As discussed by Kate and Jo in previous posts, significant reforms to the subclass 457 visa were made on 1 July 2013. These included changes to sponsor obligations relating to ensuring the primary sponsored person works in the nominated occupation, not recovering, costs, and providing training.
This post will address some common questions that have been raised by employers and migration agents about the obligation not to recover, transfer or take actions that would result in another person paying certain costs.
What changes have been made to this obligation?
Previously, sponsors were obligated not to recover certain costs from a primary sponsored person or their family. Since 1 July 2013, in addition to the existing requirement not to recover certain costs, sponsors cannot transfer or take any action that would result in another person paying those costs.
Specifically, sponsors must not pass on the following costs:
- sponsorship and nomination charges
- migration agent costs associated with the lodgement of sponsorship and nomination applications
- administrative costs and any sundry costs an employer incurs when they conduct recruitment exercises.
Sponsors fail this obligation if they pass or transfer these costs to others and the department may take actions such as barring or cancelling the sponsor from using the program, issuing an infringement notice, inviting the sponsor to enter into an enforceable undertaking or applying to a court for a civil penalty order.
Frequently Asked Questions
I was an approved sponsor before 1 July 2013, and the overseas worker I want to sponsor lodged their application before 1 July 2013. Would I breach the new requirements of this obligation if the worker paid any of the costs listed above upfront?
Before 1 July 2013 sponsors were obliged not to recover (or seek to recover) the costs described above.
The strengthened obligation will not be applied retrospectively. In other words, if you did not recover (or seek to recover) costs before 1 July 2013, you will have met your obligation not to recover costs. From 1 July 2013, you were also required not to transfer or take any action that would result in another person paying the costs described above.
Any action or payments by a visa holder of these costs post 1 July 2013 would be a failure by the sponsor to meet this obligation.
Aren’t nominations related to the visa applicant, and therefore shouldn’t they be able to pay for the costs associated with the nomination?
Applications for nomination and sponsorship are made by prospective or approved sponsors and cannot be made by the visa holder. These costs are inherently a cost of being or becoming an approved sponsor and must be borne by the sponsor. If a visa holder pays for sponsorship or nomination costs on behalf of the sponsor (after 1 July 2013), this is a failure of this obligation.
What constitutes recruitment costs that must not be recovered, transferred or charged to sponsored persons?
Recruitment costs include costs paid in connection with finding and attracting an employee—what these costs include will depend on the specific circumstances of an individual case.
The costs associated with the visa application (including migration agent fees associated with lodging the visa application) are usually paid for by the visa applicant, however, in some circumstances these costs may be considered to be recruitment costs. For example, if a sponsor agreed to pay the visa application charge (and associated migration agent fees) in order to attract a prospective 457 employee, these costs would be considered recruitment costs.
For further information on sponsorship obligations visit the department’s website www.immi.gov.au.
Employers of overseas workers must ensure their temporary sponsored workers have the same terms and conditions for the same job in the same workplace as Australian workers. There must be no exploitation and no excuses for underpaying overseas workers.
We have said before that when sponsors inadvertently, recklessly or systematically abuse and/or exploit their visa holders and the program, we can and do take action.
During the 2011-12 financial year, the department conducted more than 1000 site visits to sponsors, and sanctioned 125 of them. Further, the department issued 49 infringement notices for failure of the obligations, totalling $219 120.
In addition to applying administrative sanctions and issuing infringements, the department has become increasingly active in referring cases to civil litigation.
On 28 June, a Victorian based sponsor, Sahan Enterprises Pty Ltd, became the first sponsor to face the Federal Magistrates Court under the Migration Act 1958. The court found failures of two sponsorship obligations: the obligation to pay equivalent terms and conditions, and the obligation to keep appropriate pay records. The consequence of these failures was that the court issued a pecuniary penalty of $35 000 plus almost $11 000 in court costs. In handing down the decision, the magistrate placed weight upon the vulnerability of the sponsored person, and noted that as a group, sponsored workers are especially vulnerable.
Now that this precedent has been set, the department will continue to promote the message to sponsors to comply with their sponsorship obligations or, potentially, face the pecuniary consequences.
What’s next for monitoring?
While the overwhelming majority of sponsors are compliant, the department remains committed to strengthening the integrity ofAustralia’s skilled visa programs by identifying and penalising employers of sponsored workers who fail to comply with their obligations. To this end, we will continue to focus on campaign based monitoring in the coming months.
Australian workplace laws apply universally to all. In addition to these workplace protections, temporary overseas workers have an additional protective framework embodied in the Migration Legislation Amendment (Worker Protection) Act 2008 (the Worker Protection Act) sponsorship obligations.
The vast majority of sponsors are compliant; however, there is a comparatively small number of sponsors who inadvertently fail their sponsorship obligations, and even fewer who are recklessly unscrupulous.
In addition to sponsor monitoring officers, the Department of Immigration and Citizenship (DIAC) also has a highly trained, dedicated inspectorate of 38 officers who maintain a keen eye on sponsors of temporary overseas workers in order to protect them from exploitation. An inspector’s role is to gather information, investigate and assess matters relating to a sponsor’s compliance with their sponsorship obligations under the Worker Protection Act.
