Ethical recruitment from Nepal: zero-cost, IRIS, and the CSR file

Ethical recruitment from Nepal is not a slogan a destination employer can put on a careers page. It is a document set, and an auditor will ask to see it. The ILO settled the underlying rule in two steps, the fair-recruitment principles adopted in Geneva in September 2016 and the definition of recruitment fees and related costs adopted in November 2018: a worker shall not be charged any recruitment fee or related cost, full stop. Nepal's own statute, the Foreign Employment Act 2064 (2007), says the same thing, and the ILO Global Study scores Nepal 0/0/0, fees not allowed. The gap between that rule and the field is wide, and it is the gap that lands in a buyer's CSR file. Nepal's own National Statistics Office Return Migration and Recruitment Cost Survey, completed in November 2023 with ILO support, found that returning migrants had paid over NPR 100,000 on average, roughly USD 855, and that fewer than 2 percent paid nothing at all. This piece sets out what the standards require, what the failure modes look like in practice, and exactly which papers a destination employer in the EU or elsewhere needs on file to show the worker paid zero.

What zero-cost actually means

The Employer Pays Principle has a precise definition, and it is wider than most buyers assume on first reading. The phrasing traces to the Dhaka Principles for Migration with Dignity, which the Institute for Human Rights and Business launched on 18 December 2012, ten principles in all, with Principle 1 reading "No fees are charged to migrant workers." The ILO then enumerated what the fee actually covers, and the list is the part that catches employers out.

The ILO names seven categories of recruitment fee and related cost that a worker must never bear:

• Medical. The fitness screening, the panel tests, the certificate. For a Nepal corridor this is the Wafid panel for Gulf-bound files or the IOM-protocol assessment for higher-income destinations.
• Insurance. Including the migrant welfare-fund contribution. In Nepal that is the Foreign Employment Welfare Fund levy plus the mandatory term-life premium.
• Skills and qualification tests. The CTEVT or NSTB trade test and the National Skill Certificate fee.
• Training and orientation. The Pre-Departure Orientation Training that DOFE requires before final labour approval.
• Equipment. Uniforms and personal protective equipment.
• Travel and lodging. The air ticket, the bus from the district to Kathmandu, the nights in a guesthouse while a file clears.
• Administrative. Contracts, identity documents, passports, visas and permits.

A buyer who pays the agency fee but lets the worker carry the medical, the welfare-fund levy and the orientation has not met the standard. Those residual line items are exactly where a "zero-cost" corridor quietly becomes a worker-paid one. Werklist places its recruitment fee on the employer side and absorbs every one of these seven categories into the employer invoice, which is the same arrangement set out in the recruitment fee structure on the employer side, where each cost is a named pass-through against a milestone, not a charge that drifts back onto the candidate.

The IRIS Standard, and why an auditor asks for it

The IOM built the International Recruitment Integrity System to turn the principle into something a third party can verify. The IOM decided to develop IRIS in 2014, and the IRIS Standard is voluntary, third-party-audited, and applies only to legally operating private recruitment agencies. It is the framework most EU procurement teams will reference by name when they write a responsible-recruitment clause into a supplier contract.

The IRIS Standard runs on seven core principles, not five, and confusing the count is a quick way to signal a desk has not read it. Principles A and B are overarching, respect for laws and fundamental rights at work, and ethical and professional conduct. Then come five operational principles: Principle 1, prohibition of recruitment fees, which is the Employer Pays Principle itself; Principle 2, freedom of movement; Principle 3, transparency of terms; Principle 4, confidentiality and data protection; and Principle 5, access to remedy. An IRIS-aligned corridor is one where each of those seven can be evidenced, not asserted.

This matters to the buyer because the wider market has a deadline in view. The IHRB Leadership Group for Responsible Recruitment launched in May 2016 with the stated goal of eradicating worker-paid fees by 2026, and more than 400 businesses now sit on its Responsible Recruitment Register. A destination employer running a Nepal corridor in 2026 is running it in the year the market set as its target, and an audit that lands now will be read against that target.

Why the Free Visa Free Ticket policy is not your EU backstop

There is a tempting shortcut here, and it is wrong. Nepal has a statutory employer-pays scheme already, the Free Visa, Free Ticket policy, announced on 9 June 2015 and implemented on 6 July 2015. Under it, the foreign employer bears the visa and the round-trip air ticket, and the recruitment service fee is capped at NPR 10,000, payable only where the employer refuses to pay, down from the pre-2015 caps of NPR 70,000 for the Gulf and NPR 80,000 for Malaysia.

