A number of recent exposés have generated extensive media attention and public commentary regarding the issue of the franchisor's role in ensuring compliance with workplace law in franchise networks. However, an equally prevalent issue that has remained largely unaddressed is the franchisor's obligation (if any) to ensure compliance with Australia's immigration laws and sponsorship obligations.Of particular relevance in this context is the 457 visa program.

The 457 visa program

In brief, the 457 visa is a temporary visa which seeks to address genuine skills shortages in the Australian labour market. The 457 visa program aims to fill short to medium term position vacancies on a temporary basis when suitably skilled Australian citizens or permanent residents cannot be found. The Migrations Regulations 1994 (Cth) (the Regulations) relevant to 457 visa holders and associated penalties aim to protect the rights of the sponsored workers without displacing employment opportunities for Australian citizens and permanent residents.

Franchisee vs franchisor liability

In most cases, it is the franchisee that is the direct employer of a visa holder, and the 'standard business sponsor' under the Migration Act 1958 (Cth) (the Act), and hence subject to the requirements set out in the Regulations.

Currently, a franchisor (who is not generally the direct employer of a given visa holder) could only be responsible for breaches of the law if they are considered to be ancillary to the contravention. The franchisor must not aid, abet, counsel, procure, induce, conspire or in any way knowingly be party to a contravention of the Act or the Regulations. This section of the Act currently mirrors the accessorial liability provisions of the Fair Work Act 2009 (Cth) (the Fair Work Act).

In addition, the Migration Amendment (Reforms of Employer Sanctions) Act 2013 (Cth) (the Employer Sanctions Act):

  • introduced new non-fault civil penalty provisions for employers who employ non-citizens in Australia without a visa or allow such employees to work without a visa or in breach of visa conditions;
  • extended the liability to executive officers, partners and members of a committee of management; and
  • tightened the existing criminal offences and civil penalty provisions.

This means that executive officers, partners and members of a management committee who are in a position to influence the conduct of the employer in relation to an offence or contravention, and who have failed to take reasonable steps to prevent the contravention, can potentially be liable and prosecuted under these provisions if they knowingly or recklessly allow or continue to allow a non-citizen to work in Australia without a visa or in breach of visa conditions.

Penalties under the Employer Sanctions Act include both civil penalties and fines for both corporations and individuals and criminal sanctions including up to two years imprisonment.

Potential extension of immigration responsibilities for franchisors

Although, in a franchisee/franchisor relationship, the franchisee is generally the direct employer of the 457 visa holder, and therefore subject to the 457 visa sponsorship obligations, there have been comments made by the Fair Work Ombudsman (FWO) that the ambit of franchisor responsibility for workplace non-compliance may be increasing (refer to our Spring 2016 edition).

It is therefore possible (we consider likely) that moves may be made to extend the responsibilities of franchisors to cover immigration matters, in a similar manner to the moves that have been made to extend the responsibility of franchisors in relation to compliance with workplace relations laws.

In any case, franchisors of networks that routinely rely on 457 visas should consider what additional steps they should be taking to ensure that their franchisees are complying with their immigration law requirements and also to ensure that they, as franchisors, are not engaging in any behaviour that may be in breach of the extended liability laws referred to above.

Next Franchising Focus

Part 2 of the 457 visa implications series on the franchise community will focus on the 457 visa sponsorship obligations for the franchise network and suggested strategies for compliance.