Darzi Group Pty Ltd (Migration)

[2023] AATA 102

Darzi Group Pty Ltd (Migration) [2023] AATA 102 (5 January 2023)

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DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANT:  Darzi Group Pty Ltd

REPRESENTATIVE:  Mr Ronald Kessels

CASE NUMBER:  1915167

HOME AFFAIRS REFERENCE(S):          BCC2018/863088

MEMBER:Wan Shum

DATE:5 January 2023

PLACE OF DECISION:  Sydney

DECISION:The Tribunal sets aside the decision under review and substitutes a decision approving the nomination.

Statement made on 05 January 2023 at 3:52pm

CATCHWORDS
MIGRATION – application for approval of nomination of position – direct entry nomination stream – chef – need for position – size, scope and financial performance of business group – nominee’s performance in position – adverse information – underpayments, financial penalty and sponsorship bar – measures taken to avoid further breaches – bar ceased and new sponsorship approved – reasonable to disregard – decision under review set aside

LEGISLATION
Migration Act 1958 (Cth), s 376
Migration Regulations 1994, rr 1.13A, 1.13B, 5.19(4)(a)(ii), (f)

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 on 23 May 2019 to reject the applicant’s application for approval of the nomination of a position in Australia under reg 5.19 of the Migration Regulations 1994 (Cth) (the Regulations).

2. The requirements for the approval of the nomination of a position in Australia are found in reg 5.19 of the Regulations, which contains two alternative streams: a Temporary Residence Transition nomination stream (reg 5.19(3)) and a Direct Entry nomination stream (reg 5.19(4)). If the application is made in accordance with reg 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: reg 5.19(5).

3. In this case, the application for approval of a nomination was made by Darzi Group Pty Ltd (the nominator) on 22 February 2018 for the position and occupation of Chef under the Direct Entry nomination stream. Mr Puranjan Basnet was identified as the person the nominator wished to employ for the position of Chef. Mr Basnet lodged a Subclass 187 visa application in respect of this nomination.

4. The delegate refused the application on the basis the applicant’s nomination did not satisfy reg 5.19(4)(a)(ii) of the Regulations because there was no evidence to substantiate the claim that the nominator needs to employ a paid employee to work in the nominated position under the nominator’s direct control.

5. Mr Basnet’s visa was refused as a consequence.

6. The nominator and Mr Basnet have sought review of these decisions. Both parties are represented in relation to the review by the same lawyer named above.

7. Mr Gabriel (Omid) Darzi appeared on behalf of the nominator, in his capacity as the Director/owner at a hearing on 13 October 2022 to give evidence and present arguments in relation to this application and two other nominations made under reg 5.19. A fourth nomination is also before the Tribunal, but because there was no response received to the s 359 invitation in that matter, the nominator lost their entitlement to a hearing for that matter. The Tribunal also received oral evidence from Ms Kate Hemat-Sirkay, Director of Zest People Solutions, Mrs Sonia Pedram and Mr Basnet in connection with this application. The representative was present throughout the Tribunal hearing from a different location.

8. The Tribunal was provided with information from the Department relevant to the cancellation and a non-disclosure certificate was issued by an Immigration officer pursuant to s 376 of the Act in respect of information contained on several files. The Tribunal advised of the existence of the non-disclosure certificate and provided a copy of the certificate to the nominator following the hearing, seeking comments on the validity of the certificate. In response, the Tribunal was informed that the validity of the certificate was not attested but that little weight if any be given to the information. The certificate is electronically dated and signed and stated that the release of the documents would be contrary to the public interest because it would disclose, or enable a person to ascertain the existence or identity of, a confidential source of information and the information was provided “in confidence”, the provider of the information has not consented to the disclosure of the information to the review applicant. The Tribunal considers that the reasons given for non-disclosure are specific, detailed and correctly identify the reason for non-disclosure and is therefore of the view that the certificate is valid.

9. For the reasons that follow, the Tribunal has decided to set aside the decision under review and substitute a decision approving 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 reg 5.19(4), which is extracted in the attachment to this decision. For the nomination to be approved, all the requirements must be met.

