Adriana Bedon, Senior Associate
It is becoming a well-worn cliché that expats living in Australia are happier and living a greater quality of life than their counterparts at home. This perception resonates throughout the annual survey rankings of the world’s cities that offer the highest quality of life. 2015 was no exception, ranking both Sydney and Melbourne in the top 5.1
This promotion has served not only to attract skilled talent for recruitment purposes, but provides international employers with a powerful engagement and retention tool, should they wish to offer transfers and secondments to their respective Australian offices.
Given the above, Australia has become one of the most popular ex-pat hubs and as a result, HR departments globally are facing a growing need to become well acquainted with Australian labour laws and the skilled migration programs that work in tandem with these laws.
We set out a useful guide to this maze of overlapping laws and requirements below.
Migration check-in: requirements to be addressed from the outset
It is all too often the case that migration requirements are not considered until the last stage of a global mobility plan’s execution. For such a plan to move forward, all migration requirements need to be fully met before any transfers or secondments can commence, irrespective of the seniority of the visa applicant, or the urgency of their arrival.
In order to be able to sponsor foreign nationals for employment under the commonly known Subclass 457 Visa scheme (“Visa”), employers must become registered as “Business Sponsors” for Visa purposes.
(i) Employers with an established Australian office
International employers with an Australian office that has been in operation for 12 months or more are required to apply for a Standard Business Sponsorship (“SBS”).
Generally speaking, employers are required to demonstrate that they have lawful and financially viable Australian operations in place and are further required to meet training benchmark requirements.
Training benchmark requirements are met by providing evidence that the business has spent more than 1% of annual payroll on training related activities for the benefit of their Australian employees in the 12 months prior to making the application. Alternatively, employers with no Australian employees may make a donation in the amount of 2% of their annual payroll to an industry relevant training fund to meet this requirement.
(ii) Overseas employers with no Australian office
International employers that do not have an Australian presence but need an employee to carry out business in Australia on their behalf, or establish their Australian operations, may apply for an Overseas Business Sponsorship (“OBS”).
This application is essentially the same as that involved for an SBS, without the requirement of meeting the training benchmark. Instead, OBS applicants are required to provide supporting documentation to evidence the business requirement their foreign national employee will be addressing, or a business plan to evidence their intention of establishing Australian operations.
(iii) New entrants to the Australian market
Australian start-ups (less than 12 months in operation) may also be eligible to sponsor foreign nationals for a Visa. Start-up businesses do not need to meet training benchmark requirements but must provide an auditable training plan to demonstrate how they will meet such training benchmarks once they reach the 12 month mark.
Nominating an employee
Once an employer is registered as an Australian business sponsor they may proceed to nominate a foreign national provided there is a genuine need for the nominated role to be filled.
Further, the nominee must be coming in to take a role that is able to be sponsored, fits within the nature and scope of the business and, in some instances, employers will also be required to meet labour market testing requirements.
There are also requirements that apply with respect to a nominee’s salary. In this regard, a nominee’s Guaranteed Annual Earnings (“GAE”) must comply with two basic standards: in the first instance the GAE must at the least be equal to or above the Temporary Skilled Migration Income Threshold (“TSMIT”) and, more importantly, this amount must comply with Australian market rates for the nominated role.
In addition to the above, the GAE and other benefits must comply with rates imposed by any Modern Award or Enterprise Agreement, where applicable. Finally, the nominee must have the requisite skill level for their nominated occupation and meet a series of other thresholds to obtain the corresponding Visa. This includes mainly health, character and English language requirements.
Are employers required to issue a written employment contract to new recruits commencing in their Australian offices?
There is no statutory requirement to issue a written employment contract to a new recruit in Australia.
However, we strongly advise that our clients issue contracts or transfer agreements that have been drafted to cater for their intentions on entering into the employment relationship so as to pre-emptively position the resolution of a dispute in their favour.
In particular, we recommend that Australian employment contracts issued to foreign nationals be drafted to include clauses that make the employment relationship contingent on the foreign national’s ability to ascertain and maintain a valid visa with working rights. This will facilitate an employer’s ability to terminate an employee should they breach visa conditions or otherwise compromise their visa status.
