Esprit Hair Pty Ltd (Migration)

[2019] AATA 2999

Esprit Hair Pty Ltd (Migration) [2019] AATA 2999 (31 May 2019)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANT:  Esprit Hair Pty Ltd

CASE NUMBER:  1822478

DIBP REFERENCE(S):  BCC2017/4604665

MEMBER:Cathrine Burnett-Wake

DATE:31 May 2019

PLACE OF DECISION:  Melbourne

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

Statement made on 31 May 2019 at 1:50pm

CATCHWORDS
MIGRATION – nomination – Temporary Residence Transition stream – Customer Service Manager – evidence of financial capacity provided – capacity to pay full-time salary for nominated position for 2 years – employment contract does not exclude possibility of contract extension – evidence training requirements met provided – decision under review set aside

LEGISLATION
Migration Act 1958 (Cth), ss 140GB, 245AR
Migration Regulations 1994 (Cth), 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 17 July 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 4 December 2017. 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 Temporary Residence Transition nomination stream.

4. The delegate refused the application on the basis the applicant’s nomination did not satisfy r.5.19(3)(d)(i) of the Regulations because the it was found the business had not demonstrated the financial capacity to be able to pay the full-time salary for the nominated position for at least 2 years. The delegate also made additional findings under 5.19(3)(i) and found that the position was not genuine due to a lack of supporting documentation.

5. Mr Antonio Tenaglia, Director of the applicant, Esprit Hair Pty Ltd (Esprit Hair), formerly known as Esprit Hair and Day Spa Pty Ltd, appeared before the Tribunal on both 7 September 2018 and 1 March 2019 to give evidence and present arguments for two related Esprit Hair matters: Tribunal file numbers 1727329 and 1620191. These matters were both nomination refusals under r.5.19. The Tribunal also received oral evidence from Ms Teresa Tamburro, the daughter of Mr Tenaglia and the Operations Manager for Esprit Hair.

6. A request from the applicant was made: that all documents and oral evidence provided in relation to the Tribunal file numbers 1727329 and 1620191 could be used by the Tribunal for its considerations relating to this third matter, file number 1822478. As the Tribunal is able to reach a favourable finding, based on the evidence before it and as submitted and heard for the related matters Tribunal file numbers 1727329 and 1620191, the Tribunal is able to proceed to decision without the need to conduct a hearing.

7. The applicant was represented in relation to the review by its barrister, also a registered migration agent, Mr Michael Gros.

8. For the following reasons, the Tribunal has decided to set aside the decision under review and substitute a decision approving the nomination.

   CONSIDERATION OF CLAIMS AND EVIDENCE

9. The issue in this case is whether the applicant meets the requirements for approval of the nomination under the Temporary Residence Transition nomination stream set out in r.5.19(3), which is extracted in the attachment to this decision. For the nomination to be approved, all the requirements must be met.

   Background

10. Mr Tenaglia gave verbal evidence to the Tribunal that he has over 40 years of experience in the hair and beauty industry, owning a group of companies within this industry, which he stated employs his immediate family along with other employees.

11. Evidence has been provided to the Tribunal, which reflects there are three entities within the group owned and operated by Mr Tenaglia.

12. Firstly, there is the applicant: Esprit Hair Pty Ltd, formerly Esprit Hair and Day Spa Pty Ltd. This entity operates two salons under the ‘Esprit’ branding being: Esprit Hair Docklands with a salon size of 103 m² and Esprit Hair Burke Street with a salon size of 75 m². At hearing, Mr Tenaglia described these salons as providing current trends in the professional hairdressing industry, which strive to offer the best professional hair services. Evidence was provided, that across these two salons, five staff are employed, and they undertake duties in either salon, depending on operational needs.

13. The second entity, Tangle Free Cosmetics VIC Unit Trust, trading as ‘Hair to Go’, described by Mr Tenaglia at hearing as the major retail and salon division that was established in 2014 as a rebrand and after the relocation of Esprit hair and day Spa into Bourke Street and Docklands. It was explained to the Tribunal that the Hair to Go store provides customers with an array of the 50 brands of hair and beauty products they supply, with the retail and salon space spanning over 262 m² in size in the heart of the Melbourne CBD, on Elizabeth Street. Mr Tenaglia also outlined that this store acts as their major retail showroom/marketing store for their import division, displaying and demonstrating their own exclusive brands imported from all over the world. He stated that this store sees over 300 people visit daily with both interstate and overseas customers.