11. The nominator operates a restaurant business in Australia. According to ASIC records, the nominator (ABN 97153481479) was registered on 29 September 2011 as an Australian Proprietary Company Limited by Shares. The current Director is Mr Omid Darzi, and Darzi Capital Management Pty Ltd holds all “A”, “B” and ordinary shares. The ASIC Current Company Extract of Darzi Capital Management Pty Ltd (ABN 17641740114) and the ASIC Current Company Extract reflect that Mr Omid Darzi and Mrs Sonia Pedram are the shareholders and Directors of Darzi Capital. The Tribunal was advised that Darzi Capital Management Pty Ltd as trustee for Darzi Family Investment Trust of which Mr Omid Darzi and Mrs Sonia Pedram are the primary beneficiaries and have ultimate control of the Business Group including all legal entities under that group.

12. The business names registered to the nominator are Darzi Hospitality and The Sicilian. It was explained during the hearing that The Sicilian was the first restaurant, opening in Taree in February 2013 when they relocated from Sydney, but after a few months, a decision was made to change venues so The Sicilian was relocated to a second venue in Forster in 2014 and the Taree venue was rebranded as Cafe Giardino, which is less formal but with a similar Italian influenced menu, opening in 2019.

13. According to Mr Darzi and Mrs Pedram’s joint written statement received by the Tribunal on 29 July 2022, they are the proprietors and operate three restaurants in Taree and Foster in regional NSW, being The Sicilian, Cafe Giardino and Cafe Toscano, under different companies. The Sicilian is the flagship restaurant.

14. Cafe Giardino is operated under Cafe Giardino Pty Ltd (ABN 79 642 008 982). It was initially claimed that Cafe Toscano was operated by the nominator, but then later clarified that the relevant entity is Cafe Toscano Pty Ltd. In respect of the employees at these venues, the explanation provided was that Mr Darzi directs the nominees working in Café Giardino and Café Toscano, with the nominator employing all of the individuals working for the wider Darzi Group of entities. Both Café Toscano and Café Giardino receive monthly labour hire invoices from the nominator for the provision of labour services.

15. The application for the nomination the subject of this review was made under the Direct Entry nomination stream. The completed application form identified the work location as having the postcode of 2428, the position to be filled and occupation being Chef with ANZSCO code 351311 and the industry as “Accommodation and Food Services”.

16. The delegate was not convinced that there was a need to employ a Chef. Accordingly, the delegate refused to approve the nomination, finding that reg 5.19(4)(a)(ii) was not met.

17. The Tribunal has thus proceeded to first consider whether the application identifies a need for the nominator to employ an identified person, as a paid employee, to work in the position under the nominator’s direct control. 

18. On review, the proprietors provided a joint statement explaining why there was a need for the role of Chef for The Sicilian. The restaurant is described as a high-quality Italian restaurant that requires multiple chefs in the kitchen, due to the long opening hours of The Sicilian which trades from 8 am till late, 7 days per week for breakfast, lunch and dinner.  Currently, there are two restaurant managers, one assistant manager and five waiters in the Front of House while the Back of House includes four chefs, three kitchen hands and one kitchen attendant.

19. The proprietors state that they were unable to find Australians for the role. Of the 40 people employed in the restaurants, it is claimed that there are 14 Australian permanent residents and citizens. It is further claimed that they would love to hire more Australians but it is particularly hard in Forster because the local population is elderly and the younger generation have moved out, which makes it very hard to attract Australians into the roles. The proprietors advise that they are actively recruiting and have advertised for staff many times and had some suitable Australians apply for the positions and hired them, but the turnover is high (adding that unless people are on visas, they tend to stay less than one year).

20. Having regard to the proprietors’ statement and evidence at hearing, the Tribunal accepts that given the nature of the business and its opening hours, more than one Chef would be required to operate a restaurant of this size. Given this, reg 5.19(4)(a)(ii) is met and the Tribunal will now proceed to consider whether the remaining requirements of reg 5.19(4)(a) are met. This subregulation requires that the application for approval was made on the approved form, is accompanied by the prescribed fee, and, where applicable, includes the required written certification relating to conduct that contravenes s 245AR(1) of the Migration Act 1958 (Cth).

