that lead foreign workers to agree to contractual terms less favourable than those agreed in their home country.