- The actions of Taskforce Cadena and the recent decision in Minister for Immigration and Border Protection v Choong Enterprises Pty Ltd (2015) FCA 390 demonstrate the government’s commitment to stamp out illegal work practices and penalise employers that breach their migration sponsorship obligations.
- The proposed removal of legal practitioners from the migration agent’s regulatory scheme presents an opportunity for all lawyers to more freely provide migration law advice.
- Knowledge of compliance is essential to successful practice in this field.
The object of the Migration Act 1958 (the Act) is ‘to regulate, in the national interest, the coming into, and presence in Australia of non-citizens’. The Act and its underpinning regulatory framework have undergone significant change of late by way of response to largely unprecedented global and regional trends that have given rise to unregulated people and capital flows into Australia.
In order to better regulate these flows, the government renewed its focus on managing Australia’s border and established the Australian Border Force (ABF) on 1 July 2015. The ABF is a new agency that combines the functions of the Department of Immigration and Border Protection (DIBP) and the Australian Customs and Border Protection Service.
The ABF was established as a new front-line operational agency reflecting a greater focus on the border as a ‘strategic national asset’. Its mission is to protect Australia’s border and manage the movement of people and goods across it.
Along with this renewed focus on border protection, the government is committed to ‘cutting red tape’ by way of its visa simplification and deregulation agenda. While the legislative framework has undergone some rationalisation, further simplification is expected in 2016. In administering this ‘simpler’ regime, DIBP is also increasing its capacity to engage directly with individuals and businesses.
The increased sharing of information and the availability of online application lodgement facilities on DIBP’s website has, according to some, obviated third party legal representatives or migration agents. As a result, many businesses interacting with DIBP remain largely unaware of the scope of their migration law obligations and the consequences for failing to comply with those obligations.
Whilst most businesses are vigilant in seeking to safeguard against liability for non-compliance in relation to workplace relations, occupational health and safety, discrimination and privacy laws, many have tended not to adopt the same approach in respect of immigration law insofar as it affects their human resources decision-making.
As the government continues to direct further resources towards border protection and compliance investigations, businesses will increasingly seek to understand Australia’s immigration compliance framework in order to minimise their exposure to penalties and adverse consequences that may arise out of non-compliance.
Illegal worker regime
Driven by labour market protectionism and a desire to avoid the exploitation of foreign workers in Australia, successive Australian governments have sought to stamp out illegal worker hire practices. On 1 June 2013, Subdivision C of Division 12 of Part 2 of the Act was strengthened to provide a range of criminal offences and civil penalty provisions for any individual or body corporate that:
- allows or continues to allow an unlawful non-citizen to work;
- allows or continues to allow a lawful non-citizen to work in breach of their work-related visa condition;
- refers an unlawful non-citizen to work for a third party; or
- refers a lawful non-citizen to work for a third party and the performance of that work would result in the visa holder breaching their work-related visa condition.
It is not necessary for DIBP to prove that an individual or body corporate had any state of mind when contravening a civil penalty provision. In contrast to the strict liability civil penalty regime, criminal offences require a state of mind to be proven and attract higher penalties.
Aggravated criminal offences involving exploitation of foreign workers attract the highest penalty. In addition to these criminal offences and civil penalties, the statutory regime allows for the issuing of warnings and infringement notices in less serious cases of non-compliance.
Notably, since 1 June 2013, the statutory regime was broadened to allow for civil and criminal liability to apply to an executive officer of a body corporate that has breached the illegal worker regime. The escalating sanctions regime and associated penalties for individuals (for example, sole traders) and bodies corporate (including executive officers) employing or referring an illegal worker is summarised in the following table.
|SANCTION CATEGORY||MAXIMUM PENALTY|
|Illegal Worker Warning Notice (IWWN)||Administrative warning|
|Infringement||$3,240 fine for an individual
$16,200 fine for a body corporate
|Civil penalty||$16,200 fine for an individual
$81,000 fine for a body corporate
|Criminal offence||$21,600 fine and/or 2 years imprisonment for an individual
$108,000 fine for a body corporate
|Aggravated criminal offence||$54,000 fine and/or 5 years imprisonment for an individual
$270,000 fine for a body corporate
|Civil penalty for executive officers of a body corporate||$16,200 fine for an executive officer of a body corporate that contravenes a civil penalty provision|
|Criminal offences for executive officers of a body corporate||$21,600 fine for an executive officer of a body corporate that commits a criminal offence|
|$54,000 fine for an executive officer of a body corporate that commits an aggravated criminal offence|
In addition, a visa holder found working in breach of their work-related visa condition could face visa cancellation and a fine of up to $10,000.
