BHOOMI RESTAURANT PTY LTD (Migration)

[2023] AATA 1078

BHOOMI RESTAURANT PTY LTD (Migration) [2023] AATA 1078 (21 April 2023)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANT:  BHOOMI RESTAURANT PTY LTD

REPRESENTATIVE:  Mr Nigel Dobbie

CASE NUMBER:  2013440

HOME AFFAIRS REFERENCE(S):          OPF2020/6372

MEMBER:R. Skaros

DATE:21 April 2023

PLACE OF DECISION:  Sydney

DECISION:The Tribunal sets aside the decision under review and substitutes a decision not to take one or more of the actions specified in s 140M of the Migration Act 1958 (Cth).

Statement made on 21 April 2023 at 1:48pm

CATCHWORDS
MIGRATION – cancellation – 12-month bar as standard business sponsor – failure to satisfy sponsorship obligation – small underpayments of employees after increase in award not implemented – failure acknowledged and underpayments remedied – bar decision disproportionate to nature of breach and bar period now passed – decision made without hearing necessary – decision under review set aside

LEGISLATION
Migration Act 1958 (Cth), ss 140L(1)(a), 360(2)(a)
Migration Regulations 1994 (Cth), rr 1.13A(2), 1.13B, 2.79(3)(b), 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.

1. The applicant was most recently approved as a standard business sponsor on 13 August 2018 for a period of five years. Under s 140M of the Act, on 11 August 2020, the delegate decided to bar the applicant for a period of 12 months from sponsoring more people under the terms of the approved standard business sponsorship on the basis that the applicant had failed to satisfy a sponsorship obligation. A copy of the delegate’s decision record was provided to the Tribunal.

2. The applicant was represented in relation to the review. Prior to the hearing, the Tribunal received detailed submissions and supporting documents to which it has had regard.

3. Even though the period of the bar has now passed, the representative submitted that the applicant was pursuing the review on the basis that the decision to impose a bar for a period of 12 months was disproportionate to the nature of the breach.

   5.In reaching its decision the Tribunal did not consider a hearing to be necessary, as it was able to find in favour of the visa applicant on the basis of the material before it, pursuant to s 360(2)(a) of the Act.

4. For the following reasons, the Tribunal has decided to set aside the decision under review and substitute a decision not to take one or more of the actions specified in s 140M.

   CONSIDERATION OF CLAIMS AND EVIDENCE

5. Sections 140K, 140L and 140M of the Act provide for the imposition of sanctions on approved sponsors in certain circumstances.

6. 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.

7. 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.

8. 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 a sponsorship obligation.

   Failure to satisfy a sponsorship obligation: reg 2.89

9. 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).

10. The delegate considered that the applicant had failed to satisfy its sponsorship obligation in reg 2.79 to ensure equivalent terms and conditions of employment.

11. The Notice of Intention to Take Action (NOITTA), which was issued to the applicant on 31 July 2020, also identified a breach of reg 2.84 on the basis that the applicant had failed to notify Immigration that their restaurant business (Bhoomi Restaurant) had moved address: from Glebe to Rose Bay. After considering the applicant’s response to the NOITTA, together with the supporting evidence indicating that the applicant had informed their former migration agent of the change in address, the delegate found that this obligation had been met. Given the delegate’s findings in relation to the obligation in reg 2.84, the Tribunal has confined its considerations to the obligation in reg 2.79.

12. As an approved standard business sponsor, the applicant successfully nominated two positions in the occupation of Chef in respect of Mr Bibin Karikkudy Kuriachan and Mr Satish Kumar. The nominated annual salary for each position was $60,000.

13. On 16 June 2020, as part of the monitoring process, the Department issued a notice to the applicant under reg 2.83 requesting records and information, which relevantly included records relating to the employment of Mr Kuriachan and Mr Kumar. In responding to the notice, the applicant provided various documents, including contracts of employment, market salary information, payslips, leave application forms, rosters, bank statements and PAYG statements. An interview was also conducted with Mr Kuriachan regarding the tasks of the position, his hours of employment and payment of wages. At the time of the monitoring, Mr Kumar was overseas and had not been able to return due to COVID-19 restrictions.

