If you currently employ, or you are considering employing, workers from overseas you need to be aware of two recent legal developments that have direct application to you and your business. The developments concern:

  • the tightening of the rules hiring foreign workers; and
  • the potential cost of underpaying workers.

A recent media report suggests that there are an estimated 100,000 vacant jobs in Australian agricultural businesses. The shortage of Australian workers who are interested in agricultural work suggests that employers in the agricultural sector will continue to look to foreign labour as a means of filling the gap.

While the Federal Government has tightened laws regarding the hiring of overseas labour the Fair Work Ombudsman has stated that in the last two years it has received in excess of 200 complaints from foreign workers who claim to have been underpaid. Statistics suggest that the majority of these complaints were in the agricultural sector. In a warning to the agricultural sector, given its exposure to foreign labour, a recent decision handed down in the Federal Circuit Court of Australia demonstrates that the Ombudsman and the Courts will not take cases of proven underpayment of foreign workers lightly.

Stricter rules for hiring foreign workers

In 2007 the Federal Government legislated to criminalise the actions of businesses that ‘knowingly or recklessly’ employed foreign workers who do not have the legal right to work in Australia.

However, from 1 June this year the Federal Government went a step further and amended the Migration Act 1954 (Cth) (Act) to authorise heavy sanctions on employers, as well as their executive officers in their personal capacity. The changes mean that even in circumstances where the employer is not aware that it has employed, or is continuing to employ, a person who does not have the right to work in Australia or who does not have the right under their Visa to do the particular kind of work that they have been engaged to do an employer could be sanctioned.

What does this mean in practice?

Employers cannot afford to assume that any worker has the legal right to work in Australia. Indeed, according to a 2011 governmental review of the Act, about one quarter of people who have overstayed their visa in Australia have been in the country for in excess of 15 years.

The tightening of the laws has raised the bar for employers of foreign workers and no longer allows an employer to rely on the argument that they did not know the status of a workers’ visa as a defence to an alleged contravention of the Act.

To avoid contravening these laws employers will need to be able to demonstrate that they have taken reasonable steps at reasonable times to verify that a worker is not an unlawful non-citizen and not a lawful non-citizen in breach of a work-related visa condition.

While the Act does not provide a definition of what would be a ‘reasonable step’ in this context employers should anticipate that they would be asked whether, before they engaged a worker, they had:

  • required evidence from the workers that identifies them and states whether they had the relevant rights to work in the business
  • scrutinised any evidence that was provided rigorously
  • maintained meticulous records in respect of each employee’s work rights
  • undertaken a search of the Department of Immigration and Border Protection’s Visa Entitlement Verification Online (VEVO) system
  • periodically checked their worker’s rights where they are aware or ought to be aware that a worker’s rights may have expired during the period of their engagement.

Additional safeguards that an employer may consider adopting include:

  • incorporating a clause into written contracts of employment whereby a prospective worker acknowledges that they have the right to work in Australia and to do the work for which they are being engaged
  • ensuring that workplace policies are updated to:
    • reflect the new laws by placing a positive obligation on workers to keep the employer informed about their working rights and visa status
    • ensure that management are trained and aware in the application of the current laws.

Company officers are now personally liable

The laws now also apply to ‘executive officers’ in their personal capacity. An executive officer is defined in the Act to include a director, chief executive officer, chief financial officer and company secretary.

An executive officer will be will be personally liable for, and subject to a financial penalty in respect of, the employer’s contraventions of both the criminal and civil provisions where the executive officer:

  • knew, or was negligent as to whether, the contraventions would occur
  • was in a position to influence the conduct of the employer in relation to the contravention
  • failed to take reasonable steps to prevent the contraventions

An examination of whether the executive officer took reasonable steps to prevent the contraventions will include consideration of whether they took ‘any action’ towards ensuring that the employer’s employees, agents or contractors understood the laws as they apply and what action (if any) the executive officer took when he or she became aware that the company was in contravention of the laws.

What are the possible sanctions?

While the federal government has suggested that it would ‘usually’ provide employers with at least one warning notice employers need to be aware that the penalties for breach of these laws can be significant.

Individuals found to have contravened the tightened rules in the Act may be fined $15,300 or imprisoned for up to 2 years. A company may be fined up to $76,500 for a single offence.

Record prosecution for underpayments of foreign workers

Not only must employers of foreign workers remain vigilant in regard to their workers’ right to work but it is also crucial that employers meet their workers’ minimum pay and condition requirements.

In July this year the Federal Circuit Court of Australia (Court) ordered that a Perth based cleaning company pay nearly $350,000 in penalties under the Fair Work Act 2009 (Cth) (FW Act) for underpaying six cleaners, five of whom were foreign workers.

The decision indicates how vigilant the Fair Work Ombudsman will be in pursuing underpayment cases and how seriously Australian courts will treat cases where underpayments are proven.

The Fair Work Ombudsman was alerted to the breaches after complaints were lodged by the employees themselves.

In coming to its decision the Court considered that the wage and entitlement contraventions by the company and its director were deliberate and that the conduct was specifically designed to fail to pay employees at all during the first few weeks of employment and to fail to pay full and proper entitlements thereafter.

The Court was particularly concerned with the fact that the conduct had the effect of marginalising and exploiting already vulnerable workers and should sound as a lesson to all employers of foreign workers, not just those in the cleaning industry, that Courts will take these matters seriously. Indeed, the Court stated that ‘the penalty must be an appropriate level to deter others within the relevant industry, and other industries from committing similar breaches of Australian workplace law’. The Court stated further that ‘a light-handed approach to contraventions is no longer appropriate’.

If you are unsure of the minimum entitlements that you are required to pay your workers under the FW Act or another workplace instrument you should contact the Fair Work Ombudsman or consult one of our employment law specialists to discuss your situation.