14. The third entity is the import and distribution arm of the group, Tangle Free Hair and Beauty Pty Ltd. This entity has over 500 m² in office and warehouse space, is the distribution point, and has an education centre and wholesale showroom. Mr Tenaglia outlined they had around 10,000 items/products at the warehouse awaiting distribution/sale.

15. Mr Tenaglia explained at hearing that the entity Esprit Hair had experienced losses over a number of years. The Tribunal’s examination of the financials for Esprit Hair found that for several years prior to the 2018 financial year, the company had experienced losses.

16. Mr Tenaglia explained that these losses were directly related to the relocation(s) and investment into the two Esprit Hair salons that occurred in 2014/15. Additionally because the Docklands salon, located in the Harbour Town precinct, was negatively impacted due to the well-known issues with the Melbourne wheel not being operational for a long period. Therefore, people stopped going to the precinct, resulting in a downturn for this salon and other businesses in the area, many he said had closed.  Mr Tenaglia told the Tribunal that a great deal of investment has been made into the refurbishment of the area, including the building of a roof over the centre and many upgrades in an attempt to try to get people back. Mr Tenaglia explained that under the new management of the precinct, it was now starting to turn around, especially because one of the major supermarkets has now opened.

17. Mr Tenaglia conceded that Esprit Docklands is currently the most vulnerable store, and continuing in this location and its viability depends purely on the further developments and completion of major renovations within the precinct and how the centre performs. Mr Tenaglia explained that the current lease is signed until the middle of 2020 and if the centre does not pick up, they will not renew the lease unless they received improved leasing terms and conditions upon those currently held. He said that if they chose not to renew the lease for the Docklands salon that they would continue with the Bourke Street salon, as this in its own right was profitable and they would look for another suitable space to occupy to replace the Docklands salon.

18. Submissions were provided to the Tribunal explaining that although the entities, for financial reasons, operate separately they do operate collectively as a group and work in unison to grow and expand together.  The submissions set out there are a number of reasons why Mr Tenaglia has chosen not to close the Docklands salon during an unprofitable period which included:

    ·to uphold our highly regarded reputation in the industry, is closing a salon that is linked with a whole subdivision would most certainly cause damage to public image and would play into the hands of our wholesale competitors;

    ·to gain industry insight into competitors which aids our wholesale division;

    ·to recoup extra profit by selling our own imported products rather than another products;

    ·gain more public awareness of our own product ranges;

    ·tax deductions for the business group overall.

19. Mr Tenaglia explained that the plans of the overall group moving forward were to establish and provide a training school for hairdressers located on Level 1, 289 Flinders Lane, in the space  previously occupied by the Esprit Hair and Day Spa (before establishing the Bourke street and Docklands salons), which is currently being sublet to a hairdressing College, whom they have commenced  talks with regarding forming a joint venture.

20. It should be noted that the Tribunal has had the benefit of being in receipt of supporting information and evidence that was not before the Department when the delegate made their decision. The Tribunal has reviewed the Department files relating to the nomination applications and notes that the delegate does not appear to have any information regarding the overall group operations, and that only information pertaining to Esprit Hair was provided in support of the primary applications. There was no information regarding Hair to Go or the import and distribution arm of the group.

    The application must be compliant: r.5.19(3)(a)

21. Regulation 5.19(3)(a) requires that the application for approval must be in the approved form, must be accompanied by the prescribed fee and, where applicable, must include the required written certification relating to conduct that contravenes s.245AR(1). The application must also identify a relevant person and occupation.

22. On the basis of the information in the Department's file, the Tribunal is satisfied that the application was made on the relevant form and was accompanied by the prescribed fee. The relevant s.245AR(1) certification was also provided in the application form.