14. The delegate was satisfied that the sponsored persons were working in their nominated occupation of chef with the sponsor but found that the applicant had failed to ensure equivalent terms and conditions of their employment. In so finding, the delegate relied on the payslips for Mr Kuriachan and Mr Kumar, which indicated an annual salary of $59,991. In the NOITTA, the delegate noted that under the Hospitality Industry (General) Award 2010 a Sous Chef is classified as a Chef (tradesperson) Grade 5 with a minimum annualised salary of $61,171.50 from 1 July 2019. On this basis, the delegate considered that the sponsored employees were underpaid.

15. In responding to the NOITTA, the applicant contended that the employment contracts for both sponsored workers state at 1.3 ‘Your employment is subject to the Restaurant Industry Award 2010, however the terms of this instrument are not incorporated into this contract nor is there any intention to give them any contractual effect’.  It was submitted that Mr Kumar’s Subclass 482 nomination was approved on 13 August 2018 and Mr Kuriachan’s Subclass 482 nomination was approved on 8 November 2018. The applicant’s former representative referred to the policy at the time the nomination was lodged and stated that as there was no equivalent Australian worker, and as an enterprise agreement or industrial award did not apply, the applicant relied on external data, including job advertisements and remuneration surveys, which showed that Chefs in NSW were being paid between $55,000 and $69,999, to determine the annual salary of $60,000 for the nominated position.

    19.It was further submitted that, due to system errors, the sponsored employee’s salary was not reflected correctly in the system and that the applicant had since corrected Mr Kuriachan’s salary from $59,991.36 to $60,000. A copy of an email to Mr Kuriachan was included indicating that payment of $14.40, being the gross shortfall in since December 2018, had been made by the applicant. In relation to Mr Kumar, it was noted that his salary was correctly reflected on his payslips as $60,000.01.

    20.In considering the applicant’s response to the NOITTA and supporting evidence, the delegate acknowledged that the applicable Award was the Restaurant Industry Award as indicated in the contract of employment and not the Hospitality Industry (General) Award as referred to in the NOITTA. The delegate nevertheless considered that the annualised salary is calculated the same in both Awards. The delegate found that, in addition to the small underpayment for one of the sponsored employees (Mr Kuriachan), the applicant had also failed to ensure that the sponsored employees were being paid what an equivalent Australian worker would receive in the position. The delegate categorised the nominated position (under the Award) as Cook Grade 5 which had an annualised salary of $61,171.50.

    21.The applicant’s former representative wrote to the Department disputing the delegate’s findings regarding the applicability of the Restaurant Industry Award and the calculation of the annualised salary. It was contended that even if the Award applied, based on the hourly rates, allowances, and penalty rates provided for in the Award, the sponsored employees would have a base salary of $48,945.52, or if calculated on the hours worked, which for Mr Kuriachan included Saturdays and Sundays, then the annualised salary would be $56,792.84.

16. In recent submissions to the Tribunal, it was conceded that the applicant had failed to comply with reg 2.79 as set out in the decision record, and a request was made to set aside the delegate’s decision on the basis that the non-compliance was wholly unintentional.

17. Before considering what action (if any) to take, the Tribunal must determine for itself whether the applicant has failed to satisfy their sponsorship obligation in reg 2.79.  

18. Relevantly, the obligation requires a standard business sponsor (or former standard business sponsor) of a primary sponsored person, who holds (or last held) a Subclass 482 visa was identified in a nomination made on or after 18 March 2018, to ensure that:

    ·the primary sponsored person’s annual earnings in relation to the occupation are not less than the annual earnings which the sponsor indicated would be provided to them when the nomination was approved;[1]

    [1] reg 2.79(3)(b)(i).

