Conviviality Pty Ltd (Migration)

[2019] AATA 6463

Conviviality Pty Ltd (Migration) [2019] AATA 6463 (9 December 2019)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANT:  Conviviality Pty Ltd

CASE NUMBER:  1808789

DIBP REFERENCE(S):  BCC2016/2175970

MEMBER:Mark Bishop

DATE:9 December 2019

PLACE OF DECISION:  Melbourne

DECISION:The Tribunal affirms the decision under review to refuse the nomination.

Statement made on 09 December 2019 at 1:59pm

CATCHWORDS
MIGRATION – nomination refusal– Direct Entry nomination –Cook – genuine need for the nominator to employ a paid employee – insufficient evidence – decision under review affirmed

LEGISLATION
Migration Act 1958, s 245
Migration Regulations 1994, r 5.19

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 Immigration on 16 March 2018 to reject the applicant’s application for approval of the nomination of a position in Australia under r.5.19 of the Migration Regulations 1994 (the Regulations).

2. The applicant applied for approval on 27 June 2016. The requirements for the approval of the nomination of a position in Australia are found in r.5.19 of the Regulations which contains two alternative streams: a Temporary Residence Transition nomination (r.5.19(3)) stream and a Direct Entry nomination (r.5.19(4)) stream. If the application is made in accordance with r.5.19(2) and meets the requirements of either stream, then the application must be approved. If any of the requirements are not met then the application must be refused: r.5.19(5).

3. In this case, the applicant has applied for approval of a nomination, seeking to satisfy the criteria in the Direct Entry Nomination stream.

4. The delegate refused the application on the basis the applicant’s nomination did not satisfy R.5.19(4)(a)(ii) of the Regulations.

5. The applicant was represented in relation to the review by its registered migration agent.

6. The applicant appeared before the Tribunal on 9 December 2019.  The nominee also appeared to give evidence and present arguments.

7. The applicant provided a copy of the decision record to the Tribunal.

8. The issue in this case is whether the applicant meets the requirements for approval of the nomination under the Direct Entry nomination stream set out in r.5.19(4), which is extracted in the attachment to this decision. For the nomination to be approved, all the requirements must be met.

9. For the following reasons, the Tribunal has decided to affirm the decision under review to refuse the nomination.

   CONSIDERATION OF CLAIMS AND EVIDENCE

10. The issue in this case is whether the applicant meets the requirements for approval of the nomination under the Direct Entry nomination stream set out in r.5.19(4), which is extracted in the attachment to this decision. For the nomination to be approved, all the requirements must be met.

    The application is compliant: r.5.19(4)(a)(ii) The application must also identify a need for the nominator to employ a paid employee to work in the position under their direct control

    Tasks of the position genuine need for the position and training requirements r.5.19(4)(h)(ii)(B)

11. The nominator, CONVIVIALITY PTY LTD, lodged an application for an Employer Nomination on 27 June 2016 for the occupation of Cook, ANZSCO 351411, under the Direct Entry stream. The proposed nominated base salary is $54,000 per year.

12. Sub regulation 5.19(4)(a)(ii) requires that the nomination application for approval identifies a need for the nominator to employ a paid employee to work in the nominated position. Sub regulation 5.19(4)(h)(ii)(B) required that the nomination application for approval identifies a need for the nominator to employ a paid employee to work in the position under the nominator’s direct control;

13. The nominator provided a copy of an organisational chart for Conviviality Pty Ltd t/a The Koonwarra Store. The chart disclosed the nominator employed 1 chef, 3 cooks and 2 waiters reporting to the Director Ms Melissa Burges. Detail of the cooks/chef is as follows:

    ·1 chef Satinder (part time);

    ·3 cooks as follows:

    oJagjit Kaur (full time);

    oOmkar Singh (Part time)

    oShamsher Singh (nominee) (part time)

14. The PAYG summary for FY2017 for the nominee showed income of $21,048 and tax withheld of $612.

15. Wages slips for the nominee showed for the 8 months ended February 2018 in the FY2018 the nominee YTD income was $14,041. In evidence the nominee advised he recently commenced full time work in the store after a lengthy period of part time employment. Neither the nominator nor nominee provided any documentation such as time and wages records or wages slips that supported this claim. The P & L statement for FY2018 did not show any material increase in wages and superannuation expenses compared to FY2017.

