Changes to migrant worker legislation: one year on


Changes to migrant worker legislation: one year on

The combination of substantial changes to legislation covering 457 employment visas in September 2009 and the Fair Work Act’s commencement on 1 January 2010 have had significant implications for recruitment and employment of overseas workers. The impact of these changes was discussed at a seminar and panel discussion conducted by the Australian Human Resources Institute in Sydney on 10 November 2010.


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The combination of substantial changes to legislation covering 457 employment visas in September 2009 and the Fair Work Act’s commencement on 1 January 2010 have had significant implications for recruitment and employment of overseas workers. The impact of these changes was discussed at a seminar and panel discussion conducted by the Australian Human Resources Institute (AHRI) in Sydney on 10 November 2010.
The September 2009 changes have been explained in a previous WorkplaceInfo article.
What employment contracts should include
Katie Malyon, migration lawyer and principal of Katie Malyon & Associates, said that the changes had moved the responsibility for compliance from the visa holder strongly towards the employer, with hefty sanctions for non-compliance. She recommended that employment contracts for 457 visa holders should include the following provisions:
  • a general condition that the employment offer is subject to the employee meeting his/her 457 visa obligations (eg ‘subject to the requirements of the 457 visa sponsored by [employer’s name], we offer …’)
  • a warranty from the employee that all information supplied by him/her is correct, otherwise termination of employment may occur — Malyon said that ‘backpacker fraud’ has been quite widespread, with employees working in rural areas then moving to cities and producing false ‘statements of service’
  • a provision stating clearly that the employer will notify the Department of Immigration and Citizenship (DIAC) and terminate its obligations if the employment relationship ends
  • a statement that the employer’s obligations will end if the employee is granted any new visa subsequent to the current one
  • avoid locking yourself into continuing to employ the person after their visa ends — Malyon estimated that about 85% of visa holders want to remain in Australia, maybe 95% of those with families
  • state specifically that you will notify DIAC if termination of employment occurs, therefore the visa will be cancelled
  • on termination of employment, the employer will repatriate the person only, not his/her possessions, etc
  • clearly set out all entitlements post-employment — and note that you should check with DIAC whether provisions relating to repatriations costs have changed
  • an indemnity to the effect that if the employee does not leave Australia when he/she is required to, the employee is responsible for any extra costs incurred
  • if the employee receives a Living Away From Home Allowance (LAFHA), he/she is required to keep any necessary declarations, etc, up to date
  • clearly explain both parties’ obligations regarding health insurance cover. For example, the employee may be required to take out private health insurance and provide evidence of it, and may be required to notify the employee if he/she receives public hospital treatment.
Andrew Ball, partner of DLA Phillips Fox, Workplace Relations Lawyers, added that employers need to have reviewed (and possibly amended) employment contracts for provisions that may have been affected by introduction of the National Employment Standards (NES) on 1 January 2010. These provisions included:
  • annual leave, which now accrues progressively
  • averaging of hours, with the span reduced from 52 weeks to 26
  • parental leave, to include the right to request up to an extra 12 months unpaid leave
  • unpaid community service leave
  • changes to redundancy provisions
  • parents’ and carers’ entitlement to request more flexible work practices.
Role of inspectors
Both the Fair Work Act and Migration Act give substantial powers to workplace inspectors. The relevant wording of each Act is very similar. Ball commented that Fair Work Australia is a ‘very well-resourced and active’ organisation, as shown by the statistics in its Annual Report. He added that employers usually receive ample advance warning of site visits by inspectors. As most visits are triggered by a complaint from an employee or ex-employee, he recommended that employers should investigate the matter themselves before the visit and fix it if required. It is then likely that a sanction, if imposed at all, will be less severe (eg a voluntary undertaking may be required instead of the employer being prosecuted/fined).
Malyon added that the chances of an employer receiving a site visit at present are around 10%, but white-collar organisations such as universities, banks and insurance companies are receiving increasing attention.
The Fair Work Act changes have seen increased interest from unions in using right-of-entry provisions and inspections, but according to Ball they are nowhere near as active as the government inspectors.
