The Accredited Employer Work Visa (AEWV) scheme may be facilitating human trafficking and modern slavery, according to the Human Rights Commission.
Its report calls for an enforceable framework for ethical recruitment, meaningful business checks, and stronger compliance action.
"What we heard goes beyond bad employer conduct and raises real concerns that the AEWV scheme may be enabling potential human trafficking, with signs of systemic migrant exploitation and modern slavery," said Equal Opportunities Commissioner Commissioner Saunoamaali'i Dr Karanina Sumeo.
The commission interviewed workers - mainly from India, China and the Philippines - as well as employers, advocates and immigration agents.
Many had paid thousands of dollars for a job that either did not exist, or from which they were sacked from soon after arriving. One man had paid about $60,000.
"A common view expressed by migrant workers who paid premiums, but did not get the job offered, was that they had been scammed," said the report's authors.
"They generally considered this occurred through a coordinated deception between overseas recruiters and employers in Aotearoa. Workers and other stakeholders reported significant collaboration between overseas recruitment agents and employers."
The family of one worker who was left jobless on arrival had financed the job premium by selling long-held family land, and others took on debt with unscrupulous lenders in their home country.
Family members were being threatened because of the debts, and the stress was causing the migrants mental anguish.
"An immigration agent observed that many workers were being recruited for the profit of premiums, not for their labour. One worker said that a manager had been heard saying they were making $15,000 per new worker, and believed their dismissal was to facilitate further recruitment and payment of a premium."
The report recommends that visas should not be tied to a specific employer, a process which one worker described as "my handcuffs".
It wants employers to have to provide settlement support for migrants and meaningful involvement for Tangata Whenua, hapū and iwi in policy design, as well as providing migrants with information on their rights.
The Commission also recommends New Zealand implements human trafficking legislation and becomes a party to the International Convention on the Protection of the Rights of All Migrants Workers and Members of their Families.
Resourcing compliance action was brought up my many workers the report authors met.
"Currently stakeholders report that Immigration New Zealand has insufficient resources to meaningfully monitor the tens of thousands of accredited employers that exist.
"Without a significant upscaling of resources, policy settings may need to be redesigned to better manage human rights risk.
"One approach could be to require accredited employer involvement with reputable industry bodies who can participate in compliance with minimum standards and have the scale and track record to ensure employment standards are met and human rights risks are mitigated.
"This could have the benefit of reducing the likelihood of workers being recruited to fake jobs. Involvement could also be designed to assist workers to move easily between different businesses within the industry."
Sumeo said migrant workers were continuing to experience human rights abuses despite a review of the scheme in February and changes announced in April.
"Workers who enter the country under the scheme and then lose their job are extremely vulnerable. Their visa being tied to a specific employer makes it hard for them to find legitimate work elsewhere, so they often end up taking unregulated, poorly paid work in the informal economy just to survive.
"We need significant policy changes to ensure that the AEWV scheme promotes positive human rights outcomes. The changes need to include an end to the tying of visas to a specific accredited employer."