Submission to the Labour Department on Consultation on the Review of Code of Practice for Employment Agencies

1. The Consumer Council (the Council) is pleased to submit its views with respect to the consultation paper (the Consultation Paper) issued by the Labour Department (LD) on the preliminary proposals for revising the Code of Practice for Employment Agencies (CoP), and to provide suggestions to enhance the protection of consumer interests when the services of Employment Agencies (EAs) are procured.

Overall Views

2. The Council welcomes the LD’s review and proposed revisions of the CoP and agrees with the overall direction to enhance the professionalism and service quality of the EA industry.  Malpractices of EAs could result in financial loss and inconvenience or even distress for both job-seekers and employers, and hence should be curbed. 

3. It is commonplace in Hong Kong for job-seekers and employers to use the services of EAs for recruitment and placement of labour, especially foreign domestic helpers (FDHs).  As at end-January 2023, there were 3,223 licensed EAs in Hong Kong_[1], of which 1,397 (43%) were providing employment services for FDHs (FDH-EAs).  According to the Census and Statistics Department, there were about 327,700 Hong Kong households employing FDHs in 2019/20_[2].  Given the high demand for the services of FDH-EAs by both job-seekers and prospective employers (who very often are ordinary local families in need of the services of FDHs, relying on the EAs to source from foreign countries and select the best match for them), the Council considers it imperative to adopt proactive policies to protect the rights of consumers of the services of EAs, especially FDH-EAs.

4. The need for further enhancement of the CoP is also supported by the Council’s complaint statistics.  Between 2018 and Q1 2023, there were a total of 1,073 complaint cases on FDH-EAs.  Most of the complaints were related to quality of service (407 cases) and sales practices (200 cases).  As for cases relating to variation/termination of contract and late/non-delivery of service, the number of complaints has increased sharply since the onset of the COVID-19 pandemic in 2020.  A breakdown of these complaint cases on FDH-EAs by nature is given in the table below:

                                       _{Source: Consumer Council}

5. In the following parts, the Council puts forward its (i) views on the revisions proposed by the LD, to be followed by (ii) further enhancement suggested by the Council which concern consumer interests, and (iii) some other steps and measures beyond the CoP that can be considered to further enhance the professionalism and service quality of the EA industry, for the consideration of the LD.

(i) Views on the LD’s preliminary proposals

Involvement in financial affairs of job-seekers

6. The Council appreciates the proposed revisions in para. 5(a)-5(b) of the Consultation Paper which aim to avoid the involvement of EAs in the financial affairs of job-seekers.  In addition, the LD may consider also requiring the EA to disclose to FDH employers any financial dealings or arrangements it has made with the FDH, whether directly or indirectly, since the employer should have the right to know the EA’s involvement in the financial affairs of the FDH placed by it.  Coupled with the standards expected of EAs in the current CoP which states that EAs should not encourage or force job-seekers to take out loans from any financial institutions or individuals, the Council considers that these measures can help reduce the risk of job-seekers, especially FDHs, being burdened with loans through EAs or other institutions.  Employers of FDHs would also face less risks of being caught up in the financial matters of debt-laden FDHs.  The Council believes it is necessary for the LD to monitor licensed EAs on a regular basis throughout the term of the licence to ensure strict compliance with these measures.

Job-hopping of FDHs

7. With regard to the problem of premature termination of employment contracts by FDHs (also known as “job-hopping”) which has become especially pronounced since the COVID-19 pandemic and has led to marked increase in complaints against EAs, the Council agrees that measures should be introduced to combat the problem so as to minimise the distress and serious inconvenience that could be caused to FDH employers (consumers).  In this regard, the Council supports the proposed revisions to the CoP in para. 5(f)-5(g) of the Consultation Paper to require EAs to clearly explain to FDHs that only in exceptional circumstances would an application for change of employer in Hong Kong be approved, and to prohibit EAs from inducing FDHs to terminate their contract prematurely.  

Refund or FDH replacement arrangements

8. The Council welcomes the proposal set out in para. 5(h) of the Consultation Paper to require EAs to set out the refund or FDH replacement arrangements in the service agreement with the FDH employer.  It is hoped that the proposed requirement will address the problem of EAs refusing either a refund or replacement arrangements unreasonably when they fail to provide the services in accordance with the service agreement. 

