Immigration Law: Recap on 457 visa sponsorship obligations

Stephen Booth, Lisa Qiu

On 20 May 2015, the Federal Court of Australia handed down the largest ever court imposed fine for breaching subclass 457 visa sponsorship obligations. The offending company, Choong Enterprises operated restaurants and cafes in Darwin, acting as a sponsor for 10 employees from the Philippines, who travelled to Australia on subclass 457 visas.  

The primary obligation of a 457 sponsor is to ensure that the sponsored employees are employed on equivalent terms and conditions to Australian employees in an equivalent role and location. In this case, Choong Enterprises was not paying entitlements such as loadings, sick leave and superannuation contributions, and was also paying below the award minimum by paying $12 per hour.

Choong Enterprises fabricated documents in an attempt to demonstrate compliance with its obligations, and also recovered agent costs from the sponsored employees, which is prohibited under the Migration Regulations 1994 (Cth).  

The Court imposed penalties totalling $175,400 on Choong Enterprises.  

In response to this finding, Senator Michaelia Cash, the then 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 her word, Taskforce Cadena was launched on 1 July 2015 and it has been focusing on compliance in the agricultural and food processing industries. 

To ensure that you are complying with your obligations as a sponsor of subclass 457 visas, let’s recap sponsorship obligations. The nine key obligations are to: 

  1. Cooperate with inspectors in providing access to information and premises
  2. Ensure equivalent terms and conditions of employment
  3. Pay travel costs to enable sponsored persons to leave Australia at the end of their visa
  4. Pay costs incurred by the Commonwealth to locate and remove unlawful non-citizens
  5. Keep accurate records (Choong’s fabrication of records with intent to deceive was an aggravating factor)
  6. Provide records and information to the Minister
  7. Provide information to the Department when certain events occur
  8. Ensure the sponsored person works in the nominated occupation
  9. Not recover certain costs from the employee, such as migration agent costs.  

Under strengthened penalty provisions under the Migration Act 1958, any individual or body corporate that allows or continues to allow an unlawful non-citizen to work, or breach their visa conditions, or who refers unlawful non-citizens to work for a third party, could be liable for both civil and criminal penalties. As a compliance measure, employers should establish the citizenship, residence or visa status and work rights of their employees, and review the status of visa holders periodically to ensure they remain "legal." Recruitment processes should include review of the relevant documents, and retention of copies, and contracts should provide for the employee to provide such further information as may be required from time to time. 

For advice on whether you are meeting your sponsorship requirements, contact our Employment and Migration team: