Executive Summary

Systemic wage theft has long been part of the labour migration landscape in every region of the world. During COVID-19, egregious underpayment of migrant workers was even more widespread as businesses encountered financial pressures and vast numbers of workers were repatriated without payment of their wages. Though every jurisdiction has judicial and/or administrative mechanisms to address wage claims, employers in every country can be confident that very few unpaid migrant workers will ever use those mechanisms to recover their wages. This is because the system is stacked against them at every stage in the wage claim process.

The failure of government and judicial wage recovery mechanisms is not inevitable. This report documents a range of initiatives from around the world that seek to disrupt employer expectations of impunity and enable migrant workers to bring claims and obtain redress for wage theft. These specific, practical reform targets can form the basis of collaborative and evidence-based wage theft campaigns on a global, national and local scale.

The problem: Wage theft and lack of access to justice for migrant workers

Barriers to migrant worker access to justice

Many of the fundamental drivers of wage theft are common across jurisdictions, as are many of the barriers to accessing justice. These include barriers to lodging a complaint, obtaining a determination for the full amount owed, and enforcing a determination and collecting payment.

First, most migrant workers are unlikely to file a claim because they fear being deported, losing their job or other forms of retaliation. For many, it is practically difficult or simply impossible to lodge a claim, especially if they are about to leave the country or have already returned home. Many migrant workers are unaware of their rights or how to seek redress. The vast majority require legal assistance to lodge claims, gather evidence, and engage with government and court offices, particularly when these are not in the worker’s language. Most migrant workers cannot access free or low-cost legal assistance, and are not members of a trade union.

Second, if workers do file a claim, the burden of proof generally rests with the worker, and it is extremely difficult for a migrant worker to provide evidence of their work and the wages they were not paid. Government agencies are slow to respond and lack resources to investigate, and court and tribunal processes are cumbersome and lengthy. Employers know that informal dispute resolution processes will favour the employer as the party with greater power, and will generally result in a settlement that is unfair to the worker.

Third, employers and other businesses in supply chains can safely assume that many workers who obtain a successful wage determination never actually receive the wages the employer was ordered to pay. Employers frequently liquidate, disappear or simply refuse to pay, and determinations are unlikely to be enforced. Any penalties for wage theft or consequences for noncompliance with a judgment will not be commercially significant. Businesses in a supply chain will almost certainly not be held responsible for remedying wage theft by their supplier or contractor if those entities liquidate or do not pay their workers, leaving the workers without recourse.

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

In this context, it is easy and rational for employers to adopt systemic wage theft as a business model. It is equally easy for businesses at the top of supply chains to enjoy the benefits of wages stolen from their suppliers’ workers which facilitate the supply of cheaper goods and services, and greater profits. Migrant workers understand the risks of reporting wage theft, the burdens of making a claim and very low prospects they will recover the money they are owed. Most are acting rationally when they determine they cannot feasibly seek redress or it is not in their best interests to do so.

Deep knowledge gap and lack of research

In every jurisdiction, there is a profound lack of data on the scale and characteristics of wage theft among migrant workers to inform administrative and judicial responses. This is striking given the scale of wage theft in numerous industries globally. No jurisdiction systematically collects data on migrant workers’ actions to recover wages and governments have little meaningful data on the operation of their remedial processes and institutions in practice. With limited notable exceptions, few efforts have been made by governments, academic experts or civil society to comprehensively evaluate the effectiveness of particular systems for migrant or other vulnerable workers to determine what works, or how to improve shortcomings. Governments and advocates are generally unaware of approaches to wage theft and innovations in other jurisdictions beyond their own. In short, government responses and allocation of resources to address wage theft for migrant workers are made with almost no evidence base or informed public scrutiny.

Potential solutions: Findings on promising initiatives to improve access to justice for wage theft

As the first stage in addressing these gaps, this study profiles promising initiatives in jurisdictions around the world. These reduce, or have potential to reduce, the risks, burdens and costs for migrant workers of rectifying wage theft, or shift risks and burdens to business and government. The profiled initiatives can equip advocates with specific law and policy reform targets and lend credibility to advocacy demands by pointing to other jurisdictions in which an intervention has already been adopted. However to build an effective ecosystem for detection and remediation of wage theft, a range of these initiatives must be combined, and must rest upon a foundation of labour laws that apply to all workers without distinction. They should complement proactive strategic enforcement led by government as the primary mechanism for addressing wage theft.

Stage 1: Lodging a wage claim or complaint

The report provides examples of promising initiatives to reduce risks to migrant workers of reporting wage theft and lower the burdens of initiating claims to seek redress. These initiatives are designed to:

• Improve the practical accessibility of wage recovery mechanisms, including use of technology to allow remote filing and testimony, decentralisation of claims forums, and use of mobile labour courts that attend large migrant worksites, with an extended limitation period in which workers may file a wage claim.

• Reduce risks of job loss or other forms of retaliation for pursuing a wage claim. This includes establishing portability of employer-sponsored visas that enables workers to change employers, permitting institutional or third-party plaintiffs to file a complaint while protecting workers’ identity, and enacting anti-retaliation laws with a presumption that an employer has unlawfully retaliated if it acts against a worker soon after a complaint.

• Reduce risks to a migrant worker’s immigration status of reporting wage theft, including firewalls that prevent government labour agencies from sharing information about a worker’s immigration status with immigration enforcement authorities.

