23 Digital Pty Ltd (Migration)

23 Digital Pty Ltd (Migration) [2023] AATA 4392 (15 December 2023)
DECISION RECORD
DIVISION:Migration & Refugee Division
APPLICANT:  23 Digital Pty Ltd
REPRESENTATIVE:  Mrs Thara Namboothiri
CASE NUMBER:  2205922
HOME AFFAIRS REFERENCE(S):          OPF2021/1176
MEMBER:Mary Sheargold
DATE:15 December 2023
PLACE OF DECISION:  Melbourne
DECISION:The Tribunal varies the decision under review by reducing the period of the sponsorship bar from 18 months to 3 months.

Statement made on 15 December 2023 at 9:27pm
CATCHWORDS
MIGRATION – sponsorship bar – failure to satisfy sponsorship obligations – equivalent terms and conditions and ensuring sponsored person works in nominated occupation – ABF investigations – underpayment – calculation of paid lunch break – failure inadvertent – worker’s secondary employment as Uber driver unknown to employers – level of neglect of obligations – consequential effects on other workers and associated company – cooperation, full admissions and steps to rectify – no previous failures – bar period reduced – decision under review varied
LEGISLATION
Migration Act 1958 (Cth), ss 140L(1)(a), 140M(2)
Migration Regulations 1994 (Cth), rr 2.79, 2.86, 2.89(2)
STATEMENT OF DECISION AND REASONS
APPLICATION FOR REVIEW
1.This is an application for review of a decision made by a delegate of the Minister for Home Affairs to take an action under s 140M of the Migration Act 1958 (Cth) (the Act) in relation to the applicant’s sponsorship.

