Australia: Employment and immigration – the dos and donts of hiring employees on visas

Last Updated: 29 March 2017
Article by Lisa Qiu

Many Australian businesses have come to rely on the skills of overseas workers and are sponsoring, or are contemplating sponsoring, an overseas worker on a visa - usually the Temporary Skilled (subclass 457) visa, aka "on a 457."

Managing HR related issues or employment law issues can often be one of the most challenging aspects of running a company, and when you throw in the fact that the employee is on a visa, things can get even more complicated. So what are the some of the do's and don'ts when it comes to hiring employees on visas?

The do's

  1. Make sure the company is able to employ the worker. Some visas require little to no involvement from the company. Others, such as the 457 visa, require the company to be registered as Standard Business Sponsor. In addition, the company must have lodged an application called a Nomination Application, with the Department of Immigration and Border Protection, and have that application approved by the Department before the employee can commence employment. Make sure you know what's involved before you employ the worker.
  2. Make sure you know the working rights of the employee. Different visas have different working rights. For example, student visas only allow the employee to work up to 40 hours a fortnight when their course is in session. Working holiday visas only allow the employee to work up to six months for each employer, and to stay in Australia for up to one year. You don't want to be caught in a situation where the employee's visa has expired and they're no longer lawfully in Australia so it's important that you have a basic understanding of the working rights of your employees.
  3. Make sure the company is able to, and will, provide the employee with the same working conditions as an Australian citizen or permanent resident performing the same role. Unfortunately, it has been common for the 457 visa scheme to be exploited by employers who use it as a way to obtain cheap labour. This means that pay offered by all sponsors comes under close scrutiny. Many employees working on visas are afraid to speak out about underpayments for fear of losing their jobs or their visas. Late last year, the Government announced the establishment of a cross agency Migrant Workers' Taskforce headed by Professor Allen Fels AO, to identify and rectify migrant worker exploitation. It is therefore more important than ever that employers provide migrant workers with the same working conditions and pay that they would provide to an Australian citizen or permanent resident performing the same role.
  4. Get the employment contract right. Make sure the employment contract provides clearly that employment is conditional on the employee obtaining, and maintaining, a visa that allows them to work in Australia, and for you. Include provisions in the contract putting the onus on the employee to notify you if their working rights change.
  5. Give them notice of termination. All employees in Australia, aside from those whose employment is terminated for serious misconduct, or because they are a casual or on a fixed term contract, are entitled to notice of termination. Employees on visas are no different. However, if you are considering terminating the employment of an employee on a visa due to performance issues or redundancy, consider giving them as much notice as possible - once their employment is terminated, they will only have 90 days to find another employer to sponsor them, or face returning to their home country. Therefore, the effect of a termination of employment on a visa holder may be much more dire than usual. If the employee decides to bring a claim for unfair dismissal, the fact that termination meant potentially having to depart Australia, could have an impact on whether the termination is deemed to be "harsh, unjust or unreasonable."

The don'ts

  1. Don't make promises about employment, before you have obtained all required grants from the Department. If the employee needs you to sponsor them for a 457 visa, make sure that you don't make promises about their employment (such as promises that you will hire them or that you will hire them for a certain position for a certain amount of time) before you obtain all the relevant approvals and grants from the Department. Making promises before you can deliver could put you in a situation where you have offered a contract that you can't uphold.
  2. Don't make employment contingent on them paying for visa costs. Sections 245AQ and 245AS of the Migration Act prohibit companies from offering to provide an employee sponsorship in exchange for a benefit. A benefit can include a payment of money, a deduction of an amount, real or personal property, an advantage, a service, or a gift. Therefore, it would be unlawful for Company A to offer to sponsor employee B, in exchange for B paying $X to Company A. Similarly, it is unlawful for B to offer to pay Company A $X in exchange for Company A agreeing to sponsor employee A. Recently, a Domino's Pizza franchise was revealed to have contravened these provisions by offering to sponsor an employee in exchange for $150,000. Penalties for executive officers include up to two years imprisonment, fines of up to $64,800 or both. For others involved in the payment exchange, including the migrant worker, penalties range up to a maximum fine of $43,200.
  3. Don't change the terms and conditions of employment without considering whether you need to notify the Department first. If the Department has granted a 457 visa for the employee to work in a particular role for a particular company, this means that they are only allowed to work in that particular role, for that particular company, while on that 457 visa. If you're employing someone on a 457 visa and wish to change the terms and conditions of their employment (for example, switching roles or employing entity, or reducing their pay), don't do this without first considering whether you need to notify the Department of the change. If the role is to be changed to an entirely different role, you may need to seek approval of the Department to do this, which could involve lodging a new nomination application for the new role.
  4. Don't promise that you will sponsor them for permanent residency. Often the next step for a 457 visa holder is to obtain permanent residency by applying for the Employer Nominated Scheme (subclass 186) visa. Often employers will promise a 457 visa holder that they will sponsor them for a subclass 186 visa. However, business needs change over time and it's best to avoid making such promises, so that you avoid having to have a difficult conversation with the employee if circumstances change.
  5. Don't fall into bad habits when it comes to your employment records and paperwork. With any employment relationship, whether the employee is a 457 visa holder or not, it's important for businesses to keep adequate records and paperwork. However, if you're employing 457 visa workers this is even more important. One of the obligations of a Standard Business Sponsor is that they produce documents upon request by the Department. Therefore, to make life easier if the Department comes knocking, it's important to keep up to date with your record keeping and paperwork.

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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Lisa Qiu
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