A potential risk of forced labor in global supply chains can stem from the charging of excessive recruitment fees to migrant workers, particularly foreign migrant workers who move internationally to find work. Such payments can create situations of debt bondage and leave low-wage workers vulnerable to exploitation. Reflecting the Dhaka Principles for Migration with Dignity, the Employer Pays Principle is a commitment to ensure that workers are not exploited in the recruitment process through excessive charging of recruitment fees.
Implementing the Employer Pays Principle
The Employer Pays Principle (EPP) requires that no worker should pay for a job - the costs of recruitment should be borne not by the worker but by the employer. The EPP is increasingly adopted by major brands and retailers around the world within the toy industry and other sectors.
The ICTI Ethical Toy Program (IETP) works to ensure that toy factories adopt responsible recruitment practices which support the EPP, and our audit checklist requirements have long since prohibited the charging of recruitment fees to factory workers.
In November 2018, IETP added further checklist requirements on responsible recruitment to support the implementation of the EPP, introduced as part of wider updates and enhancements to our program. Developed with input from the Institute for Human Rights and Business, these checkpoints require factories to establish effective recruitment policies and procedures to ensure that no fees are charged to any factory workers – whether recruited directly or via a labor broker. Procedures must also include provisions for handling and remediation of any violations of the policy where workers have paid unauthorized fees in their recruitment process through brokers or agents.
During peak production months, toy factories can face challenges in recruiting a sufficient number of workers to support their manufacturing needs. Factories therefore utilise a variety of legitimate methods to recruit workers, including direct recruitment and engaging the services of a labor agency or broker to recruit workers from overseas to fill the gap.
In some jurisdictions, recruitment agencies or brokers are permitted to charge foreign migrant workers for the service they provide. IETP recognizes the potential forced labor risks associated with recruitment fees and therefore prohibits the charging of such fees as described above.
Implementing the EPP – toy factory case study from Taipei
This case study highlights the work of one Arts & Crafts factory in Taipei which has been operating for 30 years. Ever since beginning its compliance journey within IETP in 2010, this factory has consistently maintained high compliance standards in line with our program.
In early 2019, the IETP team found this factory was deducting broker fees automatically from overseas worker's wages. After communicating with the factory management to understand the case thoroughly, we confirmed these overseas workers were recruited before the launch of our updated checklist requirements.
Nevertheless, the IETP team explained the importance and value of our checkpoints related to the Employer Pays Principle and supported the factory to update its recruitment practice to ensure no recruitment fees will be charged of new foreign migrant workers in the future.
Following the conversations and engagement from the IETP team, the factory owner realized that, although this practice is in compliance with the local laws and regulations, it exposes the factory to potential risks. As an action to show they are keen to go beyond minimum requirements and to demonstrate responsible business practices, this factory has pledged to cover all recruitment fees that will be charged to the overseas migrant workers.
The IETP technical team has subsequently reviewed pay slips and the recruitment procedures at this factory and we are pleased to confirm that since January 2019 this factory is fulfilling its pledge by paying the recruitment fees directly to the agency for the workers.
IETP is delighted to see this factory proactively improve the well-being of its foreign migrant workers by pledging to pay future recruitment expenses for overseas workers.
IETP supports factories to achieve continued progress in improving labor standards and recruitment practices. Our Recruitment Practices Briefing provides clear guidance and best practice for factories on how to avoid peak season hiring pitfalls. Our recently launched Progress Visits offer good practice advice and guidance to factories on responsible recruitment and the EPP, as well as other issues areas.
IETP continues to raise awareness of the EPP – and highlight opportunities for the toy buying community to support responsible recruitment – via our regular Leadership Roundtable Meetings for toy brands and retailers.