Australian HR teams should therefore execute contracts of employment with foreign nationals on engagement, as opposed to offering a simple letter confirming the basic terms and conditions. If an Australian employment contract is not executed, this may indicate that the law of the respective Australian state of the employment will govern future disputes. In such scenarios, the governing law of the contract in place may still govern remedies for breach of contract (i.e. post-termination restraints).
In Australia, a range of terms may be implied into an employment agreement such as duties relating to work health and safety, or to the provision of reasonable notice on termination of employment.
Which laws apply to foreign nationals once they commence their roles in Australia?
Once a foreign national commences their role in Australia they will be subject to Australia’s statutory employment law as per the Fair Work Act 2009 (Cth) (“FW Act”), regardless of the governing law of their employment contract, with some minor exceptions.
Irrespective of any written employment contract or lack thereof, employees working in Australia will be entitled to:
- the standards set out in the ten National Employment Standards (“NES”); and
- the minimum terms of employment set out in any Modern Award or Enterprise Agreement, if one applies to the foreign national’s role.
Negotiation considerations: holiday entitlements
The NES provide that Australian employees are entitled to 4 weeks of paid annual leave, calculated on a pro-rata basis. This is an accrued entitlement (which means it becomes available for use as it accrues).
Foreign nationals may find this to be a pleasant or not so pleasant surprise, depending on what they receive in their home-jurisdiction. On the one hand, this may be used as a point of negotiation when offering transfers to foreign nationals that are not accustomed to receiving this much leave. On the other hand, foreign nationals that are accustomed to 5.6 weeks of paid holiday leave (like our lucky UK counterparts) may need to be compensated with other benefits to address this shortfall.
Further, it is important to note that, unlike our UK counterparts, Australian employees retain all unused annual leave, meaning that it carries over from previous years when not used. For this reason, Australian employers will often have annual leave policies that require employees to take annual leave during mandatory shut down periods (for example, Christmas), or when it remains unused for a lengthy period of time, to avoid large pay-outs in the future.
What laws will govern disputes relating to visa holders in Australia who require intermittent travel to their home office
In today’s globalised work culture, employees are often travelling into different jurisdictions as part of their daily roles.
Whilst the nature of circumstances surrounding a dispute will determine the governing laws, in some circumstances, the FW Act’s provisions (such as the NES) or the conditions of a modern award extend to employees whilst overseas.
In the same vein, it is important to note that the FW Act provides that employees will accrue the following entitlements on the basis of their length of service:
- annual leave;
- personal/carer’s leave;
- additional entitlements to notice periods on termination;
- redundancy pay;
- parental leave; and
- long service leave.
Long service leave (“LSL”) in particular can cause issues for employers who have globe-trotting employees. At present there is no definitive standpoint on whether LSL is available to employees in Australia for periods spent working overseas for the same employer. However, the current authority on this matter notes that an entitlement to LSL may arise if an employee is terminated while they are in the same state of Australia in which they were engaged, and their service during the relevant time period is seen as “substantially connected” to that state.
Given the above, we recommend that HR teams carefully monitor accrued entitlements for all foreign nationals, namely those initially engaged in Australia.
Terminating a visa holder
The threshold for what is considered to be a “harsh, unjust or unreasonable” termination is generally lower when it comes to Visa holders, given that their lawful stay in Australia is dependent on their ongoing employment.
Once terminated, Visa holders have 90 days to arrange for another visa or their departure from Australia. Given the gravity of the consequences for a Visa holder, a number of decisions have provided access to remedies under the FW Act, even in instances where the termination was for a valid reason.
HR teams need to ensure that procedural fairness is both offered and recorded to mitigate the “difficult circumstances” a Visa holder can be placed in on termination. It is also recommended that the services of a Registered Migration Agent be arranged to facilitate the Visa holder’s ability to remain in the country, if this is their preference.
On termination, HR teams should also be mindful of their sponsorship obligations, including communicating the termination to the Department of Immigration and Border Protection within a 28 day period and maintaining records.
HR teams should also be aware that they will have an obligation to cover reasonable return travel air fares (i.e. economy class) for recently terminated Visa holders who request this in writing.
- address migration requirements from the outset;
- have robust Australian employment contracts and/or secondment agreements for prospective foreign national employees;
- ensure foreign nationals are across their entitlements on engagement;
- monitor accrued entitlements; and
- carefully execute termination of Visa holders.
1. Monocle, The Monocle Quality of Life Survey 2015