9. According to the Council’s complaint records, there had been instances where the FDH did not report for duty but the EA concerned refused to honour its verbal promise of a refund or replacement.  There were also cases where the EA relied on the ambiguous conditions of refund in the service agreement and refused either a refund or replacement.  As such, the Council suggests the LD to draw up practice guides on the implementation of the proposed revision.  These could include illustrating the scenarios when a refund or replacement should be made, specifying the refund and replacement methods (such as the percentage of total costs or items that could be refunded, ways of refund, and the time required for arranging a replacement) in the service agreement, to provide certainty to employers.  The LD may consider providing sample contract clauses for EAs to adopt; while any threshold levels will leave to EAs to determine.  In addition, the LD should also define the role and responsibilities of EAs in case of premature termination of contract initiated by FDHs, so as to ensure that the FDH employers will be given adequate support.

Transparency of fees charged by EAs

10. Overcharging of EAs to employers of FDHs is another prevailing issue among the complaints received by the Council.  Between 2018 and Q1 2023, the Council received 114 complaints related to price disputes with FDH-EAs.  Against this background, the Council takes the view that it is vital to enhance the transparency of the service fees of EAs.  The Council agrees with the proposal in para. 5(i) of the Consultation Paper that requires EAs to set out the amount of fees charged for each category of services in the service agreement, including fees relevant to processing FDHs’ visas, arrangement of FDHs’ arrival in Hong Kong, medical services or insurance fees relating to employment of FDHs, etc.  If extra administrative fees will be charged for some services in addition to commonly expected of EAs (such as airport pick-up, assisting with Hong Kong identity card application, reporting to consulates which covered in the CoP’s sample service agreement with FDH employers) by the employers, EAs should clearly state such fees in the service agreement and draw the attention of the employers to those fees.

11. In addition to enhancing the transparency of service fees, the Council opines that the LD should also introduce measures to address the issue of employers of FDHs being overcharged by EAs, especially when the law only imposes restrictions over the fees that EAs may charge to job-seekers but not employers.  In this connection, the LD may consider requiring EAs to display their price schedules in a prominent position at their places of business.  Additionally, if an EA maintains a website, mobile application and/or other business channels, the price schedule should also be displayed thereat for easy reference by the public to make price comparison.  This would help improve pricing transparency and enhance market competition.  Meanwhile, EAs should also be required to provide clear explanation to employers of FDHs about the terms and conditions of the service agreement, especially the terms related to extra fees and charges.  When imposing extra fees and charges, EAs should also be required to provide relevant documents to the employer concerned to support the imposition.

Defining the meaning of “job-seeker” in the CoP

12. The Council welcomes the LD’s proposal in para. 5(m) of the Consultation Paper to define “job-seeker” in the CoP as “a person looking for employment or having been placed in employment by a relevant EA”.  The Council believes that the proposed definition will reduce misunderstanding between EAs and consumers as to the applicability of the CoP and to ensure that the interests of consumers would continue to be safeguarded throughout the employment where appropriate.  

13. The Council further opines that the proposed definition of “job‑seeker” aligns with the stance of the Council that the consumer rights of job-seekers and employers should not extinguish upon the placement of the job‑seekers, and that some of the EAs’ responsibilities to employers and job‑seekers should continue throughout the whole contract period (including post-employment under certain circumstances).  For example, EAs should have the responsibility to take follow-up actions when problems in relation to the placement surface after commencement of the employment, such as when the skills and/or credentials of the job-seeker do not match with the requirements of the employer or that the working condition and/or the job duties differ from what the job-seeker was told.  In addition, the EA should continue to be responsible to both the employer and the job-seeker for any representations and assurances that it has made in the course of its service. 

(ii) Further Enhancement of the CoP

14. In addition to commenting the proposals in the Consultation Paper, the Council sets out in the following some suggested enhancement of the CoP with a view to further protecting the consumer interest of both the employers and job-seekers.

Transparency in the hiring process

15. Some complaint cases received by the Council reflected that prospective employers of FDHs were often ill-informed of the progress of hiring.  For instance, EAs may not take the initiative to provide employers with the status of the employment visa applications of FDHs, etc., where employers of FDHs might find it hard to expect the time of arrival of their FDHs and prepare accordingly.  The Council deems it vital for the EAs to enhance transparency in the hiring process by requiring EAs to provide a clear status update for the employers of FDH on some key milestones, such as completion of submitting visa application to the Immigration Department, completion of health check, completion of training, etc. whenever applicable.