21. The material on the departmental file indicates that the application was made on form 1395 (internet) and accompanied by the fee prescribed in reg 5.37.

22. A written certification stating that the nominator has not engaged in conduct in relation to the nomination that contravenes s 245AR(1) was provided.

23. Accordingly, all of the requirements in reg 5.19(4)(a) are met. The Tribunal has thus proceeded to consider the remaining requirements for approval of the nomination below.

    Nominator is actively and lawfully operating a business in Australia: reg 5.19(4)(b)

24. Regulation 5.19(4)(b) requires that the applicant is actively, lawfully and directly operating a business in Australia. Information before the Tribunal includes business activity statements, financial reports, organisation chart, ASIC company extract and oral evidence given at the hearing.

25. The Tribunal finds that the nominator is actively and lawfully operating a restaurant business in Forster, NSW named The Sicilian, and directly operates that business.

26. Accordingly, the requirement in reg 5.19(4)(b) is met.

    Position is not labour hire: reg 5.19(4)(c)

27. Regulation 5.19(4)(c) applies to nominators whose business activities include those relating to labour hire to an unrelated business. In these cases, the nominated position must be within the business activities of the nominator. There is no information to indicate that it is involved in labour-hire activities to unrelated businesses. Accordingly, the requirement in reg 5.19(4)(c) does not apply.

    Terms of employment of the visa holder: reg 5.19(4)(d)

28. Regulation 5.19(4)(d) requires the nominee to be employed in the nominated position for at least 2 years’ full-time, and that the terms and conditions of that employment do not expressly exclude the possibility of an extension.

29. The employment agreement with the application reflected a salary of $47,000 plus superannuation of 9.5%. The terms and conditions indicate that the position will be full-time and does not expressly exclude the possibility of an extension, and indicates that the employment will be for at least 2 years. The most recent payslip with payment date of 11 October 2022 reflects that his annual salary was $65,000 at that time, but subsequently a variation to the contract effective 1 October 2022 was provided reflecting an increased in salary to $66,800.

30. In terms of the financial capacity of the nominator, the Tribunal has been provided with the financial statements for FYE 30 June 2017, 30 June 2020 and FYE 30 June 2021, and the company tax return for 2020-2021. The financial statements for FYE 30 June 2021 reflect that the business has reverted back to higher level of assets to liabilities and retained earnings are positive compared to the FYE 30 June 2020.

31. According to the company tax return, the total income was $4,893,166 for FYE 30 June 2021, with expenses of $4,300,810, and net small business income of $592,356. The Tribunal has also considered the business activity statements (BAS), which reflect that the business is actively operating. It was claimed that their restaurants are doing relatively well despite the COVID-19 pandemic, and the businesses had a total turnover of $6.9 million from 1 July 2021 to 30 June 2022 (with $3.8 million attributable to the nominator).

    Having considered the evidence given, the Tribunal is of the view that the business is profitable and reflects a business that is financially sound. The nominee has been employed at The Sicilian since June 2019, and while he will be paid a higher salary than that which he has been paid to date, the Tribunal considers that there will be minimal impact on the payroll expenses of the business if the nomination is approved. The Tribunal is of the view that the nominator does have the financial capacity to employ the nominated position for at least 2 years.

32. Given this, the requirement in reg 5.19(4)(d) is met.

    No less favourable terms and condition of employment: reg 5.19(4)(e)

33. Regulation 5.19(4)(e) requires that the terms and conditions of employment applicable to the nominated position will be no less favourable than those that are, or would be, provided to an Australian citizen or permanent resident performing equivalent work in the same workplace at the same location.

34. According to the information provided, there are no Australian citizens or permanent residents performing equivalent work in the same workplace at the same location. The other Cooks at The Sicilian are classified as Level 3 or Level 1 employed.

35. In terms of whether the salary payable for this position would be no less favourable than those that are/would be provided to an Australian citizen or permanent resident performing equivalent work in the same workplace at the same location, the Tribunal was informed that the Restaurant Industry Award (Award) for 2020 applies to the business and that the position is classified as Cook Grade 5 which is Level 6 under the Award.