The trap is the scope. The policy covers seven destinations only, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, the UAE and Malaysia, which together take roughly 95 to 97 percent of Nepali migrants excluding India. The EU is not named in the 2015 directive. Croatia is not in scope, Romania is not in scope, no European destination is. For an EU placement the statutory employer-pays obligation does not auto-attach, so a buyer who points to Free Visa Free Ticket as the reason its Croatian or Romanian corridor is zero-cost has cited a scheme that does not reach the destination. The policy is also in flux: Minister Rajendra Singh Bhandari announced on 3 February 2026 that the scheme would be scrapped within a month, calling such arrangements a way of "defrauding the youths," while in April 2026 Labour Minister Dipak Kumar Sah reaffirmed the NPR 10,000 cap and DOFE sent inquiry letters dated 17 March 2026. The full mechanics of who pays what under that scheme are set out in the Free Visa Free Ticket explainer for employers.

For an EU corridor, the employer-pays obligation flows instead from the IRIS-aligned commercial model and the ILO and IOM standards above, applied because the buyer commits to them, not because a Nepali Gulf scheme compels them. That is a stronger position for the CSR file, because it is contractual and audited rather than borrowed from a directive that names other countries.

The recruitment-debt problem the file is meant to prevent

The reason auditors care is that the field record is grim, and it is the worker who carries it. Across the 2,244-worker survey cited by CESLAM, the average fee paid was around NPR 100,000, roughly ten times the legal cap, and some Malaysia-bound workers reported paying NPR 200,000. Amnesty International's "Turning People into Profits" documented an average around NPR 137,000 with loan interest running as high as 60 percent a year. The debt does not stay at the airport. In Nepal's national accounts, loan repayment was the second-largest use of remittances at 15.9 percent of households in FY 2022/23, much of it servicing recruitment debt taken on before departure.

That is the mechanism a CSR file is built to stop. A worker who borrows NPR 137,000 at high interest to take a job is a worker who cannot leave that job, which is the textbook condition for debt bondage. The Issara Institute launched a Responsible Recruitment Revolving Fund in 2024 precisely to remove the cash-flow barrier that pushes the cost back onto candidates, evidence that the cost has to be carried somewhere, and the only ethical place to carry it is the employer's books.

What goes in the CSR and audit file

This is the part an operations or procurement lead can act on directly. A destination employer that wants to prove its Nepal corridor charged the worker nothing should be able to produce the following on request, per cohort.

The three-touchpoint survey is the spine of the file because it is the only part that hears from the worker after departure. Werklist runs it at three fixed points, pre-departure in Kathmandu, on-site at 30 days, and at contract end, and each touchpoint asks the worker directly whether any fee was extracted at any stage. A clean three-touchpoint record is what turns a zero-cost claim from a sentence on an invoice into testimony an auditor can read. The receipts then back it: a destination employer should hold the actual paid receipts for the welfare-fund levy, the term-life premium, the medical, the orientation, the ticket and the visa, all in the employer's name, so that no single one of the ILO's seven categories has a gap where a worker-paid charge could hide.

The failure mode with a name: the sub-agent fee

The most common way a "zero-cost" Nepal corridor turns out to have charged the worker is the sub-agent, the dalal. Sub-agents were banned by a March 2019 amendment to the Foreign Employment Act, yet they persist informally and they are where the money leaks. By mid-March of FY 2023/24, of 5,881 complaints filed, 5,129 were against agents and middlemen and only 752 against licensed companies. The licensed agency can run a clean employer-side invoice while an unlicensed sub-agent in the district collects NPR 80,000 to NPR 150,000 from the worker for "processing" the file, and that charge never appears on the employer's paperwork. The CSR file looks spotless and the corridor is anything but.

The defence is verification at the licence, not at the handshake. Confirm the agency's licence by name or number at dofe.gov.np, in the format 658/064/065, and confirm there is no sub-agent layer between the licence and the candidate. The employer's guide to verifying a licensed Nepali recruiter sets out the check in full, including the new safeguard that from 4 June 2026 makes repeat labour approval automatic and auto-rejects any file missing the welfare-fund and SSF contributions. A corridor where the licensed agency sources directly, with no middleman fee in the district, is the only version that survives an audit.

To scope a zero-cost Nepal corridor with the CSR file built in from the first cohort, send a brief to the Kathmandu branch, Blusift Nepal, via contact companies, and the team will walk the IRIS alignment, the receipts, and the three-touchpoint records through the DOFE office at Maharajgunj alongside the rest of the file.