Employers cannot escape ban on charging workers for New Zealand jobs by collecting money overseas
New Zealand's Employment Court has ruled that employers cannot sidestep the ban on charging workers for jobs by collecting the money overseas.
In a judgment delivered this month, a full bench found that section 12A of the Wages Protection Act 1983 – which bars employers and anyone acting for them from seeking or receiving a premium for employment – applies even when all or part of the transaction takes place outside the country.
The court concluded that "the place in which the premium transaction occurred is irrelevant for the purposes of s 12A".
The ruling answers a preliminary question of law in two cases removed from the Employment Relations Authority, Labour Inspector v Top Produce Ltd and Bhatia v Khanna.
The authority had split on the issue, with some determinations following Mehta v Elliott, a 2003 Employment Court decision that held a premium sought or received overseas was not unlawful.
The full court, led by Chief Judge Christina Inglis, rejected that approach. It said a narrow reading would let employers "avoid the protective rights conferred by s 12A simply by transacting overseas for employment in New Zealand."
The court found that the connecting factor under s 12A is "the New Zealand employment relationship," not where the money changes hands. It added that Mehta "may best be seen as a creature of its time," as offshore pay-to-work schemes and debt bondage were less prevalent when it was decided.
The court said the evidence before it painted "an alarming picture of worker exploitation," with payments often routed through relatives or intermediaries in workers' home countries. Demands typically ranged from $10,000 to $60,000 per employee, according to Labour Inspector data cited in the judgment.
Although recovery was not part of the question, the court also observed that receipt of a premium by an intermediary acting for the employer is receipt by the employer. A narrower reading would risk "rewarding employers who insulate themselves through intermediaries," it said.
'There will be consequences'
In a statement, Immigration New Zealand (INZ) welcomed the decision.
"Migrant workers paying significant sums of money for promises of jobs and residency is a recurring feature of migrant exploitation and is widespread. The Court's decision provides a legal tool to help combat this exploitation," said Aaron Smith, INZ's National Manager Risk and Verification.
Smith said INZ could not recover premiums paid by migrants in job scams, but it had a range of options to hold New Zealand employers to account if they, or those acting for them, were found to be charging migrants for jobs.
He said employers and recruiters of migrant workers must ensure that their recruitment practices are transparent and uphold New Zealand's employment standards, and that migrants are not charged to secure work. This includes being alert to what happens through offshore recruitment arrangements and third parties.
"If you break the law, misuse your position, or take advantage of migrants for financial gain, including through making false job offers, there will be consequences," Smith added.
The ruling does not decide whether the defendants in either case breached s 12A; that will be determined at the substantive hearings. Costs were reserved.
