Australia: Engaging foreign labour, employer sanctions & corporate officer liability

17 March 2014

Lesley Maclou and Sarah McCarthy of Truman Hoyle

On 1 June 2013, legislation commenced in Australia to reform the employer sanctions regime with respect to the employment of non - citizens in Australia.


The Howell’s review in 2010 revealed that the then current employer sanctions framework (that included criminal sanctions and an administrative warning notice scheme) was wholly ineffective as a deterrent against the number of employers and labour hire providers who continued to allow or refer non Australian citizens to work without the requisite legal permissions.

Whilst Australia has long recognised and accepted its economic need to tap into overseas talent, recent cases and regulatory investigations have also revealed that too many employers had been taking advantage of the system including underpaying overseas workers, paying such workers well below market rates, failing to adhere to the training requirements and fraudulently assisting family and friends migrate to Australia.

Skilled migration has historically been an important cog in Australia’s economic wheel and continues to be relevant to Australia’s development in the global economy. Over the last three years alone the number of Temporary Skilled Work Subclass 457 Visa (for on-going work greater than 12 weeks) holders in Australia has almost doubled, increasing from 68,400 in 2010 to 106,680 in 2013.

Currently, the type of visas that are available to enable overseas nationals to work in Australia, subject to strict qualifications, requirements and conditions include:

  • Business Visitor Visa – this visa allows businesses to send employees for trading, negotiations and seminars etc;
  • Short Stay 400 Visa –this visa enables visit for non-ongoing work of up to 12 weeks in duration; and
  • Temporary Skilled Work Subclass 457 Visas – this visa enables eligible Employees to provide work on an on-going basis to employers who are approved business sponsors.

Given the finding of the Howells review and the offences that were being exposed, preventing employers from unfairly capitalising on market trends, abusing the immigration policies and taking advantage of individuals who are supporting economic development in Australia was critical.

Accordingly, the then Australian Labor Government announced in December 2011 that it would legislate to reform the employer sanctions regime and introduced a new regime of individual corporate officer liability.

Legislative Changes

In July 2013 the Australian Government introduced the Migration Amendment (Temporary Sponsored Visas) Act 2013 and the Migration Amendment (Reform of Employer Sanctions) Act 2013.

This development was critical not just in terms of regulating workplace immigration in Australia, but also having regard to Australia’s economic growth and development.

Under the new laws there are increased positive obligations on employers to undertake due diligence and check that a candidate applying for a job has the requisite permissions to work in Australia. The new laws also expose corporate officers such as CEO’s, CFO’s and Director’s, to individual liability for breaches of Australian Immigration Laws. Significantly for employers the amendments include:

  • Non-fault civil penalties and harsher criminal offences for company employers where a person or employer among other things: allows or refers an unlawful non - citizen to work, continue to work, refers them for work to a third party and/or permits work in breach of visa conditions;
  • Broadening the scope of liability to include individual CEO’s, CFO’s and directors for work-related contraventions or offences;
  • Creation of an infringement notice scheme as an alternative to commencing civil penalty proceedings;
  • Introduction of harsher aggravated offences in circumstances where unlawful Employees are exploited; and
  • Increased investigation powers of Immigration offices, including entry and search powers as well as forced production of documents.

An offence may attract a criminal penalty of up to two years imprisonment, a penalty of 90 penalty units (currently AUD$15,300) or both.

A civil penalty of up to a maximum of 90 penalty units may also be imposed without immigration authorities needing to prove that an employer knew of or was reckless about an unlawful workers status when employing or referring a worker.

In February this year the current Coalition Government, who largely objected to the June 2013 amendments, announced it would conduct a further review of the 457 Visa Program with the aim to provide recommendations on how to maintain the integrity of the program, while not placing unnecessary administrative burdens on business, including potentially removing the labour market testing requirement. Until such time however the obligtaions for employers remain.

Implications for Employers

Given the Coalition Government’s announcement, employer’s in the Australian market should ‘watch this space’. In the meantime however, employers need to understand their current obligations and be aware of what steps need to be taken and options are available to them to both comply with their legal obligations whilst still pursuing commercial growth, objectives and market opportunities.

Despite the new employer sanctions Australia still remains a viable option for international employers seeking to strengthen or support their Australian operations by transferring or engaging skilled foreign labour to work in Australia.

Importantly, in addition to the changes outlined above, the new legislation has also introduced and made available to employers a range of statutory defences - subject to the employer being able to show that they took reasonable steps at reasonable times to verify a foreign nationals immigration status and/or work rights.

To utilise such statutory defences, an employer should ensure that:

  • An individual’s details are checked and verified on the Australian Governments Visa Entitlement Verification Online (“VEVO”) system; and/or
  • Ensure that original personal identification documents are cited and inspected including:
  • Passports;
  • Citizenship papers;
  • Photographic identification; and/or
  • Certificates of evidence of residence status.

Practical Tips

Employers should ensure that they conduct regular audits and reviews of current policies with respect to hiring and recruitment as well as ensuring that they have sufficient internal systems and controls to manage, monitor and enforce compliance.  This includes adequately communicating with staff and management and ensuring that all staff involved in these processes have appropriate training, are aware of, comply with and apply any relevant policies and procedures consistently. Staff should also be notified that appropriate disciplinary measures will be taken for any failure to comply.

Pre-employment screening is now critical to an employer’s potential liability for hiring or referring a worker.  Agreements with suppliers should be reviewed.  Any company that relies on labour hire will need to ensure that all contracts with third parties for the provision or use of labour adequately comply with the employer sanction provision and appropriately protect the end user.  In particular, labour suppliers/vendors should be contractually required to verify and provide warranties as to work/visa status. There are a number of other employment law related issues that may arise as a result of failing to adhere to Australian Migration laws which are not covered by this article. Please do not hesitate to contact us if you would like specialist advice or assistance in any of these areas.

By Lesley Maclou (Truman Hoyle) and Sarah McCarthy (Truman Hoyle)