36. The Tribunal sought and was provided with additional information after the hearing regarding all of the employee’s classifications under the Award. On calculating the annualised salary and wage arrangements under the Award from 1 September 2022, the minimum annualised wage for the classification of Level 6 - Cook Grade 5 is $66,729 by adding 25% to the weekly rate and multiplying this by 52 week i.e. $ 1026.60 x 125% x 52.

37. Based on the variation to the contract reflecting an increased in salary to $66,800, the Tribunal finds that the salary payable and terms and conditions would be no less favourable than those that would be provided to an Australian citizen or permanent resident performing equivalent work in the same workplace at the same location.

38. Accordingly, the requirements of reg 5.19(4)(e) are met.

    No adverse information known to Immigration: reg 5.19(4)(f)

39. Regulation 5.19(4)(f) requires that there is no adverse information known to Immigration about the nominator or person associated with the nominator, or it is reasonable to disregard any such information. For these purposes, ‘adverse information’ and ‘associated with’ have the meaning given in regs 1.13A and 1.13B.

40. The information before the Tribunal reflects that the Department has monitored the company three times during the initial sponsorship period from 14 October 2015 to 14 October 2020 and that, on the third occasion, the Department officers uncovered underpayments as a result of the misapplication of the Award for 2010 and that the nominator had not been diligent with the record keeping. A sponsorship bar of 6 months was imposed as well as a penalty of $13,320.

41. As to whether it is reasonable to disregard this information, the joint statement of Mr Darzi and Mrs Pedram (the Proprietors) explain that the failure to comply with the obligations was unintentional, and that they had followed the advice of the accountants and migration lawyers they engaged at the time regarding the Award wages, which turned out to be incorrect. They provided some evidence to support this claim in the form of emails from the former advisors.

42. There appears to be no dispute that the information regarding the sponsorship bar of the standard business sponsorship of the nominator is adverse information as it was administrative action taken out against that company.

43. The nominator also disclosed that there have been two audits by the Fair Work Ombudsman (FWO) to date. The first audit in 2015 resulted in the nominator having to remedy “some small underpayments of less than $300. No further action was taken”. The second audit was in 2018 and the company was cautioned over suspected underpayments as a result of a misapplication of the Restaurant Industry Award 2010 (2010 Award). It is claimed that the nominator remedied the potential breach and no adverse finding was made and no further action was taken. However, a copy of the Letter of Caution from the FWO outlines that a breach of the Fair Work Act 2009 (Cth) and the 2010 Award had occurred by failing to comply with the annualised salary arrangements provided for in cl 28.1(a) of that Award. The letter further explains that the issuing of a caution is a written warning to a party when the FWO has found breaches and wants to put them on notice that future breaches could result in the seeking of financial penalties.

44. The submissions are that while serious, the breaches were not deliberate and resulted from confusion over the application of Awards that, it was submitted by the representative, are not easy to apply. The Tribunal was invited to draw this conclusion based on the penalty imposed which, it was submitted, was nowhere near as serious as could have been imposed by either the FWO or the Australian Border Force. There is nothing before the Tribunal which reflects that the FWA has imposed any financial penalties but, nonetheless, the Tribunal considers that the issuing of a caution and the Department’s decision to impose of a penalty of over $13,000 as well as a sponsorship bar of 6 months, reflects that the breach was not insubstantial for a business of this size.

45. The proprietors stated that they fully accept responsibility for their actions and did not appeal against the sanction imposed on the nominator despite the major impact it had on the business because they accepted that they were in the wrong and that the Australian government had the right to impose a punishment for this. It was submitted that the errors were made despite the nominator receiving advice at that time from supposed experts. Furthermore, and there is nothing before the Tribunal to suggest the contrary, it was submitted that the nominator co-operated fully with the Department’s investigations and made admissions as to the wrongdoing. The Tribunal accepts that the financial penalty imposed of $13,320 was paid, and the sponsorship bar of 6 months has been served.

