Across many sectors, companies rely on third-party workers such as agency workers and (sub)contracted personnel, who often support a company’s operations on a temporary basis. Frequently, third-party workers include individuals who move from one country to another, or within a country, for the purpose of employment (i.e., migrant workers). In 2022, around 167 million migrant workers were part of the global workforce, representing nearly 5%, mainly in services, industry and agriculture.[1]

These workers often perform essential operational functions, working alongside directly employed workers in factories, warehouses, logistics centers or service locations. In some industries, the presence of third-party workers is essential for managing seasonal demand, maintaining operational flexibility or conducting specialized tasks.

Because third-party workers, including migrant workers, operate within the company’s operational environment, their working conditions and experiences are often closely linked to how work is organized on site. At the same time, they are often employed through labor agencies or contractors, meaning they fall outside the company’s direct employment relationship.

This creates an important dynamic for human rights due diligence.

Workers may be physically embedded in companies’ own operations, while the formal employment relationship sits with another entity. As a result, responsibility for these workers may appear to sit outside the company’s direct employment structures, even though their work takes place within its operational environment.

In practice, this can mean that these workers receive less attention in human rights due diligence processes, despite being closely connected to day-to-day operations. However, theheightened human rights risks that they face make it particularly important for companies to understand and address the situation of third-party workers present within their own operational environment.

In this article, we share insights from our experience advising companies across sectors and explain which heightened risks third-party workers face and why. You will also find a list of suggestions for companies to better address the risks to third-party workers in their own operations.

Understanding factors that enhance risks to third-party workers

A number of structural factors increase the human rights risks faced by third-party workers, including temporary, contract or migrant workers, in operational settings.

• Employment relationships and contracts are one important element. Workers employed through temporary agencies or subcontractors may face situations where responsibilities between the company and the labor provider are not clearly defined. In some cases, there are no contracts at all for third-party workers. This makes it difficult to assert one’s rights, to raise concerns and seek support.
• For migrant workers, immigration status and visa restrictions can add another layer of dependency, particularly where residence or work permits are linked to employment or where recruitment takes place through cross-border intermediaries.
• Language barriers and limited access to information can affect workers’ understanding of contracts, their rights or available grievance mechanisms.
• In addition, third-party workers may find it harder to speak up or influence their working conditions. They may depend on labor providers for continued employment, work in separate teams or live in accommodation arranged through intermediaries, increasing their dependency and the power imbalance at hand.

Together, these factors can create situations where workers face heightened risks and find it more difficult to raise concerns or access effective remedy.

Human rights risks related to third-party, temporary or migrant labor are sometimes perceived as primarily occurring in regions with weaker governance frameworks. However, in reality, negative impacts on third-party workers can also arise in jurisdictions with comparatively strong labor protections.

Complex recruitment arrangements, subcontracting structures or workers’ reliance on intermediary recruiters may still create conditions where workers face heightened risks. In Europe, for example, labor mobility supports many industries, yet it also creates situations where migrant or temporary workers face particular challenges, including unclear recruitment arrangements, language barriers and limited access to grievance channels to report problems.

The realities many third-party and migrant workers face

In practice, these structural factors can translate into a range of concrete risks and negative impacts for people employed via recruitment agencies, labor contractors or intermediaries (including online platforms for hiring gig workers). While situations vary across sectors and depend on specific circumstances such as the employment arrangements, migration status or recruitment pathway, third-party, temporary and migrant workers frequently experience situations such as:

Missing or disadvantageous contracts and complex subcontracting structures, making it unclear who is responsible and harder for workers to claim their rights. In some cases, workers may even be required to pay additional costs to even obtain a contract, effectively paying subcontractors to process their paperwork.

Recruitment fees charged by intermediaries, leaving workers with significant debt before starting a job.

Situations of forced labor, for example where workers are required to hand over passports or where high recruitment fees lead to debt limiting them to leave employment.

Unfair wages and unclear or unexpected wage deductions, for example for accommodation, transport or administrative costs. Payment terms can also vary and lead to disadvantages, such as payment by output rather than hourly rates.

Lack of insurance coverage and benefits such as health insurance or retirement benefits,thereby shifting financial and legal risks, including those related to illness, accidents and residence permit requirements, onto the workers themselves.