    ·the primary sponsored person’s earnings in relation to the occupation are not less than the earnings an Australian citizen or an Australian permanent resident earns, or would earn, for performing equivalent work in the same workplace at the same location;[2] and

    [2] reg 2.79(3)(b)(ii).

    ·the employment conditions (other than in relation to earnings) that apply to the primary sponsored person are no less favourable than those that apply, or would apply, to an Australian citizen or an Australian permanent resident performing equivalent work at the same location.[3] 

    [3] reg 2.79(3)(b)(iii).    

19. In relation to the obligation in reg 2.79(3)(b)(i), the annual earnings indicated in the approved nominations for Mr Kumar and Mr Kuriachan were $60,000. The payslip for Mr Kuriachan indicated that his annual salary was $59,991.36 and it was conceded in recent submissions that, due to accounting errors, he had been underpaid by $14.40. In relation to Mr Kumar, his annual earnings were correctly noted on the payslips and there is no suggestion that he was paid below that amount.

20. In relation to the obligation in reg 2.79(3)(b)(ii), this required the applicant to ensure that annual earnings of the sponsored persons, throughout their period of employment with the sponsor, were not less than an Australian performing equivalent work at the same location. According to the relevant Explanatory Statement (F2018L00262), ‘this means that the earnings of the visa holder or former visa holder must keep pace with any increases in the earnings that are provided, or would be provided, to Australian workers performing equivalent work’. 

21. The former representative stated that there were no Australian workers in the same workplace performing equivalent work and that the annual salary for the nominated position was determined by reference to market data, such as job advertisements. The Tribunal notes that while this method of determining the annual market salary rate (and the sponsored person’s annual earnings) is specified in the relevant instrument,[4] it can only be used where there is no fair work instrument, state industrial instrument or transitional instrument applicable to the nominated occupation. In this case, the occupation of Chef is (and was at the relevant time) covered by the Restaurant Industry Award 2010.

    [4] IMMI 18/033: Specification of Income Threshold and Annual Earnings and Methodology of Annual Market Salary Rate) 2018.

22. From 1 July 2019, the minimum weekly pay rate for a Cook – Grade 5 under the Restaurant Industry Award 2010 was $941.10. In circumstances where the employee works on a full-time basis, as in this case, the applicable Award provides for annualised wage arrangements instead of award provisions. The annualised wage must be at least 25% more than the minimum wages prescribed multiplied by 52 for the work being performed in satisfaction of the various entitlements under the Award.

23. In this case, the contracts of employment for each sponsored person indicated that they were employed on a full-time basis with an annual salary. Accordingly, from 1 July 2019 their annual salary had to be at least $61,171.5 (941.10 x 1.25 x 52). In recent submissions, the applicant’s representative conceded that there had been an underpayment in respect of each of the sponsored employees. In relation to Mr Kumar, who worked for the applicant until 26 March 2020, the underpayment was $45.06.

24. In relation to the obligation in reg 2.79(3)(b)(iii), there is no information before the Tribunal which suggests that any other employment conditions (not related to earnings) were less than those that would be provided to an equivalent Australian worker.

25. On the Tribunal’s calculations, and as conceded by the applicant, the Tribunal finds that the applicant has not complied with their sponsorship obligations in regs 2.79(3)(b)(i) and (ii).

26. 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

27. For the above 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.

28. In considering what action to take, the Tribunal has had regard to the prescribed criteria, as extracted in the attachment to this decision.

    The past and present conduct of the person in relation to Immigration

29. The delegate indicated that the applicant had responded to all the requests made by the Department. On this basis, the Tribunal is satisfied that the applicant has been co-operative with the Department.

    The number of occasions on which the person has failed to satisfy the sponsorship obligation

    36.The delegate found that the applicant had failed to satisfy their sponsorship obligations in reg 2.79 for the two sponsored employees, on 25 occasions, this included 15 occasions on which there was a shortfall in Mr Kuriachan’s fortnightly wage and 10 occasions on which there was a shortfall in Mr Kumar’s fortnightly salary.