46. It was further submitted that the nominator has taken active steps to ensure the breaches do not happen again, specifically implementing a number of measures, which include:

    ·engagement of an HR company to act as advisers on all Award and employment law issues, who audit all payments every six months to ensure compliance;

    ·remaining in regular contact with Mr David Anson, Fair Work Inspector, to ensure all decisions made are compliant;

    ·increasing all wages to pay above the Award;

    ·using VSure to run VEVO checks on all staff and potential hires.

1. Finally, it was submitted that the employment of the nominee is critical to the business operations and refusal would cause significant hardship to the business. The Tribunal’s attention was also drawn to the fact that a new standard business sponsorship was approved on 30 June 2022 for a period of 5 years, which does appear to reflect that the adverse information was disregarded by the Department in respect of the sponsorship approval.

2. Mr Darzi gave evidence at the hearing that the underpayments were rectified once they became aware of the issue and that they had engaged Zest People Solutions (Zest) as employment advisers to ensure compliance. It is claimed that Zest conducts regular audits on their payroll and notifies them of any changes to the Award and he appeared confident of their compliance. Notwithstanding the engagement of another specialised consultancy, the Tribunal noticed that the annualised salary requirements under the current Award did not appear to be met based on the information provided after the hearing and the employment contracts before it which reflected that the salaries appeared to be below the minimum for that classification under the Award based on the annualised salary arrangements. When the Tribunal wrote to the nominator regarding this after the hearing, the Tribunal was provided with variations of salary for three of the four persons this Tribunal is considering on review which is of some concern. The Tribunal notes that the officer conducting the sponsor monitoring in 2021 was of the view that the failures were reckless and, furthermore, given that the caution issued by the FWO in 2018 had also been related to a failure to comply with annualised salary arrangements, the Tribunal does have concerns about their commitment to ensuring terms and conditions are at least the same as that applicable to an Australian employee.

3. Having carefully consider all of the circumstances of this case, the Tribunal is prepared to accept that there were attempts to understand and to comply with the Awards by the proprietors. The Tribunal therefore considers that it is reasonable to disregard the adverse information as the infringement penalty was paid, the sponsorship bar ceased earlier this year, and importantly, the nominator has taken steps to ensure compliance with the applicable Award and its sponsorship obligations.

4. Accordingly, the requirements of reg 5.19(4)(f) are met. However, the Tribunal is of the opinion that the nominator should be subjected to further monitoring to ensure compliance with its obligations.

   Satisfactory compliance with workplace relations laws: reg 5.19(4)(g)

5. Regulation 5.19(4)(g) requires that the applicant 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.

6. The nominator has disclosed that there have been two audits by the Fair Work Ombudsman to date, which are outlined above, with the 2018 audit resulting in a formal caution being issued. In addition, there was a failure to pay four sponsored employees the correct wages in accordance with the 2010 Award, which was identified by the Department during its sponsor monitoring action in around July 2021. The Tribunal also requested clarification regarding the salary offered for the positions of Chef and Cook and sought clarification regarding the differences between these positions within the business, noting further that it appeared that the salary set out in the employment agreement appeared to be less than the annualised salary payable under paragraph 20.1 of the Award for the identified classification. In response, the Tribunal was informed of adjustments to the base salary by way of a variation to the signed employment contract for the nominee, as well as that of two others. By explanation, the representative referred to the letter of Kate Hemat-Sirkay of Zest People (dated 21 October 2022) submitting that the business had previously opted to pay the applicant a minimum annual salary based on a market rate and then adjusted that salary, if needed, based on actual hours and roster worked. It was claimed that this ensured that the applicant was paid at least the award entitlements for a Cook Grade 3, stating that this method is an alternative way of complying with the Award, which does not involve the payment of an annualised salary as calculated under paragraph 20.1 of the Award. It was submitted that this method of salary calculation was legally compliant but leading to confusion so the business has decided to now calculate the wages/salaries of all employees in accordance with paragraph 20.1 of the Award.

7. While the Tribunal has concerns about the nominator’s failures to comply with the Award, noting that the monitoring revealed underpayments to four sponsored employees, the Tribunal considers that, having regard to the number of employees and size of the operations, overall, the applicant has had 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.