16. The delegate made a finding Ms Jagkit Kaur was working full time as a 457 visa holder and this was correct.

17. The delegate made a finding that Omkar Singh was granted a 457 visa on 6 December 2016 to work full time for a minimum 2 years.  The nominator advised Omkar Singh was working part time. The delegate noted this was a breach of his visa and assessed Omkar Singh on the basis he was a full time worker.

18. Accordingly the delegate determined the nominator employed 1 part time chef, 2 full time cooks and 1 part time cook.

19. In the current review application the nominator advised the Tribunal the working hours of employees were as follows:

    ·Chef Satinder (left employment Mid October)

    ·Cook Jagit Kaur (left employment March 2019)

    ·Cook Oscar Singh (left employment January 2019)

    ·Cook Shamsher Singh (nominee working 8am to 4.30pm Monday to Friday) and occasionally works Saturday and Sunday. The nominee currently works full time hours

    ·Waiters normally employed on a seasonal basis. In the quiet period few, if any hours are allocated to casuals. Trade goes up and down on a periodic basis May to August is very quiet. Third week December till mid-January or Australia day long weekend is the peak period

20. The nominator advised the Tribunal in evidence current store staffing was herself and the nominee as full time workers supplemented by casual staff on an as needs basis that varied regularly.

21. The nominator provided details of its website at  The outlet was described as a speciality food store/café/restaurant. The outlet specialises in the sale of local wine and produce. This website outlined the outlet had a capacity to seat 50 people and opened 7 days per week 8.30 am to 4.30pm providing breakfast and lunch and provision for special functions after hours. In evidence the nominator advised the website was still in existence but currently being upgraded. The Tribunal accessed the website in the two weeks prior to the decision.

22. The nominator provided copies of the financial reports for FY2013, FY 2014, FY2015, FY2016, FY2017 and FY2018. The nominator provided a copy of the company tax return for FY2018 for Conviviality Pty Ltd. This return showed a net profit after tax of $12,748.

23. The income statement for FY2013 showed revenue of $854,000, gross profit of $475,000, expenses of not disclosed and net profit of $43,000. Wages and superannuation for the FY2015 were $130,000.

24. The income statement for FY2014 showed revenue of $788,000, gross profit of $423,000, expenses of $718,000 and net profit of $45,000. Wages and superannuation for the FY2014 were $134,000.

25. The income statement for FY2015 showed revenue of $689,000, gross profit of $365,000, expenses of $627,000 and net profit of $61,000. Wages and superannuation for the FY2015 were $117,000.

26. The income statement for FY2016 showed revenue of $666,000, gross profit of $373,000, expenses of $532,000 and net profit of $71,000. Wages and superannuation for the FY2016 were $91,000.

27. The income statement for FY2017 showed revenue of $793,258, gross profit of $292,000, expenses of $735,000 and a net profit of $76,000. Wages and superannuation for the FY2017 were $194,000 (inclusive of Director Fees).

28. The income statement for FY2018 showed revenue of $789,000, gross profit of $468,000. Expenses of $714,000 and a net profit of $115,000. Wages and superannuation for the FY2018 were $198,000 (inclusive of Director Fees).

29. The notes to the financial accounts FY2016 showed borrowings of $552,000. Prior year income statements disclosed minimal borrowings. Interest repayments in FY2016 were $14,000.

30. The notes to the financial accounts for FY2017 showed borrowings of $469,000. Interest repayments in FY2017 were 17,000.

31. The notes to the financial accounts for FY2018 showed borrowings of $418,000. Interest repayments in FY2018 were $17,000.