Quality of service and responsibilities of EAs 

16. The Council notes that section 4.4.1 of the CoP requires EAs to exercise due diligence in checking the accuracy of the information provided by both job-seekers and employers, and ensuring that the candidates offered to the employers could satisfy the qualification and/or requirements set out by the employers.  Section 4.4.2 of the CoP further requires EA to seek clarification and further information in case of suspicion over the accuracy of the information.  EAs are also required to refrain from using any doubtful information before it has been clarified.

17. However, despite the aforementioned requirements of the CoP, the Council has received complaints involving inaccurate information provided by EAs from time to time, such as problematic qualification and health check reports.  During surveys of the Council_[3], some EAs admitted that they only checked the qualifications and work experience of FDHs who had completed employment contracts in Hong Kong while no checking was done for those recruited from overseas.  From the standpoint of consumers, it is essential for EAs to provide accurate information to both the employers and the job-seekers as they often rely on the information provided to make employment decisions. It is suggested that the LD should step up efforts to emphasise the responsibilities of EAs under the CoP to provide professional job matching services, and to verify relevant information for FDHs and employers in accordance with the CoP.  The LD may consider conducting inspections with EAs that are frequently complained by consumers to ensure the quality of service of EAs. 

18. Regarding health check report of FDHs, the Council suggests that the LD may consider recommending a list of basic health check items in the CoP, so as to assist employers to choose the necessary examination items that meet their needs.

Reasonable opportunity for reviewing service agreements

19. The Council observed that the terms and conditions of the service agreements of some EAs are unclear and ambiguous, while there are also some unscrupulous practices of EAs forcing consumers (prospective employers) to sign the agreement without allowing them sufficient time to read and understand the terms and conditions.  In view of this prevailing problem, the Council invites the LD to consider requiring EAs to allow a reasonable period of time for the consumers to review the service agreements before signing.  To further enhance the service of EAs and to protect the right of the consumers, it is also suggested that the EAs may also allow the consumer to cancel the contract within a reasonable period of time, i.e., to offer a cooling-off period before the agreement really comes into effect.

Exemption clauses in service agreements

20. The Council notes that some EAs attempted to shrink responsibility by including liability disclaimers and/or exemption clauses in the service agreements, such as claiming that they would not be held responsible for the accuracy of any claims or information of the FDHs.  To prevent an EA from using contractual means to shun its responsibilities owed to employers or job-seekers, and to avoid consumers from being misled about the standards required of EAs under the CoP, the Council suggests the LD to consider restricting or even prohibiting the inclusion in service agreements exemption clauses and/or disclaimers to exclude EAs’ responsibilities at law and/or under the CoP.  The LD may review the service agreements during inspection to ensure compliance.  Of equal importance, the LD should provide appropriate consumer education to educate the public that certain exemption clauses may not exclude EA’s responsibilities at law.

Scope of the CoP

21. In Hong Kong, both FDH-EAs and EAs that provide services for non-FDHs (non FDH-EAs) are regulated under the same CoP and have the same EA licence irrespective of the kinds of workers they place.  However, various types of job-seekers, e.g. FDHs, local workers, imported workers, office staff or executives, as well as their prospective employers can vary greatly in their capability to protect their rights.  

22. While the proposed revisions mainly concern FDH-EAs, the Council notes that FDH-EAs only make up around 43% of the total licensed EAs in Hong Kong, while the rest are non-FDH-EAs.  There has also been rapid development of job matching platforms and job boards that are geared towards non‑FDH job seekers and employers and cover freelance, part-time and full‑time employment opportunities in a wide range of sectors.  As such, the Council is also concerned about potential issues relating to these non-FDH EAs, for example overcharging and job scams. 

23. In this connection, the Council is of the view that the LD may use this opportunity of updating the CoP to also enhance its oversight on non-FDH EAs and address the aforementioned potential issues.  The Council is especially concerned on how the rights of job‑seekers and prospective employers, as users of EA services, can be adequately protected at a time when traders use new technologies (e.g. artificial intelligence) to offer job‑matching services.  The Council also suggests the LD to consider adopting a differentiated approach to regulate EAs based on the type of job-seekers, or to consider whether different CoPs should be used to regulate FDH-EAs and non-FDH-EAs.

(iii) Other Comments

24. To further protect the interests of consumers, the Council suggests further steps and measures for the consideration of the LD so as to enhance the professionalism and service quality of the EA industry. 

Inspection from the LD

25. According to the Controlling Officer’s Report for the LD in the 2023-24 Budget, the LD plans to conduct 2,000 inspections of EAs in 2023, while inspection numbers in 2021 and 2022 were 2,048 and 1,714 respectively.  Given that there are around 3,200 EAs in Hong Kong, this would imply not all EAs would be inspected in a given year.  To enhance transparency, the Council also suggests the LD to disclose details of the numbers of EAs to be inspected per year, in addition to the number of times, so as to ensure the inspection of EAs is adequate. 

