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
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
In addition, the Migration Amendment (Reforms of Employer
Sanctions) Act 2013 (Cth) (the Employer Sanctions
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
extended the liability to executive officers, partners and
members of a committee of management; and
tightened the existing criminal offences and civil penalty
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
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
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.
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