3. Stop Illegal Agency Fees

“Anna, 32, an Indonesian domestic worker, says she spent 27 months paying almost her entire salary to moneylenders after losing her first job, being charged placement fees for a second and then needing to borrow more money… ‘For two years I didn’t have any money,’ she says, because she had to live on the equivalent of US$62 a month after debt payments.” (via Bloomberg).

Upon arrival in Hong Kong, the majority of helpers begin a cycle of indentured servitude that can last for years. The recruitment agency, the placement agency in HK and loan companies collude in a complex and opaque manner to evade regulators, burden helpers with debt and maximise profit. A 2013 Amnesty International report (pg. 8) found that agencies were routinely involved in supporting forced labour conditions.

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Hong Kong employment agencies are obliged to link up with recruitment agencies in the home countries of domestic helpers as helpers themselves are not allowed to seek work independently. Filipinos often pay placement fees and commissions to both the Hong Kong and home country agencies and Indonesians are charged excessive amounts by home country agencies for pre-arrival ‘training’.

• The law, unenforced: Contradictory policies between HK and the home countries of domestic helpers enable agencies to abuse loopholes. In the Philippines, a 2006 reform package prohibited agents from charging a commission. Training fees and other fees are legal, but commission for placement with an employer is not. A 2008 decree by the Indonesian government limits ‘training’ fees in their country to the equivalent of HK$15,550 (US$2,005), though many recruiters exceed this amount. Meanwhile, HK law allows agents to charge only HK$401 (US$52) to workers, which is 10% of their first month’s salary (Amnesty, pg. 61-62). Fees for medical checks, insurance, visas and airline tickets are meant to be paid by employers, yet they commonly request that the domestic workers to pay these fees

• Crippling debt; living in fear: Despite legal limits, a survey by the Indonesian Migrant Workers Union found that 85% if Indonesian helpers are forced to pay fees of HK$21,000 (US$2,709). Many agencies illegally withhold passports, employment contracts and bank cards until this debt has been repaid (Asian Migrant Centre report, pg. 31). As repayment takes 7 to 8 months to complete, workers are unlikely to report abuse by employers for fear of losing their jobs. A 2012 Mission for Migrant Workers survey found that 58% of workers had faced verbal abuse, 18% had suffered physically and 6% had been sexually abused… A local financial planning domestic helper NGO, Enrich, found that almost 60% of workers are in debt. After years of working in the city, some leave HK with less money than when they arrived.

A loan repayment card (Image via Amnesty International). Niaga is one of the biggest loan companies used by helpers in HK.

• Money lender/agent collusion: Upon arrival, some HK agencies take helpers directly to money lender companies to sign up for a loan. Often, workers are not allowed to read the contract, some do not receive a copy and many do not actually receive any money. They are, instead, given a loan repayment card, enabling monthly payments to be made at local convenience stores. In some cases, a cheque is issued to the agency by the loan firm. In other cases, loan documents are signed before arrival. In tandem with the money lenders, deals are done so that everyone gets a cut of the helper’s repayments.

Collusion and debt

• No paper trail: When charging excessive fees, agencies make a point of dealing in cash, without receipts, thus avoiding a paper trail. They also enlist employers to deduct their commission payment before handing over helper’s wages. To protect their jobs and evade legal issues, helpers are made to sign a receipt for the amount of their full salary, despite being handed a lesser sum. These practices make it difficult for employees to prove they have been conned.

• Debt bondage? Modern day slavery?: Article 1(a) of the 1956 Supplementary Convention on the Abolition of Slavery explains how a person becomes a ‘bonded labourer’ when they work in order to repay a loan demand. An Amnesty International report declared HK’s domestic helpers to be working in conditions of “slavery” whilst Bloomberg defined their plight as “indentured servitude“.

• Legalised loan sharks: Licensed local money lenders target HK’s helpers, encouraging even more borrowing by offering free phones or TVs whilst charging up to 60% annual interest. Business is booming – the number of loan companies listed in HK has increased by 20% to 938 over the past two years alone. They are not regulated by the Monetary Authority thus form part of the city’s ‘shadow banking’ system. In 2012, the Financial Stability Board in Switzerland declared the situation to be a “vulnerability” and recommended the HK government “strengthen oversight and regulation”. For now, setting up such a company remains very simple – renewable licences cost HKD$10,710 ($1,382) for a year.

via cleanbiz.asia & migrants.net

• Government inaction: The Labour Department has failed to monitor or reprimand unscrupulous agencies. Despite dozens of complaints, only two firms have been found guilty in recent years of overcharging helpers beyond the permitted 10% of their first month’s salary. Each company was fined just HK$50,000 (US$6,448) and lost their licences.

• Excessive contract renewal fees: Even if they are not switching employers or arriving in HK for the first time, Indonesian helpers are exploited by agencies at the end of each two year contract. The HK Immigration Department imposes a list of requirements upon helpers who attempt to renew contracts independently (such as medical checks, letters from solicitors, signatures from employers, ‘permission letters’ from family members and approval from the association of Indonesian employment agencies). An ILO-backed report (pg.83) found that 93% of Indonesian helpers will therefore approach their agency to renew a contract at an average cost of HK$3,598 (US$464), though 7% of helpers pay over HK$7,000 (US$902). However the actual fees to facilitate renewal at HK’s Immigration Department are under HK$1,000 and the cap on commission is currently HK$401.

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A ‘training school’ in Java, Indonesia, via Gratiane de Moustier.

• Untouchable? Prosecuting unscrupulous agents is difficult as they collude with money lenders, keep no paper trail and are not properly monitored by regulators. Helpers must quit in order to lodge a complaint – yet, when not in employment, helpers are forced to quickly leave HK (see our first campaign point on the ‘two week rule‘), and the legal process takes many weeks. Also, the HK Employment Ordinance requires that prosecutions must be bought within 6 months. However, many helpers only become aware they are being ‘cheated’ by an agency further down the line.

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HK Helpers Campaign is fighting in the public sphere and in the courtroom, calling on the HK government to…

  • …properly regulate and inspect helper recruitment agencies.
  • …prosecute and sanction those who violate HK law (e.g. by charging excessive fees or confiscating ID documents).
  • …tighten the provision of money lender and employment agency licences, meaningfully punishing abuses.
  • scrap the 2-week rule and/or allow helpers to either remain employed or remain in HK whilst legal challenges are being pursued.
  • …Increase the HK$50,000 (US$6448) penalty for overcharging placement fees to a more meaningful level.
  • …extend the 6-month limit for bringing prosecutions under the Employment Ordinance.
  • …ratify the ILO Domestic Workers Convention, a ground-breaking international treaty adopted in 2011 which prevents agents from deducting recruitment fees from helper’s salaries (article 15).

We call on HK’s helper employment agencies to:

  • …abide by HK law and by keeping proper records and charging no more than HK$401 in placement fees to helpers.
  • …stop referring helpers to money lenders.

We demand HK’s money lenders:

  • …decline applications from helpers referred by employment agencies.
  • …stop contacting helper’s employers to apply pressure for repayment.
  • …audio record all representations when helpers sign up for a loan.

If you agree with these ideas and believe the current situation is unjust, click here to find out how you can support the HK Helpers Campaign.


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