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August 25, 2025 Comments (0)

Understanding Placement Fees in Overseas Recruitment

If you’re hiring overseas talent or applying for a job abroad, you’ve likely asked yourself: What is a placement fee, and do I really need to pay it?

These charges often come up during recruitment, but they also create confusion and controversy. In many cases, agencies have charged workers excessive or illegal fees, leading to debt, delays, or even cancelled deployments. In worst cases, it may signal illegal recruitment of overseas Filipino workers.

To avoid these risks, you need to understand what the law allows and what it doesn’t. When you work with a DMW-licensed agency (previously POEA-licensed agency), you protect yourself through a legal and ethical process.

This guide breaks down which recruitment agency fees are legal and illegal, and how you can avoid scammers from start to finish.

 

What the Law Says (Philippines and Destination Countries)

Recruitment rules can vary depending on the job and destination country, but the Philippines has clear guidelines to protect its workers. Several countries also follow ethical hiring practices that support these standards. Here’s what you need to know about how the law works on both sides.

The Philippines Follows a POEA No Placement Fee Policy

The Department of Migrant Workers (DMW) enforces a no placement fee policy for low- to mid-skilled jobs like domestic work, caregiving, and construction. These roles are covered by rules that require the employer—not the worker—to shoulder recruitment-related expenses, including:

  • Recruitment agency service fees
  • Visa and work permit processing
  • Airfare and pre-deployment training

Countries That Support Zero-Fee Recruitment

Several countries enforce zero-fee recruitment policies as part of their commitment to protect OFWs. These countries are either part of official agreements or follow ethical hiring guidelines:

  • Qatar
  • Saudi Arabia
  • United Arab Emirates
  • United Kingdom
  • Austria
  • The Netherlands
  • Northern Ireland
  • Republic of Ireland
  • Norway
  • Israel
  • United States (H2B visa only, including Guam)
  • Canada (select provinces only)

Penalties for Breaking the Rules

Agencies or employers that charge illegal or excessive fees face serious consequences, including:

  • Fines of up to ₱2 million
  • Suspension or cancellation of licenses
  • Possible criminal charges or imprisonment

 

Common Violations and Red Flags

Even with clear laws in place, some recruiters and third-party agents continue to take advantage of employers and job seekers. Here are some common red flags you should never ignore.

  • • Charging for visa, training, or processing fees: Legitimate recruitment partners don’t ask you to pay for work visa applications, mandatory training, or processing fees, especially not before you’ve signed a job contract. These costs should fall under the employer’s responsibility. If an agency insists you cover these expenses up front, that’s a major warning sign.
  • • Using third-party agents to collect hidden fees: Some recruiters use so-called “coordinators” or “facilitators” to collect money off the record. These fees often go unreported and come with no official receipts. This tactic violates the fair and transparent recruitment process policy and makes it harder to trace and report abuse.
  • • Withholding documents until you pay: If an agency refuses to release your passport, contract, or medical results unless you pay additional charges, that’s illegal. Holding your documents as leverage is a coercive practice, and it’s a violation of your rights as a job seeker.
  • • Tying fake offers with high upfront payments: Some scammers offer jobs that don’t exist—or drastically misrepresent the role or salary—just to collect money. In one case reported online, an applicant paid ₱400,000 in processing fees for a job in the Czech Republic, only to discover the offer was fake. If the job seems too good to be true or comes with pressure to “pay now or lose the slot,” walk away.

 

What’s Legal: Fees That May Be Charged (If Any)

Businessman in a suit wearing a mask, talking on the phone about placement fee hiring.

While the law protects overseas job seekers from being charged placement fees in most cases, some pre-deployment expenses are allowed, but only under strict conditions. Here’s what you need to know.

You may pay for personal documentation costs

Some out-of-pocket expenses are legal if they relate directly to your documents. These include:

  • Passport application or renewal
  • NBI clearance
  • Birth certificate (PSA copy)
  • Medical exams (only when not covered by the employer)

However, agencies must inform you of these costs clearly, and they can’t mark up the actual rates charged by government agencies or clinics.

Agencies must issue official receipts

Whether you’re paying for documentation or other allowable expenses, the agency must always give you an official receipt for accountability purposes and prove that they’re not charging unauthorized fees.

Placement fees are legal only in certain cases

In jobs where placement fees are allowed—such as some professional or technical roles—agencies can only charge up to one month’s basic salary. Even then, they can only collect this amount after:

  • You’ve signed an employment contract
  • The job order has been verified
  • Your visa or work permit has been approved

Know the difference: placement fees vs. pre-deployment costs

It’s easy to confuse placement fees with other costs. Placement fees go to the agency for “placing” you in a job, while pre-deployment costs cover personal requirements. Understanding this distinction helps you spot illegal charges disguised as documentation fees.

 

How Workers Can Protect Themselves

Illegal recruitment tactics can be hard to spot, especially when you’re eager to land a job abroad. But knowing your rights and taking the steps below can protect you from fraud and excessive recruitment agency fees.

  • • Always verify the agency’s POEA/DMW license: Before applying, check that the recruitment agency is officially licensed by the POEA (now DMW). You can do this through the DMW’s official website or by calling their hotline. A legitimate agency follows strict rules and is held accountable by the government, unlike informal fixers or fly-by-night recruiters.
  • • Demand official receipts for any payment: Whether you’re paying for a passport, medical exam, or other allowable costs, always ask for an official receipt. This precaution protects you from being charged hidden or inflated fees and serves as proof in case you need to file a complaint later.
  • • Know your rights before signing anything: Before agreeing to anything, understand what you’re signing. The agency should explain your salary, benefits, job role, destination country’s laws, and what a placement fee is, if it applies at all. If they rush you to sign without clear details, that’s a red flag.
  • • Report on illegal practices immediately: If you suspect illegal activity—like being asked to pay upfront fees, dealing with third-party collectors, or surrendering your passport—you have the right to report it. You can file a complaint with the DMW, the nearest Philippine Overseas Labor Office (POLO), or even the Philippine embassy in your destination country.

 

Partner with Staffhouse for Ethical, Transparent Recruitment

Staffhouse is a DMW-licensed agency that champions ethical recruitment through a strict no placement fee policy. Since 1999, we’ve helped deploy over 40,000 Filipino workers abroad through a fair and transparent recruitment process. 

Our team ensures full compliance with Philippine labor laws and destination country requirements, making international hiring easier and safer for everyone involved. Whether you’re an employer or job seeker, partner with Staffhouse to move forward confidently.

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