Government Crackdown on 457 Visa Breaches – 10 Key Requirements

On 20 May 2015, the Federal Court of Australia handed down the largest ever court imposed fine for breaches of the Subclass 457 business sponsorship program to Choong Enterprises. An operator of restaurants and cafes in Darwin, the company acted as a sponsor for 10 employees from the Philippines, who travelled to Australia on 457 visas.

A 457 business sponsor’s primary obligation is to ensure that the sponsored employees are employed the same on terms and conditions to those of an Australian employee for an equivalent role in the same position.

Not only was Choong Enterprises not paying entitlements such as loadings, sick leave and superannuation contributions, it was also paying below the award minimum at approximately $12 per hour. In addition to award minimums, the Migration Regulations also provides a minimum salary threshold of $53,900 per annum. In this case, the salaries being paid by Choong Enterprises to their 457 visa holders ($45,220 per annum) was below the minimum salary threshold. Thanks to these underpayments Choong Enterprises had to pay between $6,000 - $20,000 to each of the seven underpaid employees, as well as penalty payments to the Commonwealth, ranging from $450 - $7,000 per employee.

Choong Enterprises also fabricated documents in an attempt to prove compliance with its obligations, and recovered the fees charged by its migration agent from the sponsored employees, which is prohibited under the Migration Regulations.

The court penalised each of the breaches that occurred in respect of each of the employees, and fined Choong Enterprises a total of $175,400.

In response to this finding, Senator Michaelia Cash, Assistant Minister for Immigration and Border Protection, said:

“The stiff penalty this company has received should send a warning to other sponsors: if you fail to meet your requirements, my Department may impose administrative sanctions, issue an infringement notice, execute an enforceable undertaking, or apply to the Federal court for a civil penalty order. The overwhelming majority of businesses act in good faith and therefore have nothing to fear, but we want to send a strong message that if you breach your obligations, you can expect to face the consequences.”

True to the Minister’s word, from 1 July 2015, Taskforce Cadena is enforcing the sponsorship requirements applicable to all approved 457 business sponsors. Headed by the Department of Immigration and Border Protection and the Fair Work Ombudsman, the Taskforce will also involve the Australian Federal Police, Australian Securities and Investment Commission, Australian Tax Office and other agencies.

If you are currently an approved business sponsor and/or employ 457 visa holders in your business, it’s perhaps an opportune time to make sure you’re meeting your sponsorship requirements.

The 10 key requirements are to:

  1. Ensure equivalent terms and conditions of employment
  2. pay travel costs to enable sponsored persons to leave Australia
  3. pay costs incurred by the Commonwealth to locate and remove unlawful non-citizens
  4. keep records
  5. provide records and information to the Minister
  6. co-operate with inspectors
  7. provide information to the Department when certain events, such as termination of employment occur
  8. ensure the sponsored person works in the nominated occupation
  9. not recover certain costs such as migration agent costs from the visa-holder, and
  10. ensure that you are contributing to the training of Australians in your industry.

For more information please view our Plain English Guide to Sponsoring Skilled Staff from Overseas.

For further advice on whether you are meeting your sponsorship obligations, please don’t hesitate to contact our Employment Law and Business Migration Team:

Stephen Booth, Principal
Phone: 02 9895 9222
Email: sbooth@colemangreig.com.au

Lisa Qiu, Lawyer
Phone: 02 9895 9207
Email: lqiu@colemangreig.com.au