The applicant was first approved as a standard business sponsor on 14 July 2016. On 1 April 2022, the delegate decided to bar the applicant for 18 months from making applications for approval as a standard business sponsor and temporary activities sponsor under s 140M(2) of the Act on the basis that it was found to have breached reg 2.89 of the Regulations by failing to satisfy two of its sponsorship obligations.
In the Notice of Intention To Take Action (NOITTA) issued to the applicant by Australian Border Force on 24 January 2022, a breach of reg 2.90 was also alleged, with the applicant accused of providing the Department with false or misleading information. After considering the evidence provided by the applicant in response to this allegation, it was not pursued further by ABF.
Mr Ruchir Parekh and Mr Piyushkumar Kotadiya, the directors and shareholders of 23Digital Pty Ltd (the applicant appeared) before the Tribunal on 5 December 2023 to give evidence and present arguments.
The applicant was represented in relation to the review. The representative attended the Tribunal hearing.
6.For the following reasons, the Tribunal has decided to vary the decision under review by reducing the period of the sponsorship bar to 3 months from 18 months.
CONSIDERATION OF CLAIMS AND EVIDENCE
Sections 140K, 140L and 140M of the Act provide for the imposition of sanctions on approved sponsors in certain circumstances.
Under s 140M, if prescribed circumstances exist, the Minister (and the Tribunal on review) may take one or more of the following actions:
·cancelling the sponsorship approval in relation to a class to which the sponsor belongs;
·cancelling the sponsorship approval for all classes to which the sponsor belongs;
·barring the sponsor for a specified period from sponsoring more people under the terms of any existing approval; and
·barring the sponsor for a specified period from making future applications for sponsorship approval in relation to one or more classes of sponsor.
For these purposes, the circumstances are prescribed in regs 2.89–2.94B and include circumstances in which the Minister, or Tribunal on review, is satisfied there has been: a failure to satisfy a sponsorship obligation; provision of false or misleading information; sponsorship application or variation criteria no longer met; a contravention of the law; unapproved changes to a program; a failure to pay additional security; a failure to comply with certain terms of an agreement; or a failure to pay medical and hospital expenses.
Where a prescribed circumstance has been found to exist, the Regulations prescribe criteria that must be taken into account when determining what action, if any, to take: regs 2.89–2.94B. These criteria, as they relevantly apply to the circumstances of this case are set out in the attachment to this decision.
Does a circumstance for the taking of an action exist?
11.In the present case, the delegate found that the applicant failed to satisfy 2 sponsorship obligations and so was found to have breached reg 2.89.
Failure to satisfy a sponsorship obligation: reg 2.89
The Minister may take one or more of the actions in s 140M if satisfied the sponsor has failed to satisfy a sponsorship obligation referred to in Division 2.19 of the Regulations: reg 2.89(2).
In this case, the applicant was found to have breached its obligation to ensure equivalent terms and conditions of employment for Subclass 457/482 visa holders (reg 2.79) as well as breaching its obligation to ensure that the primary sponsored person works or participates in their nominated occupation, program or activity (reg 2.86).
Regulation 2.79
In respect of the obligation to ensure equivalent terms and conditions of employment for its sponsored workers, the Tribunal notes that the applicant was found to have incurred this breach by making underpayments of less than $2 per hour to 2 of its sponsored workers over a 6 month audit period from September 2020 to March 2021. Those 2 workers were Sarfraz Ahmad and Kaivan Mahendrakumar Mehta.
Mr Parekh and Mr Kotadiya tried to explain this discrepancy to the Tribunal in the manner in which they had responded to ABF, citing misunderstandings and changeovers in employment agreements after the audit period to explain the disconnect. Both directors were fervent regarding their approach to operating a services business, noting their staff are their greatest asset and that they have always gone above and beyond what is required by law to ensure a positive work environment for all their employees.
Mr Parekh explained that the staff were noted to have a 40 hour work week in their hourly pay calculation, but that this included a 30 minute paid lunch break, and that it seemed the confusion regarding the correct construction of their sponsored workers’ hourly rates of pay could be explained by this fact. The Tribunal proposed to the applicants it was absurd to incorporate a paid lunch break into an hourly pay calculation with no expectation for staff to work through that paid break time, and suggested that perhaps it would be more logical to not pay staff for a lunch break and reduce the hours paid to the standard 38 hours per week, which would reflect the above-Award hourly rates the applicant claimed to pay to its staff. To his credit, Mr Parekh said he would take this on board and would look to adopt that approach in the future.
Neither Mr Parekh nor Mr Kotadiya attempted to defend themselves against the ABF’s finding. They accepted that prima facie it was open to the delegate to find that those 2 sponsored workers were paid slightly less than their expected hourly rate. However, they maintain that if the salary paid is divided into an hourly rate based on the 38 hours per week actually worked rather than the full 40 hours including a paid meal break, it is clear they did not underpay those sponsored workers.
The directors focused their attention on the positive steps they had taken to correct the error identified and to ensure it never happens again. They highlighted the fact that 23Digital records significant net profits year on year, noting it would not be worth risking their business’s reputation to knowingly underpay their staff.
Based on all the evidence available at review, the Tribunal is satisfied that while the 2 sponsored workers identified by ABF appear to have been underpaid their ‘entitled’ hourly rate, they were nonetheless paid their salary, representing a market-leading salary for their positions, on the same terms as every other worker in the organisation. The fact that a payroll officer records 40 hours per week on a payslip where an employment contract stipulates a 38 hour work week yet the salary paid matches the salary proposed in the employment contract satisfies the Tribunal that while there may have been a technical breach of this sponsorship obligation, it was minor in nature.
Regulation 2.86
Safraz Ahmad was also investigated by ABF because there was evidence to suggest he had worked for Uber Technologies Inc between at least 1 November 2017 to at least 8 October 2018. The records uncovered by ABF showed that Mr Ahmad had worked for Uber for, on average, 11-14 hours per day. Given the nature of Uber’s business, it was possible to trace the exact times Mr Ahmad performed work for Uber and the applicant did not attempt to dispute, at any time, the veracity of ABF’s findings.
The Tribunal devoted the majority of its time with Mr Parekh and Mr Kotadiya trying to make sense of a circumstance in which an employee could meet all his deadlines and produce good quality work, as well as having a physical presence in the office for meetings, while working 11 or more hours a day for another employer, generally during standard 9-5 business hours, without anyone ever realising.
Mr Parekh and Mr Kotadiya were able to proffer some theories regarding the reason Mr Ahmad’s second job went undetected by the applicant. They suggested that Mr Ahmad was always very responsive over Skype, the platform used by the applicant prior to Covid-19 to connect staff who were working from home with those staff in the office, suggesting he would both type messages and answer calls on his mobile phone while driving. The Tribunal accepts that working from home arrangements are commonplace in the IT sector and have been for many years. It appears Mr Ahmad was able to leverage his position as someone known to prefer working from home to his advantage.
The directors explained that prior to ABF’s investigations, they did not engage in the use of any software to monitor the activity levels and location of workers accessing shared networks remotely, but after this incident, they have been forced to revise their policies and practices. It was clear that Mr Parekh and Mr Kotadiya were embarrassed to be in a situation where their employee was able to brazenly accept secondary employment at a full time level without anyone ever catching on. It is also clear that they preferred a work environment that valued and fostered trust between employer and employee, but that they have accepted now that the risks involved are too great.