26. Moreover, the LD may also devote manpower to conduct inspections and investigations on the operations of any unlicensed EAs.  While understanding the resource implication of increasing on the number of inspections on EAs, the Council is of the view that the LD may consider prioritise inspections with EAs based on a reasonable sampling mechanism, such as the business size, operation mode, and complaint numbers received, in order to safeguard the quality of service of the industry. 

Employer feedback survey

27. To improve the quality of service of EAs and identify the pain points of the industry, the Council suggests the LD to engage with employers more proactively to understand their level of satisfaction on EAs, and to identify the areas for improvement that could be made in the industry.

Engagement with overseas jurisdictions

28. Recognising the presence and operations of EAs across the globe, and that they may provide information about jobs in Hong Kong even though they may not have a physical presence locally, the Council believes that the LD must have regularly and proactively exchange information and communicate with its counterparts in other jurisdictions and related embassies on various topics.  The Council adds to the topics list (if have not already included) on sharing of the latest consumer demands and trends (e.g. elderly care), new consumption trends of FDHs (e.g. overborrow issue) which may affect their employers, problematic practices, emerging risks, and the corresponding precautions, so as to be adequately prepared for issues that may also impact on Hong Kong consumers and their consumer rights.  

Enforcement actions on combatting irregularities

29. The Council notices that the LD has all along taken enforcement actions in combatting irregularities of EAs, including actions to revoke or refuse to issue/renew its licence, or issue warnings for rectification.  According to the figures provided by the LD to the Legislative Council, the LD revoked the licence of 1 FDH-EA, and issued 49 written warnings and 603 verbal warnings to FDH-EAs in 2022_[4].  There was a large difference between the number of licence revocation and number of warnings issued.

30. By reference to Singapore, EAs that infringe relevant regulations or guidelines may receive demerit points_[5] and face administrative requirements upon accumulation of points beyond a threshold.  The Council is of the view that the LD may consider the feasibility of introducing suspension of EAs’ licences to supplement the existing regulatory supervision of EAs.  The suspension of licences would help regulate problematic EAs (e.g. repeated non-compliances) that have contravened the CoP in a manner that deserves more than written/verbal warnings, but not so serious as to deserve having their licences revoked. 

Training for EA staff and public education

31. To enhance the professionalism of the industry, the Council considers that provision of training to EA staff is necessary to ensure they have sufficient knowledge about employment laws and regulations.  For instance, in Singapore, for EAs other than those providing placement for high‑wage workers, the licensee, key personnel and other personnel must pass a certification test and attain the Certificate of Employment Intermediaries (CEI)_[6].  It ensures that EA personnel are familiar with employment laws and regulations before being allowed to conduct EA-related work. 

32. Apart from ensuring EA staff are well equipped with necessary training, the LD should also organise seminars to explain the relevant clauses in the Employment Ordinance (Cap. 57) and other relevant laws and regulations for the public regarding the employment FDHs.  The LD should also take steps to encourage FDH employers to care more about their FDHs, such as knowing more about their financial conditions and their lives in Hong Kong.  If it is found that the EA has charged the FDH more than the maximum commission allowable under the Employment Agency Regulations (Cap. 57A), which is currently an amount not exceeding 10% of the first month’s salary, employers should be encouraged to report to the LD for further investigations.

Accommodation of FDHs

33. The Council notes that all FDH employers shall provide FDHs with suitable accommodation and with reasonable privacy.  Given the small living space in Hong Kong, some FDHs reflected that they did not have proper accommodation, or did not live in harmony with the employers’ family.  The LD may continue to closely monitor the situation and review the regulatory measures if needed, by considering alternative ways that can improve family harmony while ensuring the welfare of FDHs.  Further, the viability of introducing exemptions to the requirement of residing in the employer’s residence should be considered in view of the flat size of general households in Hong Kong and the welfare of FDHs.

Conclusion

34. The Council hopes that the LD will take into consideration the above views and suggestions in response to the Consultation Paper to ensure that consumer interests will be safeguarded sufficiently.  The Council believes that EAs have an important role to protect the rights and respond to the needs of job‑seekers and employers.  The LD should also regularly review the CoP to provide up‑to‑date protection to patrons of EAs including both job-seekers and employers, for the benefits of the society of Hong Kong.