Regulation of Recruitment Fees: What Employers Need to Know

By Justin Storch, J.D. June 13, 2019
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Regulation of Recruitment Fees: What Employers Need to Know

​Employers and their agents should not charge fees and illegitimate costs when recruiting because these fees might put workers at greater risk for human trafficking.

On May 22, 2019, The International Labour Organization (ILO) published its general principles and operational guidelines for fair recruitment and definition of recruitment fees and related costs. These principles include guidelines for employers and their agents on charging fees and costs in the recruitment process. Here is what employers need to know about the regulation of recruitment fees.


Purpose

By regulating recruiting fees, the ILO wants to prevent recruiters and employers from charging for access to employment, which can make workers vulnerable to exploitation.

Much of this regulatory movement has come from groups seeking to prevent situations such as debt bondage and human trafficking. The ILO stipulates that "workers should not be required to pay for access to employment." This applies to employees currently working and job seekers. The ILO recognizes that costs related to international recruitment can be higher than the costs of in-country recruitment, and those recruited across borders may be especially vulnerable.

Exceptions

The ILO spells out certain costs that may ostensibly be related to employment but might be prohibited, including medical and insurance costs, as well as costs for skills and qualification tests, equipment, travel and lodging, and other administrative costs.

But the ILO recognizes that, in some circumstances, exceptions can be made in the interest of workers. Those exceptions are limited to specific categories of workers and services, and the costs must be disclosed to the worker before he or she accepts a job. For instance, a highly skilled worker with the means to pay for expedited visa processing might wish to do so.

The ILO also recognizes that illicit costs, such as bribery or extortion, are never permitted.

Flexibility

The ILO is a United Nations agency of employer, employee and national government representatives from 187 countries who set labor standards and develop guidelines that influence policy at the national level. The ILO's principles and guidance are nonbinding, which means each of the 187 countries can choose if and how to implement the guidance.

The ILO defined "recruitment fees and related costs" at a meeting of experts, and its governing board adopted the definition in March 2019. The definition should be interpreted along with the general principles and operational guidelines for fair recruitment, which were developed at a separate meeting. Those principles and guidelines prohibit but do not define recruitment fees and related costs. The Society for Human Resource Management was an employer representative at both meetings.

 [SHRM members-only toolkit: Introduction to the Global Human Resources Discipline]

Various Approaches 

At the national level, regulations regarding recruitment fees vary widely. According to the ILO, at least 99 policies on recruitment fees and related costs have been implemented at the national level, and at least 63 of these policies have prohibited the charging of such fees to workers and job seekers.

Some explanations are in general terms. For example, the United Kingdom prohibits certain license holders from charging fees for "work-finding services." Other countries—including Pakistan, the Philippines, Qatar and Uganda—have specific, itemized lists of fees and related costs that are prohibited during recruiting.

While the United States has not adopted the ILO approach, its Federal Acquisition Regulatory (FAR) Council has taken a similar approach for federal contractors. In 2015, the FAR Council finalized a regulation, Ending Trafficking in Persons, that prohibits federal contractors from engaging in certain activities that the council asserts could result in trafficking vulnerabilities. Among these prohibited activities was the charging of recruitment fees, which were to be defined in a subsequent regulation. That final regulation, Combatting Trafficking in Persons—Definition of "Recruitment Fees," was issued in December 2018 and includes a broad list of examples of prohibited fees. The regulation, however, clarifies that such fees are prohibited only when they are related to recruiting.

There has also been action at the federal and state levels in Australia to address recruitment. The Australian government passed its Modern Slavery Bill 2018 in November of that year. It aims to "require some entities to report on the risks of modern slavery in their operations and supply chains and actions to address those risks." The bill, which is modeled on the United Kingdom's Modern Slavery Act 2015, outlines mandatory reporting criteria that certain employers must include in a Modern Slavery Statement, including the organization's supply chain, what risks exist, the action the organization is taking to address and remediate them, and how the entity assesses effectiveness. The state of New South Wales has also enacted its own legislation that would affect a broader range of employers.

Justin Storch, J.D., is global content strategist for the Society for Human Resource Management.

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