Mr Parekh and Mr Kotadiya also explained that they were relatively new to the visa sponsorship program and did not fully appreciate that the scope of their obligations extended to preventing their employees from having any supplementary employment. They noted that since they received the NOITTA nearly 2 years ago, they have incorporated a reminder section into each team meeting held to remind all sponsored workers that they are to work only for 23 Digital and that they are not permitted to engage in any outside employment.
The irony of the applicants being found to have breached a sponsorship obligation in circumstances where the employee fulfilled their job description and delivered good work product on time is not lost on the Tribunal. The ripple effect caused by Mr Ahmad’s lone actions is significant. The directors claim to have lost good workers as a result of ABF’s actions, and noted that another company in which they are directors has also recently been barred from sponsoring workers due to this incident.
Nonetheless, the extraordinary extent of Mr Ahmad’s deception reveals an obvious issue with the applicant’s ability to ensure that sponsored workers are working only in their nominated occupation for their nominating sponsor. The trust that the applicant places in all its staff to perform their duties and be available to the business’s clients as needed was broken by Mr Ahmad, and the consequences are felt by the applicant too.
The Tribunal notes that Mr Parekh and Mr Kotadiya did not attempt to defend their lack of awareness of Mr Ahmad’s gross indiscretion; rather, they accepted graciously a valuable opportunity to learn and to grow. The Tribunal accepts their evidence regarding the significant steps taken to ensure such an incident does not go undetected for so long ever again.
The evidence regarding Mr Ahmad’s secondary employment is not disputed by the applicant. It follows that, based on all the available evidence at review, the Tribunal is satisfied that the applicant breached its obligation to ensure that the primary sponsored person worked in their nominated position and only in that position.
29.Accordingly, the Tribunal is satisfied that the prescribed circumstance in reg 2.89 exists for the purpose of s 140M of the Act.
Action to be taken
For these reasons, the Tribunal is satisfied that a relevant circumstance for s 140L(1)(a) exists. Accordingly, it is necessary to consider whether one or more of the actions mentioned in s 140M should be taken.
In considering what action to take, the Tribunal has had regard to the prescribed criteria, as extracted in the attachment to this decision.
23Digital’s past and present conduct in relation to Immigration and the period of time over which it has been an approved sponsor
23Digital was first approved as a standard business sponsor on 14 July 2016. It has successfully nominated and sponsored 6 primary visa holders in the Subclass 457 and then Temporary Skills Shortage visa schemes. The ABF’s investigation is the first time 23Digital has been subject to monitoring. The evidence before me suggests that Mr Parekh and Mr Kotadiya and their representative have cooperated with the Department to the best of their ability, and they have not intentionally obstructed ABF’s investigations or intentionally misled ABF officers in any way.
The number of occasions on which 23Digital has failed to satisfy its sponsorship obligations
Mr Parekh and Mr Kotadiya have admitted and accepted that there were multiple breaches of 23Digital’s sponsorship obligations. They were identified by the delegate, and those findings are affirmed by me at review. 23Digital breached its obligation under 2.79 on 29 occasions. It breached its obligation under s.2.86 on 1 occasion.
The nature and severity of the circumstances relating to the failure to satisfy the sponsorship obligations, including the period of time over which the failure has occurred
As set out above, the breaches of reg 2.79 are relatively minor and somewhat explicable. However, the Tribunal notes that but for ABF’s investigation, it is probable that the status quo would have continued indefinitely.
Of more concern is the circumstance regarding the failure to ensure that Mr Ahmad worked only for 23Digital (or an associated entity as defined). It is extraordinary that Mr Ahmad could go undetected for at least 11 months, working an additional 11-14 hours per day for Uber, while maintaining a good quality work product for the applicant’s business.
The Tribunal accepts that while Mr Parekh and Mr Kotadiya themselves should not be expected to monitor each worker’s work patterns on a daily basis, the reporting lines within the company should have been strong enough to ensure they were made aware of an employee who was effectively working two full time jobs. To have never picked up on this until alerted to the fact by ABF shows a level of neglect or disregard for 23Digital’s sponsorship obligations.
Whether, and the extent to which, the failure to satisfy the sponsorship obligation has had a direct or indirect impact on another person
In the Tribunal’s view, the failure to satisfy the sponsorship obligations under r.2.79 has had neither a direct nor indirect impact on another person. The sponsored workers were paid their required salary for a full time work week that may or may not include a paid lunch break. It has not impacted their actual earnings nor their expected hours at work, being 9:00am to 5:00pm Monday to Friday. These are standard business operating hours.
Interestingly, the failure to satisfy the sponsorship obligation under reg 2.86 has had a direct impact on Mr Ahmad himself, and that impact was a net positive, being a second income. However, the Tribunal notes that by creating a workplace environment where it was very easy to work outside the business, even during office hours, there has been a direct impact on the Australian community. Mr Ahmad’s role with Uber was not one identified by the government as a skilled position experiencing employment shortages, and by working for Uber while sponsored by the applicant, Mr Ahmad may well have denied that work to an Australian permanent resident or citizen.
Whether, and the extent to which, the failure to satisfy the sponsorship obligation was intentional, reckless or inadvertent
The Macquarie Dictionary defines ‘inadvertent’ as ‘not attentive; heedless’ and in the Tribunal’s view, this is an accurate characterisation of both failures of 23Digital to satisfy its sponsorship obligations. While a business is obliged to ensure sponsored workers performed their nominated occupation and work only for their sponsor, it is unfair to characterise that which happened to 23Digital when Mr Ahmad chose to surreptitiously undertake employment with Uber as ‘reckless’.
Whether, and the extent to which, 23Digital cooperated with Immigration, including whether it informed Immigration of the failure
The evidence before me suggests that Mr Parekh and Mr Kotadiya were fully cooperative with ABF during its investigation. They provided frank and forthright evidence at the Tribunal hearing. However, I note that they did not identify the failures themselves and self-report; they only became aware of their sponsorship obligations as a result of the ABF investigation.
The steps (if any) taken to rectify the failure to satisfy sponsorship obligations, including whether steps were taken at the request of Immigration or otherwise
I am satisfied that 23Digital rectified the failures identified by ABF during its investigations, and there is sufficient documentary evidence before me to confirm this. It is clear to me that Mr Parekh and Mr Kotadiya do intend to act within the law at all times moving forward, and they have both acknowledged their mistakes and lessons learned as a result of the ABF investigation.
The processes (if any) implemented to ensure future compliance with sponsorship obligations
Mr Parekh and Mr Kotadiya indicated that they now appreciate the totality of their sponsorship obligations, and they were amenable to the suggestion that paying staff for a lunchbreak and citing a 40 hour work week when it could easily just pay its employees for 38 hours per week may be more appropriate for their business moving forward. They have explained the steps taken to rectify the problems identified by ABF and to ensure they do not occur again. The applicant has provided documentary evidence including a suite of human resources documents, advice regarding ongoing financial management of the company, and the regular reminders given to staff to ensure future compliance with sponsorship obligations. I am prepared to accept Mr Parekh’s and Mr Kotadiya’s verbal commitment to complying with all of their sponsorship obligations in future.
The number of other sponsorship obligations that 23Digital has failed to satisfy and the number of occasions on which 23Digital has failed to satisfy other sponsorship obligations
This is the first time 23Digital has been subject to monitoring and investigation by the Department. There is no evidence of previous failures to satisfy any sponsorship obligation(s). The multiple failures identified in the ABF investigation and the delegate’s decision have been enunciated above. Serious compliance issues were identified.
Any other relevant factors

