Employment Contract – 457 Visas holders

A recent decision from the Fair Work Commission (Commission) of Smallwood v Ergo Asia Pty Ltd [2014] FWC 964 (14 February 2014) is a timely reminder for 457 Employer sponsors and visa applicants of their obligations, particular in regards to their terms and conditions of employment.

The Commission dismissed a claim for unfair dismissal against Ergo Asia Pty Ltd (Ergo), affirming that the employee was not employed by Ergo, but by Geoffrey Nathan Consulting (GNC).

The employee, who was in Australia holding a 457 visa, sought employment from Ergo. Around the same time, she sought employment from GNC. On 20 September 2012, she advised Ergo that GNC would be sponsoring her, but that she would need an ‘offer letter’ from Ergo. Ergo agreed and provided the employee with an offer of employment.

However, on 8 October 2012, she also signed an employment contract with GNC. GNC undertook a “workplace service agreement” and advised Ergo that their contract superseded theirs. GNC then proceeded to arrange for the sponsorship to be transferred, and the employee commenced working for Ergo. GNC invoiced Ergo for the amount specified in the workplace service agreement and continued to do so until the engagement ceased. GNC continued to meet all of its sponsorship obligations.

In September 2013, GNC terminated the employee’s employment, due to the employee’s conduct. The employee claimed that Ergo was her employer, but the Commission ruled that Ergo was “not an employer registered to sponsor 457 visa holders”. There was a clear employment contract between GNC and the employee. The employment contract set out wages and conditions of employment, and the employee was not forced into arrangements she was in with GNC.

Migration Implications

Though not required to discuss this issue, Commissioner Bisset held that the Migration act impliedly prohibits employment between the visa holder and the non-sponsoring company. Ergo had never sponsored the employee, and clearly could not have been her employer. The Commissioner stated that had the employee worked for Ergo, she would have breached her visa condition, and would have been criminally liable under the Migration Act.

The Workplace Relations Law and Migration Law teams can assist employers mitigate their risks of 457 visa issues.

Written by
Jonathan Mamaril
Principal & Director, NB Lawyers – the Lawyers for Employers
07 3876 5111
jonathanm@nb-lawyers.com.au