Workers were paying up to $60,000 before even boarding a plane
New Zealand's Employment Court just closed a loophole that let employers sidestep the country's ban on charging workers for jobs.
In a judgment handed down on October 8, 2026, a three-judge Full Court ruled that section 12A of the Wages Protection Act 1983 applies to payments made overseas - not just within New Zealand. The provision bans employers, or anyone acting on their behalf, from seeking or receiving any "premium" in connection with a person's employment.
Until now, the reach of that ban had been contested. A 2003 Employment Court decision, Mehta v Elliott, held that a premium paid offshore fell outside the statute, giving weight to the legal presumption against extraterritoriality - the idea that domestic laws do not ordinarily reach beyond a country's borders. Some Employment Relations Authority decisions followed that reasoning. Others did not.
The Full Court was convened to settle the split. Two proceedings - one brought by a Labour Inspector against Top Produce Limited, the other by four workers against separate employer parties - had both raised the same preliminary question. Three interveners were granted leave to appear: the New Zealand Council of Trade Unions, Workers First Union, and Community Law Centres Aotearoa.
The evidence before the court painted what it called an "alarming" picture of migrant worker exploitation.
Migrant workers were routinely paying between $10,000 and $60,000 each - before leaving their home countries - in exchange for promises of employment and residency in New Zealand. Payments were typically made in cash or by bank deposit, often in instalments, and directed not to employers but to intermediaries: relatives, associates, or contacts of the employer operating through family or community networks in the worker's home country.
Documentation was scarce. Receipts were rarely given. Discussions happened over WhatsApp, phone calls, or verbal messages through family members - often in the worker's first language, and before they had set foot in New Zealand.
Workers funded these payments through family borrowing, high-interest loans, or by selling or mortgaging property. Once they arrived - frequently on visas tied to a single employer - the resulting debt made them far less likely to complain about unlawful conditions.
One deponent told the court that the offshore location of these payments "is not an accident; it is a calculated feature of the exploitation model, designed to evade domestic regulation and to trap vulnerable workers in debt bondage before their employment even begins."
Regulatory data compiled by the Labour Inspector showed complaints involving offshore premiums were increasing, both in number and in the size of the sums involved.
How the court reasoned
The court started with the text. Section 12A is broadly worded and contains what the court described as an "unequivocal prohibition." It says nothing about where the payment must occur.
But broad wording alone does not settle the question of territorial reach. So the court turned to purpose.
Employment law, the court noted, is its own legal category - shaped by the inherent power imbalance between employers and workers, and designed to set a protective floor beneath which employers cannot go. A narrow reading of s 12A that excluded offshore payments would let employers dodge the ban simply by transacting overseas. That, the court held, would produce "the precise mischief the provision was designed to address."
The court also drew on New Zealand's international commitments. The International Labour Organization's 2025 indicators of forced labour identify debt bondage arising from employment premiums as one of the most common markers of forced labour, and state that no recruitment fees or related costs should be charged to workers or job-seekers. Reading s 12A as limited to domestic transactions would sit uneasily with New Zealand's obligations under the Forced Labour Convention (ratified in 1938) and the International Covenant on Economic, Social and Cultural Rights (ratified in 1978).
On the question of the 2003 Mehta decision, the court was direct. Single-judge decisions do not bind the Employment Court. And Mehta was decided under the now-repealed Employment Contracts Act 1991. Modern circumstances - offshore pay-to-work schemes, international recruitment pipelines, debt bondage - were "less prevalent and not considered in that judgment." The court described Mehta as "a creature of its time."
The court also addressed a practical concern: what happens when payments are funnelled through intermediaries rather than paid to the employer directly? The statute, the court noted, already contemplates this. Section 12A(1) applies to any "person engaged on behalf of the employer." Receipt by an intermediary acting for the employer counts as receipt by the employer. To hold otherwise, the court said, would sever the civil remedy from the substantive prohibition and reward employers who insulate themselves through middlemen.
The answer was one word: yes
Section 12A applies to premiums sought or received overseas for employment in New Zealand. The court reserved costs.
The substantive proceedings in both cases will now continue. The court was careful to note that the evidence has not yet been given, and the preliminary ruling does not determine whether any party has actually breached s 12A. That question remains for the trials.
For HR teams and recruitment operators bringing migrant workers into New Zealand, the practical takeaway is clear: where the money changes hands no longer matters. If it is connected to employment in this country, the ban applies.
The allegations in the underlying proceedings have not been tested in court. No party has been found to have breached section 12A. The substantive cases remain before the Employment Court.