Mr Parekh and Mr Kotadiya established 23Digital in 2007 with no capital funding. They have built the company to one with a multi million dollar turnover and have established a second company, operating primarily in Brisbane, providing significant and valuable IT infrastructure and support to the early childhood education sector. The impact of this sponsorship bar has been felt by that second company, and the Tribunal accepts the evidence given at the hearing that if that company is no longer able to sponsor workers, it will not be able to continue to meet its contractual obligations with its clients.
45.Considering the totality of the circumstances, and having regard to the prescribed criteria the Tribunal finds that action mentioned in s 140M(1)(d) to bar the applicant from making future applications for approval as a work sponsor for a period of 3 months is warranted.
DECISION
46.The Tribunal varies the decision under review by reducing the duration of the sponsorship bar from 18 months to 3 months.
Mary Sheargold
Member

ATTACHMENT – Extract from the Migration Regulations 1994
2.89   Failure to satisfy sponsorship obligation
…
(3) For paragraph 140L(1)(b) of the Act, the criteria that the Minister must take into account in determining what action (if any) to take under section 140M of the Act in relation to the circumstance mentioned in subregulation (2) are:
(a)    the past and present conduct of the person in relation to Immigration; and
(b)    the number of occasions on which the person has failed to satisfy the sponsorship obligation; and
(c)     the nature and severity of the circumstances relating to the failure to satisfy the sponsorship obligation, including the period of time over which the failure has occurred; and
(d)    the period of time over which the person has been an approved sponsor; and
(e)     whether, and the extent to which, the failure to satisfy the sponsorship obligation has had a direct or indirect impact on another person; and
(f)     whether, and the extent to which, the failure to satisfy the sponsorship obligation was intentional, reckless or inadvertent; and
(g)     whether, and the extent to which, the person has cooperated with Immigration, including whether the person informed Immigration of the failure; and
(h)    the steps (if any) the person has taken to rectify the failure to satisfy the sponsorship obligation, including whether the steps were taken at the request of Immigration or otherwise; and
(i)    the processes (if any) the person has implemented to ensure future compliance with the sponsorship obligation; and
(j)     the number of other sponsorship obligations that the person has failed to satisfy, and the number of occasions on which the person has failed to satisfy other sponsorship obligations; and
(k)    any other relevant factors.

[2023] AATA 4392

15 December 2023

Key Legal Topics

Areas of Law

Immigration

Administrative Law

Legal Concepts

Judicial Review

Procedural Fairness

Statutory Construction

Remedies

Jurisdiction