8. Accordingly, the requirements of reg 5.19(4)(g) are met.

   Tasks of the position, genuine need for the position and training requirements: reg 5.19(4)(h)

9. Regulation 5.19(4)(h) contains a number of alternative requirements. Where the position and nominator’s business is located in regional Australia, it is a requirement that: there is a genuine need for the paid position under the nominator’s direct control which cannot be filled by a locally resident Australian citizen or permanent resident; the tasks of the position correspond to those of an occupation specified in the relevant legislative instrument; the occupation is applicable to the proposed employee in accordance with the specification of the occupation; and a regional certifying body has advised the Minister about certain matters relating to the position.

10. The nomination was made on the basis that the position and business is in regional Australia and that the requirements of reg 5.19(4)(h)(ii) were met. The business is located in Forster, 2428, which is a postcode of NSW specified in IMMI 17/059 as ‘regional Australia’. The requirements of reg 5.19(4)(h)(ii)(A) are therefore met.

11. As to whether there is a genuine need to employ a paid employee to work in the position under the nominator’s direct control, according to the employee list and organisation chart, the kitchen at The Sicilian currently consists of 8 kitchen staff, with 5 identified as Cook Grade 1, 3 or 5 and the other 3 kitchen attendants. The occupation for the nominated position is that of Chef and the Tribunal accepts that based on the operating hours of the business and the size and nature of the business, there is a genuine need. Therefore, the requirements of reg 5.19(4)(h)(ii)(B) are met.

12. In terms of whether the position cannot be filled by an Australian citizen or permanent resident who is living in the same local area, the Tribunal notes that it has been nearly 4 years since the application was made in February 2018. Evidence was provided of attempts to hire a Chef with the application, which included advertisements posted on the Jobactive website in around February 2018 and in the classifieds section of the Port Macquarie Express and Manning Great Lakes Extra in December 2017. Having regard also to the evidence at the hearing, the Tribunal is prepared to accept that it is difficult to find a suitably qualified person for this position and finds that the position cannot be filled by an Australian citizen or permanent resident who is living in the same local area. It therefore finds that reg 5.19(4)(h)(ii)(C) is met.

13. In regard to the tasks of the position, the Tribunal accepts that the nominee currently carries out tasks which correspond to those of a Chef as described in ANZSCO (351111) having regard to the evidence which includes oral evidence at the hearing. The nominee claimed that he is responsible for: supervising cooks, kitchen hands and other chefs as well as training new staff in the kitchen; ensuring that food safety guidelines are met in the kitchen; contributes ideas for new dishes and specials on the menu; also arranges maintenance of kitchen equipment if required. The nominee also claimed that he is involved with rostering of staff; and keeps an eye on the cost of produce and talking with suppliers if any issues arise. The nominee claims that he is responsible for the kitchen at The Sicilian restaurant as the Head Chef, with Mr Darzi being the Executive Chef of the three restaurants operated by the nominator and related companies. The Tribunal finds that the tasks to be performed in the position correspond to an occupation which is listed in ANZSCO, has a skill level of 2 and is also listed in the relevant instrument (IMMI 17/058). There are no additional specifications made in the relevant instrument in relation to this occupation. Therefore, the requirements of regs 5.19(4)(h)(ii)(D) and (DA) have been met.

14. Finally, the Regional Development Australia – Mid North Coast, which is a Regional Certifying Body (RCB) located in the same State as the position, advised the Minister on 26 March 2018 about the matters in regs 5.19(4)(e) and 5.19(4)(h)(ii)(B) and (C). The RCB was satisfied: that there is a genuine need for the nominator to employ the nominee; that the position could not be filled locally by an Australian permanent resident or citizen; and that the terms and conditions of the employment will be no less favourable than that which would be provided to an Australian citizen or permanent resident. There is nothing before the Tribunal to indicate that the advice does not remain valid. The Tribunal therefore finds that the requirements of reg 5.19(4)(h)(ii)(F) have been met.

15. Accordingly, the requirements of reg 5.19(4)(h) are met.

    Conclusion

16. Based on the findings above, the Tribunal is satisfied that the applicant meets the requirements of reg 5.19 for approval of the nomination of the position in Australia.

    DECISION

17. The Tribunal sets aside the decision under review and substitutes a decision approving the nomination.

    Wan Shum
    Member