Australian Immigration Daily News

What will the consequences be if a Standard Business Sponsor breaches its sponsorship obligations and exploits its employees?

A decision that was handed down on 8 June 2016 by Justice Buchanan of the Federal Court in the case of Minister for Immigration and Border Protection v Hallmark Computer Pty Ltd (2016) FCA 678 suggests the answer. The case also provides a cautionary tale to sponsors of 457 visa holders and should provide a strong deterrent message:

If you breach your sponsorship obligations, you run the risk of paying very heavy monetary penalties!

Or, to put it another way, if a sponsor contravenes its obligations, it invites an enforcement response from the Department which could result in penalties that are the equivalent of having an anvil dropped on one’s head!!!

And would anyone suggest that it should be any other way?

There has been a lot of well-warranted attention lately to the issue of exploitation of temporary work visa holders, including a raft of stories in the media and a Senate inquiry that led to the issuing of the report A National Disgrace: The Exploitation of Temporary Work Visa Holders.

The exploitation of foreign nationals who have come to Australia under the 457 program should be condemned in the strongest, most unequivocal terms. It is conduct that undermines the integrity of Australia’s migration laws. And it deserves to be answered by the imposition of fines that accurately reflect the seriousness of the offence.

So exactly what did the sponsor do wrong here?

There were multiple contraventions of the sponsorship obligations, a total of 314 breaches in all!!

The sponsoring company, Hallmark, was located in Darwin and was engaged in the business of “assembling, distributing and repairing computer products and mobile devices”. Relevantly to this case, it employed 4 workers on 457 visas, 3 from the Philippines and one from India.

The contraventions involved the following conduct:

Requiring each of the sponsored persons to repay in cash a portion of their fortnightly wages, which had the effect of reducing their pay to a level significantly below their respective guaranteed earnings, contrary to Regulation 2.79(3);

Requiring the employees to work without pay for periods of time, also contrary to Regulation 2.79(3);

Requiring one of the sponsored employees to work in an unskilled occupation and not in his nominated skilled occupation, contrary to Regulation 2.86

As a result of requiring repayments from the employees, unlawfully recovering costs contrary to Regulation 2.87.

And how did this employer treat its employees?

In a word, horribly!

As recounted in the Court’s judgment, the company’s sole director: deterred the employees from making complaints to the Department; verbally intimidated and manipulated them by making threats that they would be fired, as well as promises to support applications for permanent residency if they continued to work for him; and enforced the repayment scheme by imposing penaties for late repayments.

How did Justice Buchanan characterize the employers conduct?

His Honour described it as “calculated, deliberate, deceptive and systematic” and a “cynical misuse and exploitation of the company’s superior position with respect to its employees.

And how did the employer cooperate with the Department’s investigation?

To quote from Justice Buchanan’s judgment: “repeatedly lied to Department investigators and provided them with misleading information and knowingly false records”.

So what were the penalty consequences?

As Donald Trump might put it: “Yuuuge!” (Huge!)

The first sentence of Justice Buchanan’s judgment declares that:

“”This is a case which calls for the application of the simple and straightforward principle that courts should attempt to ensure that the risk of a fine for breach of statutory obligations is not seen by those who commit civil penalty offences as an acceptable cost of doing business.”

And Justice Buchanan was “good for his word” in this case.

The penalties imposed were $430,000 against the company and $86,000 against its sole director, who the court found had aided, abetted, counseled, procured and had been knowingly involved in the offences.

On top of those fines, the Court also ordered the company to pay restitution to the employees in an amount exceeding $80,000.

The moral of this case is that standard business sponsors who are guilty of a repeated pattern of breaching their sponsorship obligations by exploiting their employees absolutely run the risk of being hammered with penalties.

And did I mention that the company was also banned from being a standard business sponsor for 5 years, through separate administrative action by the Department.

To put it all in a nutshell, this case tells employers to take that famous marketing slogan and turn it on its head: “Just don’t do it”!!!!!

Concordia Pacific, Email: This email address is being protected from spambots. You need JavaScript enabled to view it.