Training requirements
Malyon was critical of the training requirement for organisations to spend either 1% of payroll on training for visa employees or donate 2% to an industry training fund. She believed this fails to recognise the opportunity cost of training, which can be onerous for small businesses. It also fails to recognise the high value of on-the-job training and experience, which elsewhere has been recognised and valued in case law. Furthermore, it can be hard to find an industry training fund, although so far DIAC has been flexible in its interpretation and allowed donations to be made to universities and Registered Training Organisations.
HR must be vigilant
Malyon estimated that about 25% of the entire workforce is working under some form of visa, and about 10% have a temporary visa.
To avoid possible discrimination claims, she recommended checking all employees’ entitlements to work in Australia (eg by requiring them to produce relevant documents or insisting on employees’ consent to contact DIAC for verification).
HR must monitor the conditions of all visas, both for currency and any possible changes over time. This means keeping tabs on expiry dates and following up promptly, and investigating employees for possible moonlighting and other breaches. Even if an employer’s breach of the law is inadvertent, it will still be subject to a penalty.
Demonstrating ‘market rate salary’
Replacing the old Minimum Salary Level requirement with the requirement to pay at least ‘market rate salary’ also requires extra diligence, according to Malyon. The Migration Act uses the same terminology here as the Fair Work Act. An employer needs to be able to demonstrate what the ‘market salary’ is. If there is not another employee in an equivalent or similar job, and usually working in the same location, possible sources are a relevant collective agreement or a reputable commercially available remuneration survey such as the Australian Institute of Management’s National Salary Survey. Again, the law fails to consider the value of ‘experience’ when comparing employees.
Comments from the Federal Opposition
This seminar also featured comments by Scott Morrison MP, Shadow Minister for Immigration and Citizenship. Commenting on population trends, he said that there is really not much difference between Government and Opposition policy in this area, both support ‘sustainable population growth’. The current population growth rate of 1.8% per year is down from its recent peak of 2.1%, but still very high by world standards. He recommended that the Productivity Commission advise the government on the impact of different growth band rates.
He added, however, that population growth should not be a substitute for improving productivity and participation rates. Obtaining skills should be the main reason to have a migration program and it should be used as a supplement to natural population growth. He cited two areas of challenge:
  1. Young, unemployed males who may lack mobility, (ie be unwilling to relocate)
  2. Skills transition for employees aged over 55 — some factors still actually provide an incentive to employees to retire at 55.
He further added that skilled migration is now only about one-third of total migration, claiming that the government wants to phase out 457 visas in favour of sponsored migration arrangements which have doubled in the past three years. However, skilled migration had the advantage that people migrated to Australia without the guarantee of a job and were thus motivated to look for one. The government has also removed some occupations from the skilled migration list, although they still have shortages, (eg chefs). 457 visas have fallen sharply in the past two years, especially in the industries of hospitality, manufacturing and mining.
Morrison concluded from the above that employers, often faced with the need to fill vacancies immediately, will simply resort to illegal substitutes if the system does not meet their needs. He favoured an emphasis on migration for specific occupations (eg if you are a chef, only migrate here in order to work as a chef, although later retraining would be permissible as skills and the labour market evolved). He also recommended some more flexible options, such as short-term arrangements (maximum 12 months work) and adjustments to cater for different regional needs.
Employer groups should be more vocal
Morrison criticised employer representatives for not speaking out more about their needs, commenting that it was ‘very lonely out there’ during the 2007 election campaign when WorkChoices was a major issue. He suggested they tended to be quiet because they wanted to impress the government. Referring to the Fair Work Act, he said that the Opposition had no current plans to propose amendments, but will ‘watch trends’ while the Act is in force. Meanwhile, it will prepare a revised policy on 457 visas.
Further information
Further information about this seminar is available from the AHRI website
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