Sponsorship Compliance: Why It Matters for Employers and Visa Holders

Over the past year, we have become aware of increased sponsorship compliance activity by the Australian Border Force (ABF). This may take the form of “desktop” surveys and requests for documents. At worst, an employer may find themselves dealing with unannounced site visits from ABF (or Fair Work Ombudsman) officers.

In whatever form the compliance audit may take, we have found that many employers are ill-equipped to deal with them. Failure to properly respond to an audit may result in serious consequences to both employers and visa holders.

What are Sponsorship Obligations?

Sponsorship obligations refer to the legal obligations imposed on approved sponsors of visa holders, such as the Subclass 482 Skills in Demand visa.

Some of these obligations include:

• ensuring that sponsored workers work only in their nominated occupation;
• ensuring that sponsored workers are paid at or above the nominated salary; and
• ensuring that sponsored workers are paid at market rate.

From a broader policy perspective, these obligations are designed to ensure that:

• sponsored workers are not exploited;
• Australian workers are not disadvantaged by the sponsorship program;
• the integrity of Australia’s migration system is upheld.

They are a key plank of the sponsored visa program. However, in many cases, when lodging a visa application for a sponsored worker is the main priority, the advice about “back-end” consequences can often be overlooked.

Non-Compliance and its Consequences

Some examples of non-compliance include:

• During an annual salary review, the Australian worker used as a reference point for “market salary” has their salary increased greater than the visa holder’s salary, resulting in the visa holder being paid ostensibly less than market salary. No other evidence of “market salary” was held on file at the time of review;
• A sponsored worker whose “guaranteed annual earnings” as stipulated in the nomination approval was calculated on a high number of hours to be worked. However, it turned out the worker was engaged for fewer hours each week (perhaps due to economic conditions) which resulted in their earnings dropping below the guaranteed amount;
• A sponsored worker who failed to perform at the expected level of competence was given lower-level tasks without their position being renominated; or a sponsored worker who performed above expectations was given higher-level tasks for a sustained period without their position being renominated.
• An employer misconceived the tasks of the position and nominated the wrong occupation.

The penalties for failing to comply can be significant, including:

• Suspension or cancellation of sponsorship approval.
• Civil penalties and infringement notices.
• Negative impacts on the visa holder, including visa cancellation.

These outcomes can disrupt business operations and cause reputational damage.

Strategies to Mitigate Risk

With the right systems in place, businesses can significantly reduce the risk of non-compliance.

Some practical strategies include:

1. Develop an internal compliance policy
   Document key obligations, reporting timelines, and responsible officers within the business.
2. Develop flagging systems
   Flag key events which may result in changing work conditions (such as pay,  hours of work or position tasks) which may, in turn, impact sponsorship obligations.
3. Maintain accurate records
   Keep up-to-date payroll, work location, and visa records. Ensure these can be produced quickly in the event of an audit.
4. Regular internal audits
   Review employee contracts, pay slips, and visa conditions at least annually to confirm ongoing compliance.
5. Train HR and payroll staff
   Provide training to staff involved in recruitment, payroll, and workforce management so they understand sponsorship obligations.
6. Set up reminders for notification deadlines
   Use calendar alerts or compliance software to ensure changes (such as cessation of employment) are reported to the Department within the required timeframe.
7. Seek specialist advice early
   If there is uncertainty about a reporting obligation or employment arrangement, legal advice can prevent small issues from escalating into breaches.
8. When ABF requests information, respond promptly
   Failure to provide information within specified time limits may itself be seen as a breach of sponsorship obligations.

Munro Doig regularly advises employers on all aspects of sponsorship compliance, including acting during an audit. We can assist with:

• Advising on setting up compliance frameworks and systems.
• Conducting compliance “health checks” and audits.
• Advising on reporting obligations and record-keeping.
• Representing sponsors in dealings with ABF.

Whether you are a growing business sponsoring your first overseas worker, or an established employer with a large sponsored workforce, we can guide you through the complex requirements to best protect your interests.

If you or your client need assistance with sponsorship compliance, please contact Melissa Phan or Lester Ong.