Australian Immigration Daily News

The operator of a number of restaurants and cafes in Darwin has been ordered to pay civil penalties of $175,400 for committing multiple breaches of its obligations under the 457 program. These fines were imposed  by Justice Mansfield of the Federal Court of Australia in the case of Minister for Immigration and Border Protection v Choong Enterprises Pty Ltd (2015) FCA 390 (27 April 2015).  

Although it does not appear that it is at all common for the Department to take enforcement proceedings against a 457 sponsor (in fact, my review of the Austlii database did not reveal any other cases where such action has been taken!) the Choong  case should nonetheless serve as a reminder to sponsors concerning the importance of complying with their sponsorship obligations.  The case also illustrates the serious financial consequences that can result if a sponsor does not comply.

Further, the result in this case demonstrates that RMAs can very meaningfully assist sponsoring employers by making sure that they are aware of the duties that are imposed on them  under the migration legislation: an RMA’s work is not necessarily completed once a 457 visa has been granted!

The basic provision under which civil penalties may be imposed for a failure to meet sponsorship obligations is section 140Q of the Migration Act.  This section of the legislation specifies that any person who contravenes the regulations relating to sponsorship obligations will be subject to civil penalties of “60 penalty units”.  A “penalty unit” is currently defined under section 4AA (1) of the Crimes Act 1914 (Cth) to be $170. Therefore a breach of the sponsorship regulations can attract a penalty of $10,200.

It should be noted that the version of section 104Q that was in force at the time that the breaches that gave rise to the Choong case occurred provided that higher penalties could be imposed on a corporate entity (300 penalty units) than upon an individual (60 penalty units).  This variable penalty regime for corporations and individuals has not been carried forward into the version of section 140Q that is presently in force.  Currently, section 140Q provides that the same penalty amount (60 units) may be imposed in the case of both individuals and corporations.

Another significant aspect of the civil penalty regime under the Migration Act  is that proceedings involving multiple contraventions can be heard together (see section 486W) and a single penalty may be imposed for multiple breaches that are of the same or a similar character, or that stem from the same facts. However, this “single penalty” cannot exceed the maximum penalty that would be imposed if separate penalties were imposed for each contravention (section 486V).

The proceedings in the Choong case involved a number of breaches of the Regulations pertaining to sponsorship obligations.  

These included a breach of clause 2.79 of the Regulations, which requires that an employer must ensure that a worker on a 457 visa is given the equivalent terms and conditions to those that would be required for an Australian citizen or permanent resident.  In the Choong case, the 457 visa holders had been paid hourly wages at a rate considerably lower than was required, determined by the Court to be approximately $2 - $5 an hour. Furthermore, the workers had received no allowance for overtime, nor had they been given any sick leave or superannuation.

A second contravention was against clause 2.82 of the Regulations, which requires employers to keep records that are capable of being verified by an independent person concerning the weekly wages that are paid to 457 visa holders.  In the Choong case, no such records were kept at all. The workers were paid in cash, and the only record that was kept concerning their pay were annotations on the envelopes given to the workers containing their wages.  The Court found this to be a significant breach, due to the fact that this requirement is obviously essential to enable a determination to be made as to whether 457 visa holders are in fact enjoying terms and conditions of employment that are equal to those to which an Australian citizen or permanent resident would be entitled.

A third contravention that was dealt with in the enforcement proceedings was a breach of clause 2.86 of the Regulations.  This clause imposes an obligation that the sponsor ensures that the 457 visa holder work in the nominated occupation. What occurred was that visa holders who had been nominated for the positions of “Cook” and “Café/Restaurant Manager” were actually employed in the duties of “Fast Food Cooks and Kitchenhands”. The Department argued before the Court that the employer had gained a monetary benefit by having the 457 visa holders work in an occupation that attracted lower pay than the occupations nominated in their 457 visas.  In the event, however, the Court determined that the underpayment to the 457 workers that had resulted from having them carry out the duties of  a “lesser paid” occupation under the applicable aware had been “unintended”, and was thus a breach that was, in the Court’s view, at the lower end of the range of seriousness.

Lastly, the proceedings brought by the Department involved a breach of clause 2.87 of the Regulations. This clause prohibits an employer from taking action to recover the costs charged by a migration agent associated with becoming an approved sponsor.  The employer contravened this regulation by making deductions from the pay of visa holders to reimburse itself for these costs.  In the Court’s view, the seriousness of this breach was compounded by the fact that the employer also underpaid the visa holders below the level required by the applicable award.

The fines that were imposed by the Court were broken down as follows: 1) $120,000 for the contravention of clause 2.79 for underpaying 10 workers over varying periods of time and otherwise failing to provide employment conditions equivalent to those to which Australian citizens/permanent resident are entitled; 2) $15,000 for the breach of clause 2.86 involving the failure to maintain independently verifiable records of the employees’ wages; 3) $10,000 for the breach of clause 2.87 involving taking deductions from the employees’ wages to recover the costs of migration agents’ fees.

In addition to these fines the Court ordered the employer to make restitution to the employees who had money deducted from their pay for the migration agents’ fees, in a total amount of $6,400.

As readers of this blog may be aware, there has been considerable attention recently in the Australian media to stories relating to the exploitation of foreign workers under the “working holiday” visa program (subclass 417 visas). Thus, although the civil penalty proceedings that were taken against the employer in the Choong case appear to have been “unusual”, in light of the public attention that has been drawn to the treatment of overseas workers, it can be anticipated that cases of this kind will not remain “unusual”.

The Choong case thus sounds a “warning call” to employers of visa holders under the 457 program that failure to meet the sponsorship obligations imposed by Australia’s migration laws can result in significant penalties.  Further, if civil penalty proceedings are taken in response to breaches of the regulations, the employer may also be required to pay the Department’s legal costs, which may also be very substantial. 

Consequently, the Choong  case teaches that employers would be well advised to comply scrupulously with their sponsorship obligations.

 This article was prepared by Michael Arch, Concordia Pacific Migration Lawyers, Email: This email address is being protected from spambots. You need JavaScript enabled to view it. , Tel: (02) 8068 8837