Australia: 457 visa sponsorship obligations – Franchisee or franchisor?

Since our last edition of Franchising Focus, there has been a surprising development in respect of 457 visas. Prime Minister Malcolm Turnbull announced on 18 April 2017 that the 457 visa will be abolished and replaced with a new Temporary Skill Shortage (TSS) visa from March 2018.

However, the 457 visa program (with some changes) will remain in effect until March 2018 and existing 457 visa holders will not be affected.

It is also anticipated that the sponsorship obligations will continue beyond March 2018, albeit with some enhancements in due course. As such, while the end of the 457 visa program may be in sight, for those employers who have employees on 457 visas you still need to be aware of your obligations as it is likely that such obligations will continue even once this program is wound up.

In our previous edition of Franchising Focus we raised the issue of franchisor liability for 457 visa holders. In this edition we will address the sponsorship obligations as they pertain to 457 visa employers.

As the law currently stands, only the direct employers of 457 visa holders are accountable for the employer obligations associated with the 457 visa. The direct employer may be the franchisor or the franchisee.

In most cases, depending on the contractual arrangements between the franchisor and franchisee, it is the franchisee that is subject to the sponsorship obligations in its capacity as the direct employer and an 'approved standard business sponsor' under the Migration Act 1958 (Cth).

What are the sponsorship obligations of an employer of a 457 visa holder?

A summary of some of the 457 visa sponsorship obligations most relevant to the employers of 457 visa holders within the franchise network are as follows:

  • Reg 2.79: Obligation to ensure equivalent terms and conditions of employment which are no less favourable than those provided to Australian citizens or permanent residents performing equivalent work in the same workplace and location. This obligation aligns with the Fair Work Act 2009 (Cth).
  • Reg 2.84: Obligation to provide information to the Department of Immigration and Border Protection (DIBP) within 28 days of the occurrence of certain events including actual or expected cessation of a sponsored person's employment, change to work duties/occupation, changes to the employer's corporate or financial status, payment of return travel costs, etc.
  • Reg 2.86: Obligation to ensure that the sponsored person works or participates in a nominated occupation, program or activity for which their nomination has been approved.
  • Reg 2.87: Obligation not to recover, transfer or take actions that would result in the sponsored person or their family paying for certain costs even if the sponsored person agrees to accept these costs.
  • Reg 2.87B: Obligation to provide training to Australian employees (not sponsored employees) by meeting certain training benchmarks in each 12 months of engaging a 457 sponsored person. A sponsor's training record is assessed on an annual basis for monitoring purposes in the 12 month period.
  • Reg 2.87C: Obligation not to engage in discriminatory recruitment practices which requires employers to give an attestation that they will commit to employing local labour if the required skills are available and must not engage in discriminatory recruitment on the basis of visa or citizenship status.

When do the sponsorship obligations commence and end?

Each of the obligations have a start date and an end date. Most of the above obligations commence on the day the 457 visa, nomination or sponsorship is granted, and end on various occasions including when:

  • the visa holder ceases employment with the sponsor;
  • another nomination is granted;
  • the sponsored person is granted an alternative substantive visa;
  • the sponsored person departs Australia and the 457 visa has ceased to be in effect; or
  • the sponsor ceases to be an approved sponsor and no longer has sponsored persons.

However, other obligations, such as cooperating with inspectors, keeping records and payment of location and removal costs, only end 2 or 5 years after the visa holder departs Australia or the sponsorship ceases and there are no sponsored persons left.

It is critical that employers understand the nature and extent of these obligations, as failure to comply can lead to sanctions ranging from formal warning letters from the Department of Immigration and Border Protection, cancellation or barring of the sponsorship, civil penalty orders to enforceable undertakings in court and infringement notices.

Strategies for compliance with sponsorship obligations

As noted above, even though the 457 visa program is being wound up, it is likely that those employers with employees on these visas will continue to be bound by their existing obligations and as such, need to ensure that they continue to comply with the laws relating to the 457 visa program. There are a number of strategies and processes that may be considered to ensure that both the franchisee and franchisor are immigration compliant. These include:

  • adding clauses into franchise agreements outlining the nature and extent of immigration responsibility;
  • agreeing within the franchisee and franchisor contractual arrangements to undertake and report on regular audits of the 457 visa population to ensure legal employment and compliance with immigration laws and sponsorship obligations; and
  • reviewing current internal processes and practices including recruitment practices, HR policies, contracts of employment and compliance frameworks in general.

Next Franchising Focus

In part 3 of the of the 457 visa series we will focus on the nature and extent of monitoring compliance with the sponsorship obligations by the immigration and other authorities and the consequences of non-compliance with these obligations in the context of the franchise network.

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