Excessive working hours or pressure to work overtime due to production pressures, unclear responsibilities between the company and the formal employer and limited protection.

Accommodation arrangements that may be costly or not meet adequate living standards where housing is organized through labor providers or intermediaries

Limited access to grievance mechanisms, particularly where workers are unaware of available channels or fear negative consequences for raising concerns

Health and safety gaps for contracted workers, especially where responsibilities between companies and contractors are unclear and limited safeguards are in place.

 

Different treatment compared to direct employees, for example regarding working conditions, access to facilities and workplace protections.

For many workers, these are not isolated issues but everyday realities with often very limited means to change and improve situations, particularly where employment, housing or legal status depend on the same intermediaries.

Despite their proximity to day-to-day operations, the risks faced by third-party or migrant workers are not always fully and adequately reflected in companies’ human rights due diligence. Since these workers are formally employed by labor agencies or contractors, responsibility may appear to sit elsewhere, while internally different functions, such as HR, procurement or operations, may only see part of the picture.

What companies can do in practice to address human rights risks to third-party workers

Addressing risks affecting third-party and migrant workers does not necessarily require entirely new systems. In many cases, it starts with taking a closer look at how these groups of workers are included in existing human rights due diligence processes, understanding recruitment pathways and employment arrangements better, and making use of the company’s proximity to workers on-site or very close to their operations. Here are some concrete steps companies can take:

Include third-party workers in risk assessments and understand recruitment practices:

Companies can start by ensuring that third-party workers, incl. migrant workers, are explicitly considered in risk assessments related to their own operations. Existing practices and processes should be assessed, for example, by reviewing internal policies on responsible recruitment and building a clearer understanding of how labor agencies are selected and managed. Speaking with procurement, human resources or operational colleagues can help clarify what safeguards are in place to support the fair treatment and good working conditions of third-party workers.

Most importantly, engage directly with third-party workers:

Because these workers are often physically present within their own operations, companies need to speak to them, to hear directly from them about their experiences. Site visits and conversations with workers or accessible feedback channels can provide important insights into the situations of workers, working conditions, recruitment arrangements and potential challenges they face. Direct engagement with workers is one of the most effective ways to understand what is actually happening and what needs to change to improve their situation and the protection of their rights. Furthermore, establishing grievance channels that are accessible to third-party workers and fulfil their needs is crucial to be able to address issues and provide access to remedy.

Work with labor providers to strengthen safeguards:

Companies should engage closely with labor agencies or contractors to better understand their recruitment and employment practices, including recruitment channels, contract arrangements, fee structures and accommodation provided to workers. Based on this understanding, companies and labor providers can work together to strengthen safeguards. This can include increasing transparency in recruitment practices, adapting contractual terms, translating policies and processes into relevant languages, explaining national labor laws and legal protections to third-party workers, improving workers’ access to grievance mechanisms and clarifying responsibilities across recruitment and employment arrangements.

Build capacity in functions with oversight of third-party workers:

Ensure that teams such as human resources, procurement and operations understand the specific risks affecting third-party workers, incl. migrant workers, and how these may arise in practice. This can include building awareness of recruitment practices, employment arrangements and potential risk factors. Strengthening internal capacity helps ensure that existing processes are applied in a way that takes these workers’ situations into account.

Including third-party workers in human rights due diligence

For human rights due diligence to be meaningful and effective, it is important to recognize that different groups of workers, even when performing the same tasks in the same facility, may experience very different levels of protection. Third-party workers, such as agency or contracted workers, are often integral to company operations, yet they can also be among the workers most exposed to risks due to their employment arrangements or dependence on intermediaries.

Paying closer attention to their experiences and ensuring they are meaningfully included in human rights due diligence is therefore an important step for companies seeking to better understand the risks and contribute to fairer working conditions and stronger protection of the rights of the people who support their operations.

If you are exploring how to identify and address risks affecting third-party workers in your own operations or in your supply chain, we’d be keen to exchange with you: hello@peopleatcore.com or if you’d like to write to me: stephanie@peopleatcore.com.

Stephanie for the CORE team