Wage theft has long been part of the labour migration landscape in every region of the world. A new report by the Migrant Justice Institute, demonstrates that this situation is not inevitable.

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Wage theft has long been part of the labour migration landscape in every region of the world. Underpayment of migrant worker wages became even more pervasive during the COVID-19 pandemic, as businesses encountered financial pressures and vast numbers of workers were repatriated without payment of their wages. Though numerous reports have highlighted wage theft in particular countries and industries, there is very little data on the scale of wage theft globally.

Every jurisdiction has judicial or administrative mechanisms to address wage claims. However, there is no jurisdiction in the world where underpaid migrant workers can expect to recover the full wages owing to them.

A new report by the Migrant Justice Institute, demonstrates that this situation is not inevitable. Pointing to promising examples from around the world, Migrant Workers’ Access to Justice for Wage Theft: A Global Study of Promising Initiative demonstrates how many of the barriers impeding migrant workers’  access to justice can be overcome. 

Why migrant workers can’t recover the wages they are owed

Migrant workers rarely recover unpaid wages because the system is stacked against them at each of the three stages in the wage recovery process. First, most migrant workers are unlikely to file a claim. Many fear doing so will result in deportation, job loss or other forms of retaliation. For others, it is difficult or impossible to lodge a claim, especially if they are about to leave the country or have already returned home. Second, if a claim is filed, the burden generally rests with workers to prove they were not paid. Government agencies are slow to respond and lack resources to investigate. Court processes are cumbersome, and employers know informal dispute resolution processes will generally yield unfair outcomes because workers accept a fraction of what they are owed. Third, many workers who obtain successful rulings never actually receive their wages because employers frequently liquidate, disappear or simply refuse to pay, and any consequences for noncompliance with a judgment will not be commercially significant.

Migrant workers rarely recover unpaid wages because the system is stacked against them

As a result, most migrant workers rationally believe they cannot seek redress, or decide it is not in their best interests to do so. Many employers comfortably adopt systemic wage theft as a business model, knowing they will evade detection or enjoy impunity. Businesses at the top of supply chains continue to enjoy cheaper goods and services made possible by theft of workers’ wages.

 

 

Risks and burdens of wage recovery should rest with business and government, rather than migrant workers

Under most national systems, migrant workers not only bear risks of nonpayment for work, but also personal risks and burdens of making wage claims and  enforcing judgments. To ensure labour compliance for all workers and create a level playing field for businesses not engaging in wage theft, governments must accept that wage theft is systemic and not exceptional. The risk of employer nonpayment of wages must be borne by businesses higher up a supply chain, and not by workers. Similarly, the burden of pursuing remedies for unpaid wages should rest with business, and the burden of enforcing wage judgments should rest with government, deploying consequences for business.

 

 

The path forward: promising examples from around the world

Migrant Workers’ Access to Justice for Wage Theft: A Global Study of Promising Initiatives identifies promising initiatives that reduce the risks and burdens for migrant workers of rectifying wage theft. Based on global consultations and research undertaken in collaboration with the Solidarity Center and ILAW Network, the report sets out credible reform targets based on examples of innovative interventions that have already been adopted.

 

Shifting risks and burdens of filing a wage claim

Governments must address risks to migrants’ immigration status and job security if they bring wage claims. This includes instituting firewalls that prevent government labour agencies from sharing information about a worker’s immigration status with enforcement authorities, and establishing portability of employer-sponsored visas that enables workers to change sponsoring employers.

Because many only feel safe to bring claims after their employment has ended, governments must create processes for migrant workers to swiftly bring wage claims before leaving the country of employment or after returning to their country of origin. This includes technological innovations developed during COVID-19 to enable remote claims.

 

Fair wage determination processes with reduced burdens on workers

Rather than requiring workers to prove wage theft, governments should shift the burden of proof to employers to demonstrate they paid workers correctly. This includes legal presumptions in workers’ favour as to hours worked and wages owed.

Governments must also address inaccessible, slow and ineffective processes for adjudicating wage claims. Unfair mediation must be replaced by professionalised dispute resolution services that are based on workers’ ’legal rights, in which employers are compelled to participate and workers have legal representation. Governments should also develop technological systems that identify and generate evidence of wage theft. This includes requiring employers to transfer wages electronically and provide pay slips, and using technology to track regular wage payments and automatically notify government of underpayment based on worker entitlements.

Rather than requiring workers to prove wage theft, governments should shift the burden of proof to employers to demonstrate they paid workers correctly.

 

 

Shifting burdens of enforcing a wage judgment and compelling payment

Governments must create commercial incentives and consequences within and beyond labour laws to drive business compliance with wage payments and remediation of wage theft. First, lead firms in supply chains (and corporate officers and shareholders) should be jointly liable for wage nonpayment by their suppliers. Lead firms and principal contractors should also be jointly liable for wages of subcontractors’ workers. Host businesses should be liable for wages of workers supplied by a labour contractor.

Second, national, provincial and municipal governments should leverage their function as gatekeepers of opportunities for businesses. For example, agencies can withhold or revoke a licence, deregister a business, or suspend job orders or trading until the business complies with outstanding wage judgments. These powers can be exercised by agencies that oversee licensing or registration schemes in labour migration, as well as agencies that license other commercial operations such as health certifications for food businesses or construction licenses. Governments at all levels can also condition public procurement of goods and services on suppliers’ compliance with wage payment and judgments.

Governments must create commercial incentives and consequences within and beyond labour laws to drive business compliance with wage payments and remediation of wage theft.

Third, governments should ensure meaningful commercial consequences for businesses that ignore wage judgments. This could include: disrupting supply chains by prohibiting transport of goods across internal or international borders until wages are paid; establishing rapid accrual of penalties for noncompliance; and giving workers access to commercial assets to fulfil wage claims (through workers’ liens, surety bonds and government seizure of assets).

 

Expand the Employer Pays model to wages

With socialisation of the ‘Employer Pays’ principle, the business community is beginning to accept the connection between payment of recruitment fees and migrant exploitation, and the ethical unacceptability of migrant workers shouldering the burden of paying for  jobs. Similarly, it is time for business, and government, to recognise that it is unacceptable to let the risks and burdens of wage theft and wage recovery lie with migrant workers, rather than business and government. This is especially the case given the benefits to business and national economies from migrant labour.

Migrant workers are least able to bear these risks and burdens, and many workers will, as a result, fall further into debt and be vulnerable to forced labour and modern slavery. Leaving the wage recovery burden with migrant workers is also an untenable labour compliance strategy that will leave a gaping, and widening, enforcement gap. Businesses committed to  supply chains free of exploitation and modern slavery must raise their voices and be prepared to absorb the cost of remedying wage theft, which is morally theirs to bear.