32. The Conviviality Pty Ltd Company Tax Return for the FY2018 showed a net profit of $12,748.

33. The nominator advised the Tribunal the borrowings were used for a commercial mortgage on which the business is located. The loan is serviced from rent and cash flow in the business.

34. Analysis of the above information shows the following:

    ·Revenue over the six year period in the FY 2013 until 2018 declined significantly;

    ·Gross profit over the six year period in the FY 2013 until 2018 declined significantly;

    ·Net profit over the six year period in the FY 2013 until 2018 declined significantly from $43,000 in the FY2013 to $12,750 FY2018. This is minimal profit.

    ·Wages and superannuation payments over the four year period from FY 2013 until 2016 declined significantly and then grew over the FY2017 and FY2018;

    ·Wages and superannuation payments as a percentage of revenue over the six year period from FY 2013 until 2018 increased from a 17% to 25%;

    ·Significant borrowings of up to $500,000 since FY2016 have reduced marginally (involving some reduction in capital owed) and interest cost repayment are now a significant expense item.

35. In short by all relevant financial indictors Conviviality Pty Ltd t/a The Koonwarra Store over the six year period from FY 2013 until FY2018 was a shrinking enterprise, with declining sales, much reduced staff numbers in later years, a continuing decline in profits over the six year period from FY2013 until FY2018, net profit in the FY2018 as outlined in the company tax report of $12,750, increased expenses relating to interest costs and Director Fees and that minimal profit was primarily because of significantly higher outlays on wages and superannuation for employees, Director Fees and interest cost repayments. In summary expenses were high and growing, profit was minimal and declining and maintenance of former levels of employment and attendant cost suggested there was a need for radical restructure of the business. In evidence the nominator agreed with this summary and advised she had been forced to restructure the business primarily by staff number and cost reduction.

36. The nominee was employed on a part time basis and earned minimal income in the FY 2017 and 2018. The nominee advised he started full time work as a cook in April 2019 and has maintained full time employment with the nominator since that time. See paragraph 16 above.

37. It is the context It is the context of the information provided and analysed in paragraphs 15 to 37 above the nominator provided the Department on 28 June 2016 with a signed employment contract dated 20 April 2016 between Conviviality Pty Ltd t/a The Koonwarra Store and the nominee that detailed a salary of $54,000 plus superannuation of 9.5% giving a combined wages and superannuation benefit of $59,130 with a commencement date of four weeks after the grant of a 187 visa.

38. The delegate outlined the details of an internet search searches that revealed (example of site: kitchen-to-cook-for-50-people-on-a-daily-basis-for-3-meals-a-day) that 2- full time Cooks are enough for a cafe/restaurant with such seating capacity of 50 as outlined on the company website at This website discloses the company trades seven days per week from 8.30am to 4.30pm but provides only 2 meals per day not 3, these being breakfast and lunch with limited menus. The Tribunal has some doubt that 2 full time cooks are needed to adequately staff such a limited service café. The Tribunal is inclined to the view the café is over staffed already.

39. The nominator provided a submission to the Department that outlined the following

    ·"Availability of the Position -Cook

    oI require a qualified and experienced Cook to handle the operations. We need Cook so that our busy restaurant can be handled and work smoothly. Right now in kitchen, I have one Chef and one cook and casual workers working in front, with the demands growing up and more customers visiting our restaurant it is difficult to maintain a smooth running in kitchen only. It has been extremely difficult to locate qualified people especially from such a low population area who are able to match with the standard of quality offered by the business from the local labour market. The position was advertised through local employment agency for time periods.

    oAfter the job advertisement, we received only 2 application[s]. The applicant was not called for interview. I personally did not like the Resume, it was not appealing, the applicant was residing too far from the region, also did not have much of the experience.

    ·Need for Nominated Employee

    oNominated person is a qualified person and possess excellent skills as Cook. During Interview, I judged his commitment for long term employment with us. I believe that employment of a full time Cook will help us grow our sales and provide consistent service to our customers. The applicant's contribution to the business with his permanent employment will be very beneficial to the business and to the generation of work and taxes for the Australian government. The business will firmly abide by the terms and conditions as set out by immigration and will carry out its responsibilities as required. Therefore, I wish to employ him on a permanent basis and offered him the position as a Cook."