    37.It was submitted that the underpayments were in the context of one ongoing failure to pay the correct salary to the two sponsored workers due the increase in the award on 1 July 2019. It was submitted that the review applicant did not intentionally seek to deprive the two employees of their entitlements on 25 occasions.

    38.Whilst minor, the Tribunal notes that prior to 1 July 2019 there was a shortfall of $14.40 in Mr Kuriachan’s annual salary. The Tribunal accepts that this was due to an accounting error. The Tribunal also accepts that the shortfall in wages from 1 July 2019 for the two employees, was the result of one ongoing failure, being the applicant’s failure to implement the increase in the award from that date.

    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

30. The Tribunal considers the shortfall of $14.40 in respect of Mr Kuriachan’s annual salary prior to 1 July 2019 to be a minor failure given the relatively small amount, which the Tribunal accepts has now been paid.

31. In relation to the underpayments of wages, as required by the award, in respect of the two sponsored employees since 1 July 2019, the Tribunal acknowledges that this was due to the applicant not being aware of the increase to the award, the Tribunal considers, however, that it was the applicant’s responsibility, as an employer, to ensure that any awards applicable to their industry had been implemented. The failure to do this, resulted in the underpayment of wages to the sponsored employees each fortnight.

    41.The Tribunal accepts that the underpayments have been remedied by the applicant, and that the shortfall in payments were made to the two employees on 18 August 2020 (following the delegate’s decision) as evidenced by the payslips.

    The period of time over which the person has been an approved sponsor

    42.The business was approved as a standard business sponsor on 13 August 2018 for a period of five years.

    43.It was submitted that the only non-compliance with obligations by the applicant were those set out by the delegate in the decision record, and that two years and seven months have passed since then, during which the review applicant has been compliant.

    44.The Tribunal accepts that other than the failures identified by the delegate, there is no evidence before it which suggests that the applicant had failed to comply with any of their other 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

    45.The Tribunal considers that the failure to satisfy the obligation in reg 2.79 to ensure equivalent terms and conditions of employment had a direct impact on the two sponsored employees who, in the case of Mr Kuriachan prior to 1 July 2019, was not being paid in accordance with the nominated salary and, in the case of Mr Kuriachan and Mr Kumar, from 1 July 2019, were not being paid the annualised salary under the relevant award.

    46.The Tribunal acknowledges that any underpayment has now been remedied by the applicant and has regard to this in its considerations.

    Whether, and the extent to which, the failure to satisfy the sponsorship obligation was intentional, reckless or inadvertent

    47.The delegate was concerned that the applicant had not acknowledged that, since 1 July 2019, they were providing less favourable terms and conditions of employment (being the underpayment of wages) than those that would be provided to an equivalent Australian worker as provided under the Restaurant Industry Award 2010.

    48.The Tribunal notes that the applicant’s former representative had submitted that the Award did not apply in the applicant’s case and that if it did, the sponsored employees were paid more than the required rates under the Award having regard to the hours worked, including weekends. The Tribunal notes, however, that these contentions overlooked the relevant method by which the terms and conditions of employment (and guaranteed annual wage) were to be calculated in circumstances where there was an applicable Award, as found in this case. They also overlooked the provisions in the Award relating to annualised salary arrangements for full-time employees which encompass the various entitlements of an employee under the Award. This oversight (or misunderstanding) resulted in the applicant’s failure to comply with their obligations to ensure that the nominated person’s earnings do not fall below that which is provided to an equivalent Australian worker.

    49.In recent submissions to the Tribunal, it was stated that the failure to pay the correct salary, which increased from 1 July 2019, was an innocent oversight as the applicant was unaware of the salary increase in the award for a Sous Chef (Cook – Grade 5 under the Award).

