Australia: Employing backpackers – be a fair employer and stay on the right side of the law

Last Updated: 9 December 2016
Article by Geoff Baldwin

Everyone loves a bargain and backpackers are seen as an endless source of cheap labour. Employers who want to hire backpackers for seasonal or unskilled work may see them simply as holiday-makers looking for a bit of extra spending money, who aren't going to be all that fussy about how much they are paid.

And, as backpackers are typically young, fit, and not expecting luxury, that they will accept demanding work conditions without complaint. However, there can be a sting in the tail, even if individuals do in fact conform to the expectation of cheap and cheerful labour.

What is a backpacker?

But who exactly are backpackers? According to Tourism Australia, which has conducted research on this category of individuals, a backpacker is a traveller who is spending at least one night in a hostel.

The image conjured up by the word is of fruit-pickers, but backpackers – or "working holiday makers" – can work in all sorts of industries, although typically in unskilled work. However, when we talk here about "backpackers", we are talking about international visitors holding visas giving them the right to work while they are in Australia.

While there are of course backpackers who are Australian citizens or residents and who are simply on travelling holidays, this article focuses on overseas visitors.

The working holiday visa system: visa subclass 462 and 417

There are two subclasses of visa most common among backpackers: 462 and 417, both of them for persons between the ages of 18 and thirty. Unhelpfully, a 462 visa is called a "Work and Holiday" visa, and a 417 a "Working Holiday" visa.

Some of the differences between the two are immaterial to employers, but the most obvious relevant difference is that a 462 visa is limited to one year in duration, while a 417 visa can be renewed for a further year, subject to conditions.

Other visas may apply, for example the subclass 500 student visa, but for most practical purposes backpackers will hold one of the other two.

Reported exploitation of backpackers in rural areas

The practical difference between the 462 and 417 subclasses of visa is not so much the duration of each, as that 417 visa-holders wanting to renew must demonstrate that they have worked at least 88 days in the initial year. Consequently, these people may be anxious to reach this target of recorded working days.

This desperation is one of the factors that makes backpackers vulnerable to exploitation by unscrupulous employers, as reported recently in the media.

People who are in Australia are subject to the laws of Australia

Anyone who did not already understand that a fundamental principle of international law is that people lawfully present in a country are subject to the laws of that country, understood that fact once Schapelle Corby became a household name.

Thus the laws of Australia – notably employment laws – apply to backpackers just as they do to Australian citizens.

Payment and benefits of backpackers under Australian law

Overseas backpackers working legally are entitled to pay and benefits as though they were Australian citizens. These include:

  • being paid in accordance with the relevant Modern Award (consult Fair Work Australia's online Award Finder if you don't know what a Modern Award is or which one applies)
  • having the employer pay an amount equivalent to 9.5% of gross pay into a complying superannuation fund if the backpacker earns more than $450 per month
  • the protection of workplace health and safety laws (in NSW, the Work Health and Safety Act 2011)

Your obligations as an employer of backpackers

As an employer, your very first obligation is to check personally that a potential backpacker employee has the right to work in Australia, and satisfy yourself as to how long that right will last. This means either an appropriate visa or evidence of Australian citizenship or residency and (in all cases) a tax file number.

It cannot be emphasised enough that this obligation is personal. According to a recent media report, an employer explained that he engaged backpackers through a labour hire firm, because the firm would "dodgy up the paperwork" – presumably to disguise the fact that the potential employees did not meet legal requirements.

Significant penalties for allowing a person to work illegally

It is an offence under the Migration Act 1958 for someone to knowingly or recklessly permit a person to work illegally. It is essential to understand that you cannot insulate yourself from some illegality by, in effect, looking the other way, sticking your fingers in your ears and whistling loudly.

You will be held complicit if – as the courts would see it – you knew or ought to have known that the law was being flouted. You will be held "reckless" if you did not know whether or not a backpacker could work legally, and you were aware that you did not know this detail. Deliberate or reckless employment of illegal workers is punishable by imprisonment for up to two years, which rises to five if you knew that the worker was, in addition, being exploited.

Even an innocent mistake can carry a fine, and there's nothing like a hefty fine to focus your attention, the maximum being around $15,000 for an individual or $80,000 for a company. The only defence is to show that you took reasonable steps to inform yourself as to the backpacker's entitlement to work.

It is equally important to emphasise documentation in relation to all requirements, starting, of course, with the eligibility to work, whether that is Australian citizenship/residency, or a suitable visa. Other obligations are:

  • to pay according to the Award (or an Enterprise Agreement, if your business has one) and to provide employees with pay slips
  • to withhold tax – in early December 2016 the backpacker tax rate was set at 15%
  • to make superannuation contributions (see above)
  • to provide employees with the benefits of the National Employment Standards under the Fair Work Act 2009. There are of course exceptions in relation to casual employees, and many backpackers will fall into this category.

Making deductions from an employee's pay

It is permissible to make deductions from pay for things such as meals and accommodation, but any such arrangement must be documented before it is implemented.

And, if this need be said, the monetary value attached to such benefits must be generally in line with commercial values in the locality in question.

Where to find more information

Most small business owners/operators are not experts in law or bureaucracy, and here we have an area involving two sets of laws: employment and migration.

A good, free, way to check work entitlements of overseas backpackers is through the Department of Immigration and Border Protection's Visa Entitlement Online Verification (VEVO) tool. A number of helpful resources can be accessed from the department's employing legal workers web page.

The website of the Fair Work Ombudsman is a good source of information, and the ATO website is also useful. However, a good rule of thumb is to assume that overseas backpackers have the same rights as residents or citizens, unless there's a clear contrary provision. And document your decisions and the rationale for them.

Who can you contact for help if you're a backpacker?

The website of the Department of Immigration and Border Protection has information about working holiday visa options. The federal government's Harvest Trail website provides useful resources to people who want to find harvest jobs around Australia.

The Harvest Trail Campaign page on the Fair Work Australia website has helpful information for backpackers and seasonal workers about workplace rights and obligations while working on the harvest trail. Information can also be accessed by ringing the National Harvest Trail Hotline on 1800 062 332.

Geoff Baldwin
Employment law
Stacks Law Firm

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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