40. The delegate considered the above submission and gave it little weight because it confirmed the view that the nominee who was sponsored by the nominator on a 187 permanent visa “is currently working full time and not employed as part time, or else the nominator could be in violation of its sponsorship agreement” The Tribunal expresses no view on this particular finding as the Tribunal noted in paragraphs 15, 16 and 37 that the nominee was being paid as a part time worker and earning minimal income. The Tribunal notes the nominee gave evidence he did not commence full time work until years after his application for a visa  and possibly as late as April 2019.

41. In evidence the nominee advised as follows:

    ·The number of meals at breakfast 60-65 meals per week on average but much busier at peak times

    ·Number of meals at lunch 80-85 on average and more at peak times.

    ·The business did not currently cater for evening functions and did not open at evening times after 4.30pm

42. The nominator advised she thought the figures for breakfast and lunch were much higher, perhaps 100 in winter and much higher in peak times. The nominator advised the store is an all country store. It has a mixed use kitchen. It produces all its own condiments and prepares baking products. The nominator advised she regularly attends farmer markets in the local area and Melbourne and sells produce and condiments made in the store. Hence the cook or nominee will shift during the day after peak periods to the making of produce and condiments. The nominator does very few after hours functions. The nominator advised the business had lost sales in the last six years. Business had been stripped back. Her brother used to work in the business but had left. The nominator advised the financials of the business did not show a happy picture and the nominator had been required to strip back the business.

43. The Tribunal is unable to draw a conclusion as to the number of sales for breakfast and lunch. Whatever the correct figure the financial documents provided by the nominator from 2013 until 2018 show a significant decline in the cost of sales from $378,000 in FY2014 to $321,000 in FY2018. Cost of sales as outlined while not absolute is an indicator that total sales have been in decline for some years which suggests the number of meals provided on site has also been in decline in the same period.

44. The nominator advised current staffing levels are the nominator, the nominee full time, a casual dishwasher and kitchen hand, and a casual retail assistant.

45. The nominator advised she had been forced by declining finances to restructure the business and this would continue until the business renewed a growth outcome.

46. The Tribunal notes as late as 14 November 2019 the nominator advised the Tribunal in writing in a position description document the nominee in the position of Cook would “review menus with the chef” and “…manage, coach, discipline and train all staff employed in the kitchen” In evidence the nominator advised all other chefs and cooks had left the enterprise well before November 2019. The Tribunal is unable to give much weight to this position description when it is evident 3 of the four chef/cook positions no longer exist (see paragraph 19 above).

47. This decline in revenue, decline in cost of sales, minimal profit, uncertainty as between the nominator and nominee as to the number of sales, the reduced trading hours, the lack of afterhours business, letting go of staff, the serious reduction in kitchen staff numbers, and cost increases suggest to the Tribunal an uncertainty and lack of clear direction as to the future of this particular business. In this context the Tribunal is unable to conclude there is a need to employ a paid employee to work in the position under the nominator’s direct control and   

48. The Tribunal has considered all the above information.

49. The Tribunal is not satisfied there is sufficient evidence to adequately establish a need for a paid employee to work in the Cook occupation under the nominator’s direct control. The Tribunal is not persuaded there is a genuine need for the nominator to employ a paid employee to work in the position under the nominator’s direct control.  

50. Accordingly, the application did not meet the requirements of sub regulation 5.19(4)(a)(ii), and thus failed sub regulation 5.19(4)(a).

51. Accordingly, the application did not meet the requirements of sub regulation 5.19(4)(h)(ii)(B) and thus failed sub regulation 5.19(4)(h)

52. Accordingly the requirements of r.5.19(4)(a) are not met.

53. Accordingly the requirements of r.5.19(4)(h) are not met.

    CONCLUDING PARAGRAPHS

54. For the above reasons the Tribunal is not satisfied that the applicant meets the requirements of r.5.19(4). The applicant has not sought to satisfy the criteria in Temporary Residence Transition Nomination stream, and as such has not met the requirements in r.5.19(3). Accordingly, the nomination of the position cannot be approved. Therefore, the Tribunal must affirm the decision under review.

