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Pendlebury Workplace Law is a specialist workplace relations and employment law legal practice based in Sydney.

Largest ever Court Imposed Fine for Breaching 457 Visa Sponsorship Obligations

Five weeks after ordering Darwin-based Choong Enterprises to pay the largest-ever court-imposed fine for breaching 457 visa sponsorship obligations, the Federal Court has directed the Company to backpay 7 of the Filipino workers involved, totalling more than $100,000.

Justice Mansfield found in April 2015 that Choong Enterprises Pty Ltd (which operates a number of fast food restaurants and cafés) had underpaid the workers who were 457 visa holders, only $12 an hour between 2009 and 2012.

The Company failed to pay entitlements such as loadings, sick leave and superannuation contributions and failed to comply with record-keeping obligations, produced false pay records and had recovered the costs of migration agent fees from 4 of the visa holders.

Justice Mansfield in April ordered the Company to pay $175,400 in pecuniary penalties and ordered its sole director and shareholder, Ronald Choong, to pay $800, finding he had aided and abetted the Company’s actions.

However, his Honour refused to impose a penalty on the director’s wife (who was not a company officer), finding that while she was aware “more broadly” of the Company’s failure to comply with its sponsorship obligations, she “was not doing so in a considered and consistent way“.

The government subsequently sought $125,956 in total reimbursements for 7 of the affected employees (all from the Phillippines) under the Migration Regulations 1994.

The judge rejected the Company’s application for periodic payments, noting that while Choong Enterprises’ trading assets had been reduced to operating a fish and chip shop in Nightcliff, it had sold most of its business to D & C Gourmet Pty Ltd, whose director shared an address with Ronald Choong.  He noted the “stark” difference in restitution payable under the Migration Act to the exploited employees, depending on whether it was calculated using the base rate prescribed for the purposes of section 140(1) of that Act, or the relevant award.

His Honour said, “Without going into the detail of each of the 7 sponsored employees involved, as the PAYG tax adjustment in each case is different, the total claimed by way of reimbursement of regulation 2.79 fixes the entitlement, the total reimbursement sought by the Minister is $125,956 compared to $52,480 if the Award is the appropriate starting point.

After Justice Mansfield made the initial ruling in April, Assistant Minister for Immigration and Border Protection, Senator Michaelia Cash, in a statement said it was the department’s first Federal Court civil penalty application and the largest civil penalty any court had imposed for a breach of sponsor obligations.

Senator Cash said, “The stiff penalty this company has received should send a warning to other sponsors: if you fail to meet your requirements, my Department may impose administrative sanctions, issue an infringement notice, execute an enforceable undertaking, or apply to the federal court for a civil penalty order” .

[Minister for Immigration and Border Protection v Choong Enterprises Pty Ltd (No 2) [2015] FCA 553 (4June 2015)]

Taskforce Cadena

Senator Cash in a statement issued Friday 5 June 2015, welcomed the Federal Court result and said to expect further investigations with the commencement of Taskforce Cadena from 1 July.

Senator Cash said, “The Coalition Government understands that at times businesses need to access foreign labour for positions that cannot be filled locally, however we are committed to ensuring integrity is maintained across our migration programmes through rigorous enforcement of the rule of law“.

The task force (headed by the Department of Immigration and Border Protection and the Fair Work Ombudsman) will work with the Australian Federal Police, Australian Securities and Investment Commission, the Australian Tax Office, and various state and territory agencies to investigate instances of worker exploitation and visa fraud.

Senator Cash said, “The Department of Immigration and Border Protection and the Fair Work Ombudsman are active in ongoing compliance campaigns to ensure that temporary visa holders are being paid in accordance with Australian pay and conditions. This taskforce will greatly complement those existing efforts.

Brooke Pendlebury
Sunday, June 21, 2015
Entitlements, News, Workplace Investigations