• Enable workers to file a claim swiftly before departing the country of employment. This includes short-term immigration options to stay to pursue a labour claim or assisting workers to rapidly commence wage proceedings with the option of urgent advance testimony before departure.

• Enable migrant workers to recover wages after returning to their origin country. This includes technological innovations during COVID-19 that can be replicated and mainstreamed in government and judicial processes, combined with transnational provision of services to migrant workers by organisations with offices across migration corridors. Labour attachés at diplomatic missions in countries of origin and employment can facilitate lodgment and pursuit of wage claims.

• Increase resourcing for legal services, and incentivise private lawyers to represent migrant workers, including through awarding attorney’s fees and permitting claims on behalf of groups of workers. Unions, civil society, bar associations and law schools can also creatively expand legal services available to migrant workers.

• Improve effectiveness of government enforcement programs, including through routine, institutionalised collaborations between government authorities, unions and civil society.

• Create alternative jurisdictional bases and institutions to remedy wage theft within provincial and municipal government when a central labour agency is lacking, including through creation of wage theft criminal offences and related enforcement.

Stage 2: Obtaining a determination against an employer for all wages owed

The report identifies promising elements of administrative and judicial processes and rules of evidence that aim to reduce barriers to migrant workers obtaining a timely determination against their employer for the full wages owing.
They do this by:

• Shifting the burden of proof to employers to demonstrate their compliance with their obligations to pay workers correctly, rather than leaving the burden of adducing evidence with workers. This includes a flexible approach to workers’ evidence of the existence of the employment relationship. It also includes legal presumptions in workers’ favour as to duration of employment, hours worked, and wages owed, which the employer bears the burden to disprove.

• Developing technological systems that generate evidence of wage theft, including requiring employers to provide pay slips and transfer wages electronically, and implementing technology to track regular wage payments and automatically notify government of underpayment based on a worker’s entitlements under law and contract.

• Developing swift processes for adjudicating wage claims in administrative and legal forums, including fast-track adjudication of small wage claims and one-stop-shop claim resolution forums.

• Instituting professionalised mediation processes grounded in the parties’ legal rights under law and contract in order to fairly resolve wage disputes, and compelling employers to participate by imposing commercially meaningful consequences if they fail to do so.

Stage 3: Enforcing the determination and ensuring workers can collect payment

The report identifies creative initiatives across a range of jurisdictions to drive business’ compliance with wage judgments and reduce enforcement burdens on migrant workers. These are designed to:

• Leverage governments’ function as gatekeeper of opportunities for businesses. This includes national, provincial and municipal governments, and agencies beyond those that regulate migration or employment. 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. Governments at all levels can also condition public procurement of goods and services on suppliers’ compliance with wage payment and judgments.

• Create further meaningful commercial consequences for businesses that ignore wage judgments. This includes disrupting supply chains by prohibiting transport of goods across state borders until wages are paid, rapid accrual of additional penalties, and giving workers access to commercial assets to fulfil wage claims (through workers’ liens, surety bonds and government seizure of assets).

• Broaden accountability for rectifying wage theft to businesses further up a supply chain. This includes holding lead firms (and their corporate officers and shareholders) jointly liable for wage nonpayment by their suppliers, holding lead firms and principal contractors jointly liable for wages of subcontractors’ workers, and holding host businesses liable for wages of workers supplied by a labour contractor.

• Provide direct redress for wage theft when no party can be held to account, through public insolvency schemes and other forms of insurance. These can be funded through general public funds or employer contributions or deposits, or through Project Bank Accounts for large public infrastructure projects.

• Enable government agencies to proactively pursue payment of wage judgments on workers’ behalf.

Conclusion

The study has illuminated a range of potential paths for governments to establish institutional frameworks that enable migrant workers to remedy wage theft, with examples of how these have been implemented in different jurisdictions around the world. Substantial further research is urgently needed to determine how particular initiatives are working in practice based on data from migrant workers, advocates, service providers, government and judicial bodies. This should include an assessment of factors contributing to positive outcomes, and changes required to address shortcomings in apparently promising initiatives.

Campaigns for specific reforms should sit within a broader commitment to restructure the risks of nonpayment of wages, and the burdens of rectifying wage theft. Currently, these risks and burdens generally lie where they fall on migrant workers, rather than business and government. This is morally indefensible given the benefits derived by business and national economies from migrant labour and the fact that a migrant worker is the party least able to bear these risks and burdens. It is also an untenable labour compliance strategy that will leave a gaping, and widening, enforcement gap.

To genuinely ensure labour compliance for all workers and create a level playing field for businesses that do not engage in wage theft, governments must accept that wage theft is systemic and not exceptional. Alongside strategic enforcement of labour laws and proactive investigation of breaches, governments must establish systems that empower workers to initiate and swiftly resolve wage claims, by restacking every stage of the wage recovery process in workers’ favour.

Read full report here.

Bassina Farbenblum is Co-Executive Director of the Migrant Justice Institute and Associate Professor in the Faculty of Law & Justice at the University of New South Wales Sydney.

Laurie Berg is Co-Executive Director of the Migrant Justice Institute and Associate Professor in the Faculty of Law, University of Technology Sydney.

The Migrant Justice Institute (www.migrantjustice.org) undertakes strategic research and legal action to achieve fair treatment, enforcement of rights and just remedies for migrant workers. They chart pragmatic new pathways for decent work and responsible recruitment for migrant workers in Australia and globally, in collaboration with migrant worker communities, governments, business, civil society, trade unions, international organisations, and donors.