DIAC has commenced monitoring on 1398 sponsors; issued breach notices to 270; officially warned 188; and sanctioned 75, which means to 29 February this financial year, we have barred or cancelled sponsorship to a not insignificant number of employers doing the wrong thing.
In addition to administrative sanctions, we also have the power to serve infringements and take civil action; already in the last eight months we have issued 37 infringements to a value of more than $186 000, and filed two applications in the Federal Magistrates Court against sponsors for failing their obligations to their visa holders. Other cases are pending.
During the monitoring process, we also work collaboratively with other agencies. For example, if we uncover issues that fall within the responsibility of the Fair Work Ombudsman (FWO), we either collaborate with, or refer cases to their inspectors for full investigation to ensure compliance with workplace laws. DIAC and the FWO are also working together to help visa holders understand their legal rights when working in Australia. In December we jointly released a fact sheet about workplace rights, specifically for overseas temporary workers. It is available at http://www.immi.gov.au/skilled/skilled-workers/_pdf/457-your-rights-work.pdf
In November 2011, the government announced reforms to the Fringe Benefits Tax (FBT) treatment of Living Away From Home Allowance (LAFHA) benefits to commence on 1 July 2012.
LAFHA is commonly used by employers to compensate employees for additional costs incurred when they are required to live and work away from their usual place of residence. This can include accommodation and food costs.
Under the current tax system, the provision of LAFHA can increase the take-home pay of employees, including subclass 457 visa holders. The Australian Government has concerns that LAFHA concessions are being exploited by some employers.
The Department of Immigration and Citizenship has received a number of enquiries about how these changes will impact subclass 457 visa holders.
From the department’s perspective, if an employer committed to pay a subclass 457 visa holder LAFHA, it is expected this payment will continue. The only difference will be how the Australian Taxation Office (ATO) views such payments.
For example, if a sponsor committed to pay a subclass 457 visa holder a base salary of $75 000 plus a $10 000 LAFHA, the department expects the employee will continue to be paid a total of $85 000.
If a sponsor is unable to pay the amount equivalent to the LAFHA they may be failing their sponsorship obligations.
A sponsor may decide to lodge a new nomination application to amend the salary offered to the 457 visa holder. However, the sponsor must demonstrate that the new salary continues to be the market salary rate.
Click here for further information on the Australian Tax Office’s LAFHA requirements.
As the 457 program rapidly grew over the period 2003-2007, concerns mounted over the exploitation of overseas workers and the undermining of local wages and conditions. Australian newspapers frequently splashed stories about unscrupulous sponsors abusing the 457 visa program and exploiting their visa holders. The vast majority of these cases involved trades’ level 457 visa holders with little or no English languages skills, and who often lacked the technical skills they claimed.
To focus sponsors on their responsibilities to their overseas workers, and to strengthen the integrity of the program, in September 2009 the Government brought in the Worker Protection Act 2008. The essential message the legislation embodies is this – sponsors must ensure that overseas workers have the same terms and conditions for the same job in the same workplace as Australian workers. There must be no exploitation and no excuses for underpaying overseas workers.
The legislation also provides decision makers here in the department with additional powers and options for taking action against sponsors found to be failing their obligations. Be assured that when sponsors inadvertently, recklessly or sometimes systematically abuse and/or exploit their visa holders and the program, we can and do take action.
How do we do this?
To assess whether our 18 500 active sponsors are satisfying their obligations, we monitor sponsors. Sometimes we commence monitoring on the basis of an allegation, and sometimes we may instigate a sector-based campaign, but generally, we adopt a risk based approach to initiating monitoring. We’ve got a dedicated network of officers around the country, including 27 inspectors who have enhanced monitoring powers – this means that they can require documents from sponsors, and if those documents are not supplied, we can initiate civil action against the sponsor. Our officers talk to sponsors, gather information, and analyse the information to assess whether a sponsor is meeting their obligations.
During the monitoring process, we also work collaboratively with other agencies. For example, if we uncover issues that fall within the responsibility of the Fair Work Ombudsman, we refer specific matters for their attention. Similarly we refer matters to work place safety agencies, and the Australian Tax Office as required.
If through monitoring, a sponsor is found to be failing their obligations, a decision maker can bar or cancel a sponsor from the program, infringe the sponsor and/or take legal action against the sponsor.
How many sponsors have you sanctioned?
In 2010-2011, the department sanctioned 137 sponsors, and warned 453 sponsors. The majority of these sanctions have been applied as a result of sponsors failing to provide equivalent terms and conditions of employment as they would to an Australian or permanent resident employee. Additionally, in the last 18 months, we have issued 12 infringements to 12 sponsors, and are considering civil action against a few sponsors at the moment for serious failures of their sponsorship obligations. Watch this space!
What are the department’s future plans in the area of monitoring?
We intend to sharpen our focus on campaign based monitoring in the coming months, commencing work in particular industry sectors. We will also be looking at sponsors other than 457 sponsors, to assess whether those sponsors are satisfying their sponsorship obligations.