    DECISION

55. The Tribunal affirms the decision under review to refuse the nomination.

    Mark Bishop
    Member

    
    

    ATTACHMENT  -  EXTRACTS FROM THE MIGRATION REGULATIONS 1994

    5.19Approval of nominated positions (employer nomination)

    …

    (2)The application must:

    (a)be made in accordance with approved form 1395…; and

    (aa) include a written certification by the nominator stating whether or not the nominator has engaged in conduct, in relation to the nomination, that constitutes a contravention of subsection 245AR(1) of the Act; and

    (b)be accompanied by the fee mentioned in regulation 5.37.

    …

    Direct Entry nomination

    (4)The Minister must, in writing, approve a nomination if:

    (a)the application for approval:

    (i)       is made in accordance with subregulation (2); and

    (ii)      identifies a need for the nominator to employ a paid employee to work in the position under the nominator’s direct control; and

    (b)the nominator:

    (i)       is actively and lawfully operating a business in Australia; and

    (ii)      directly operates the business; and

    (c)for a nominator whose business activities include activities relating to the hiring of labour to other unrelated businesses — the position is within the business activities of the nominator and not for hire to other unrelated businesses; and

    (d)both of the following apply:

    (i)       the employee will be employed on a full-time basis in the position for at least 2 years;

    (ii)      the terms and conditions of the employee’s employment will not include an express exclusion of the possibility of extending the period of employment; and

    (e)the terms and conditions of employment applicable to the position will be no less favourable than the terms and conditions that:

    (i)       are provided; or

    (ii)      would be provided;

    to an Australian citizen or an Australian permanent resident for performing equivalent work in the same workplace at the same location; and

    (f)either:

    (i)       there is no adverse information known to Immigration about the nominator or a person associated with the nominator; or

    (ii)      it is reasonable to disregard any adverse information known to Immigration about the nominator or a person associated with the nominator; and

    (g)the nominator has a satisfactory record of compliance with the laws of the Commonwealth, and of each State or Territory in which the applicant operates a business and employs employees in the business, relating to workplace relations; and

    (h)either:

    (i)       both of the following apply:

    (A)the tasks to be performed in the position will be performed in Australia and correspond to the tasks of an occupation specified by the Minister in an instrument in writing for this sub-subparagraph;

    (AAA)the occupation is applicable to the person identified under subparagraph (a)(ii) in accordance with the specification of the occupation;

    (B)either:

    (I)the nominator’s business has operated for at least 12 months, and the nominator meets the requirements for the training of Australian citizens and Australian permanent residents that are specified by the Minister in an instrument in writing for this sub-sub-subparagraph; or

    (II)the nominator’s business has operated for less than 12 months, and the nominator has an auditable plan for meeting the requirements specified in the instrument mentioned in sub-sub-subparagraph (I); or

    (ii)      all of the following apply:

    (A)the position is located in regional Australia;

    (B)there is a genuine need for the nominator to employ a paid employee to work in the position under the nominator’s direct control;

    (C)the position cannot be filled by an Australian citizen or an Australian permanent resident who is living in the same local area as that place;

    (D)the tasks to be performed in the position correspond to the tasks of an occupation specified by the Minister in an instrument in writing for this sub-subparagraph;

    (DA)the occupation is applicable to the person identified under subparagraph (a)(ii) in accordance with the specification of the occupation;

    (E)the business operated by the nominator is located at that place;

    (F)a body that is:

    (I)specified by the Minister in an instrument in writing for this sub-subparagraph; and

    (II)located in the same State or Territory as the location of the position;

    has advised the Minister about the matters mentioned in paragraph (e) and sub-subparagraphs (B) and (C).