Statutory defences are available in the Act; for example, where an employer uses DIBP’s Visa Entitlement Verification Online (VEVO) system to verify that a person has the required permission to work. More general defences can be made out where it is shown that an employer took reasonable steps at reasonable times to verify a non-citizen’s right to work.
While the illegal worker provisions have not been fully tested in the courts, it is anticipated that the Minister for Immigration and Border Protection will soon rely upon them as a compliance enforcement mechanism. In June 2015, the government established Taskforce Cadena to tackle allegations of fraud and worker exploitation. Led by DIBP and the Fair Work Ombudsman, the taskforce has been working with relevant agencies including the AFP, ASIC, ATO, and state and territory agencies. Although initially targeting labour hire companies and the exploitation of foreign workers in the hospitality, agribusiness and retail sectors, the taskforce has also been investigating allegations of non-compliance by organisations operating in other sectors. Many of these investigations have received considerable media attention.
In the absence of any judicial consideration of the illegal worker provisions, given the prospect of non-compliance penalties and business interruption arising out of administrative sanctions and reputational damage, risk-averse employers are increasingly seeking assistance with reviewing and improving their work rights checking policies and procedures.
Sponsorship obligations regime
Australia’s subclass 457 visa programme has been the subject of considerable political debate and public commentary of late. As a result, changes by the government to make it easier for businesses to sponsor foreign workers have been coupled with a renewed focus on ensuring compliance with sponsorship obligations.
Where a sponsor of foreign workers is found to have breached any one of the ten sponsorship obligations set out in Division 2.19 of Part 2 of the Migration Regulations 1994, the Minister or his delegate may take action under s 140M of the Act to cancel their sponsorship approval and/ or restrict their capacity to sponsor more foreign workers for a specified period.
According to the Assistant Minister for Immigration and Border Protection’s Media release of 9 January 2015, the number of sponsors sanctioned between 1 July 2013 and 30 June 2014 increased by 68 per cent compared to the previous year. DIBP’s compliance investigation and administrative sanction activity has not shown any sign of waning.
In more egregious cases of sponsorship obligation breach warranting more than administrative sanction, the Minister may:
- apply for an order that the sponsor pay the Commonwealth a pecuniary penalty in accordance with Part 8D of the Act;
- issue the sponsor with an infringement notice under s 506A of the Act, as an alternative to applying for a civil penalty order;
- accept a sponsor’s written undertaking relating to sponsorship obligations compliance in accordance with
s 140RA of the Act whereby, among other things, the Minister may publish that undertaking on the Department’s website and enforce that undertaking if breached. The undertaking is similar to that of the enforceable undertakings system available under the Fair Work compliance framework, including the requirement that there is an admission of breach and publication of the undertaking. Interestingly, the Minister has not delegated this enforcement power and, to date, it remains unused.
By contrast, the Minister has twice applied to a court for a pecuniary penalty to be imposed against a sponsor for breach of their obligations.
In Minister for Immigration and Citizenship v Sahan Enterprises Pty Ltd  FMCA 619, Whelan FM imposed a penalty of $35,000 upon a sponsor that had underpaid a foreign worker and had not kept independently verifiable records of the wages paid to that worker.
When determining the pecuniary penalty, Whelan FM took into account matters specified in s 486R of the Act as well as matters regularly cited in civil penalty proceedings in both the Federal Magistrates Court and the Federal Court under the Fair Work Act 2009, namely:
- the nature and the extent of the relevant conduct;
- the nature and extent of any resulting loss or damage;
- previous similar conduct by the respondent;
- whether the contraventions were distinct or arose out of one course of conduct;
- the size of the business enterprise involved;
- whether the contraventions were deliberate;
- whether contrition was exhibited;
- whether corrective action was taken;
- cooperation with enforcement authorities; and
- the need for specific and general deterrence.