    50.The Tribunal accepts that the failure to satisfy the sponsorship obligation to ensure equivalent terms and conditions was not intentional and that the applicant, upon realising that they were subject to the Award and that there had been an underpayment in respect of the sponsored employees, had remedied the failure.

    Whether, and the extent to which, the person has cooperated with Immigration, including whether the person informed Immigration of the failure

    51.The delegate noted that the applicant had responded to all the Department’s requests. The delegate also noted that the failure was identified by the Department during the course of the monitoring process. In their submissions, the applicant acknowledged that they were not aware of the increase in the award from 1 July 2019 until they were informed by the Department.

    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

    52.At the time of the delegate’s decision the applicant had only remedied the underpayment for Mr Kuriachan for the period prior to 1 July 2019. The delegate was concerned that the applicant had not acknowledged their obligations to ensure equivalent terms and conditions of employment as required by the applicable Award.

    53.The applicant has now acknowledged their failure, which was explained in the decision record, and sought to remedy it. The Tribunal accepts that the applicant, following the delegate’s decision, rectified the failure by paying the sponsored employees the shortfall in wages.

    The processes (if any) the person has implemented to ensure future compliance with the sponsorship obligation

    54.It was submitted that the applicant is now cognisant of the grades (and pay rates) in the Award and has ensured its employees are paid accordingly.

    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

    55.Other than the sponsorship obligation found not to have been satisfied by the applicant, the Tribunal is not aware of any other sponsorship obligations that the applicant has failed to satisfy.

    Any other relevant factors

    56.It was submitted that a sponsorship bar brings with it the spectre of ‘Adverse information’, having regard to reg 1.13A(2). The Tribunal accepts that the decision to bar the applicant under s 140M may come within the definition of ‘Adverse information’ in the Act, as it may be relevant to the applicant’s suitability as an approved sponsor or nominator and is an administrative action for a possible contravention of a law under the Migration Act.

    57.The Tribunal accepts that the existence of adverse information would continue to impact the review applicant, and their associated entities, having regard to the meaning of ‘associated with’ in reg 1.13B, as occurred with the associated entity Jewel Restaurants Pty Ltd, which had an employer nomination refused by the Department due to the action taken to bar the applicant. While there is provision in the legislation to disregard the adverse information where it is reasonable to do so, the Tribunal acknowledges that the existence of adverse information, as defined in the regulations, will create uncertainty for the applicant, associated persons, and associated entities, as to the outcome of any future sponsorship or nomination applications. It is also likely to create uncertainty for sponsored employees wanting to apply for visas on the basis of an associated nomination.

    Overall consideration

    58.In considering what action (if any) to take the Tribunal has had regard to all the relevant circumstances as discussed above.

    59.In this case, the Department decided to bar the applicant for a period of 12 months (from 11 August 2020) from sponsoring more people under the terms of their approved business sponsorship. The factors that likely contributed to the duration of the bar was the applicant’s insistence, as presented by their former representative, that the Restaurant Industry Award 2010 which provided an increase of the award wages for Chefs from 1 July 2019, did not apply in them and the failure to rectify the accumulated underpayments from that date.

    60.On review, the applicant conceded that they had failed to provide award wages to the sponsored employees since 1 July 2019 and, following the delegate’s decision, promptly rectified the failure by paying the shortfall in wages to Mr Kuriachan and Mr Kumar. The Tribunal is satisfied that the underpayment was due to an oversight (and lack of knowledge) on the part of the applicant regarding the applicability of the relevant Award and was not intentional. The Tribunal accepts that the applicant has now put in place procedures to ensure that this type of failure does not reoccur.

    61.Considering the totality of the circumstances, and having regard to the prescribed criteria, the Tribunal finds that none of the actions under s 140M should be taken.

    DECISION

    62.The Tribunal sets aside the decision under review and substitutes a decision not to take one or more of the actions specified in s 140M of the Migration Act 1958 (Cth).

    R. Skaros
    Senior 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.

    …