In April 2015, the Federal Court imposed the largest civil penalty to date for breach of sponsorship obligations where a hospitality business in Darwin was ordered to pay over $330,000 for breaching sponsorship obligations and underpaying subclass 457 visa holders. In Minister for Immigration and Border Protection v Choong Enterprises Pty Ltd  FCA 390, Mansfield J considered the conduct of Choong Enterprises Pty Ltd which had sponsored a number of Filipinos to work at its various café establishments.
DIBP had found there were multiple sponsorship obligation breaches as well as other grounds to impose administrative sanctions. DIBP cancelled Choong Enterprises’ standard business sponsorship approval and the Minister applied to the Federal Court for an order that the corporation, director and sole shareholder Mr Choong, and Mrs Choong, had contravened a civil penalty provision and that they pay a pecuniary penalty to the Commonwealth.
The grounds for action were:
- underpayment of subclass 457 visa holders;
- failing to keep independently verifiable records of wages paid;
- failing to ensure workers only undertook duties relating to the position for which their subclass 457 visa had been approved;
- deducting migration agent costs from various subclass 457 visa holder’s wages; and
- failing to notify DIBP when a subclass 457 visa holder had ceased their employment within the prescribed period of 10 working days.
In considering the penalty to be imposed, Mansfield J noted the quantum chosen should meet the function of serving both specific and general deterrence, such that any sponsor should not regard the penalty as an acceptable cost of doing business. Mansfield J further observed that the purpose of the sponsorship obligations and the civil penalty regime was twofold:
- to secure the integrity of the Australian labour market – by ensuring that 457 workers are not employed in a manner that undercuts standard conditions of employment; and
- to protect those persons who are brought to Australia and who are vulnerable to exploitation.
Taking into account these guiding principles, the court ordered the company to reimburse four visa holders the $6,400 it had unlawfully deducted from their wages.
Furthermore, in addition to imposing a pecuniary civil penalty of $175,400, the court ordered the company to make restitutionary payments to ten subclass 457 visa holders for underpaid wages in the sum of $125,956.52 and unpaid taxes to the ATO in the sum of $26,460.61.
Interestingly, in both Sahan Enterprises and Choong Enterprises, neither the company nor its owners, were legally represented. One wonders whether the respondents had received any legal advice in relation to the scope of their obligations prior to becoming sponsors and indeed whether the outcome, specifically in relation to the severity of the civil penalties imposed, may have been different had they been properly advised and represented.
In any case, the decisions serve to indicate that DIBP and the Minister are determined to take administrative and court action to impose sanctions and enforce penalties against
businesses that fail to meet their sponsorship obligations.
Compliance – an emerging opportunity
Despite a change in Prime Minister and Cabinet reshuffle in September 2015, compliance remains at the forefront of the immigration portfolio.
On 16 September 2015, the government introduced the Migration Amendment (Charging for a Migration Outcome) Bill 2015 into Parliament. The Bill seeks to give the Minister and DIBP power to take action against ‘payment for visas’ activity, which occurs where a benefit is asked for, received, offered or provided in return for a migration outcome.
A range of civil penalties and criminal offences apply against individuals, bodies corporate and executive officers where breach has occurred. If passed, the sponsorship compliance regime will be further broadened and there will be a further increase in DIBP sponsorship monitoring and investigations activity.
Following the recommendations of the 2014 Independent Review of the Office of the Migration Agents Registration Authority, the government has committed to amending the Act to remove lawyers from the migration agents’ regulatory scheme. If this commitment is realised, the administrative burden requiring lawyers to register with two regulatory bodies will be removed and it is expected that many lawyers who have not practised in the field of migration law will seek to do so.
While migration agents will continue to offer immigration assistance to clients with applications before DIBP, the emergence of immigration law compliance presents an important opportunity and necessity for legal practitioners to engage with their clients to ensure they understand the scope of their liability and put in place robust policies and procedures to mitigate risk of non-compliance to an acceptable level.