23. The application for approval identifies, Ruwan Dissanayake Mudiyanselage, the nominee who, according to Departmental records, held a Subclass 457 visa from 9 December 2013  through to 9 December 2017 that was granted on the basis of satisfying subclause 457.223(4) of Schedule 2.

24. The occupation identified in the application is Customer Service Manager ANZSCO 149212. The Tribunal is satisfied, based on the employment documents for the nominee, that the occupation identified is the same occupation as that carried out by him as the holder of a Subclass 457 visa. The Tribunal is accordingly satisfied that this occupation carries the same 4-digit code (1492) as the occupation carried out by the nominee whilst he held the Subclass 457 visa.

25. Given the above findings, the requirement in r.5.19(3)(a) is met.

    Status of the nominator: r.5.19(3)(b)

26. Regulation 5.19(3)(b) requires the nominator to be or have been the relevant standard business sponsor who is actively and lawfully operating a business in Australia. In addition, the nominator, as that standard business sponsor, must not have met certain criteria relating to the operation of a business overseas, in the most recent sponsorship approval.

27. Departmental records confirm that the nominator was the standard business sponsor who last identified, Ruwan Dissanayake Mudiyanselage, the nominee, in a nomination made under s.140GB of the Act. The nominator was not granted the most recent business sponsorship on the basis of meeting either r.1.20DA, r.2.59(h) or r.2.68(i).

28. During the hearing, Mr Tenaglia described the nature of the business and its operations as detailed in paragraphs 10-19. The Tribunal is satisfied that the business Esprit Hair operates as two hair salons, one on Bourke Street, the other in the Docklands Harbour Town precinct.

29. The Tribunal is satisfied on the basis of the material before it, including the business' registration documents, activity statements, payroll activity information and other information about the business' activities that the nominator is actively and lawfully operating a business within the hair and beauty industry.

30. Given the above findings, the requirement in r.5.19(3)(b) is met.

    Previous employment of the nominee: r.5.19(3)(c)

31. Broadly speaking, to meet the requirement in r.5.19(3)(c), either:

    ·     the nominee must have been employed full time in Australia in the position for which he or she holds a Subclass 457 visa for at least 2 of the 3 years preceding the nomination application; or

    ·     the nominee holds a Subclass 457 visa on the basis that s/he was identified in a nomination of a specified occupation for that visa, the nominator nominated the occupation, and the nominee has been employed in that occupation for at least 2 years in the 3 years immediately before the application.

32. In this case, r.5.19(3)(c)(i) is the relevant provision. The nomination was lodged on 4 December 2017. The nominee was granted the Subclass 457 visa to work in the nominated occupation of Customer Service Manager on 9 December 2013.

33. The Tribunal has had regard to payslips along with the payroll activity summary document on the file, which confirms the nominee's employment with the nominator.

34. During the hearing, Mr Tenaglia confirmed the nominee’s employment and confirmed for the Tribunal the role and duties of the nominee, which correlate to those of Customer Service Manager as per ANZSCO 149212.

35. Given the above findings, the requirement in r.5.19(3)(c) is met.

    Future employment of the visa holder: r.5.19(3)(d)

36. Regulation 5.19(3)(d) only applies to certain nominees (those described in r.5.19(3)(c)(i)). For this class of person, the regulations require that the nominee will be employed on a full time basis for at least 2 years on terms that do not expressly preclude the possibility of an extension.

37. The Tribunal has had regard to the signed offer of employment and the letter of guarantee, confirming the nominee will be employed on a full-time basis for at least 2 years; and that his employment contract does not expressly exclude the possibility of extending the period of employment

38. The Tribunal has had regard to the documents provided on review, including the nominator's financial statements, company tax returns and BAS. It has also had regard to the related entities financial statements provided to the Tribunal.

39. The Tribunal notes, collectively, the group of companies overall is in profit and is doing well. Although losses within the group have occurred over a several year period, these have been confined solely to the entity Esprit Hair. Of note are the 2018 financial statements for Esprit Hair, which demonstrate recovery, compared to previous years, with a small net profit before income tax achieved. The recovery is consistent with Mr Tenaglia’s verbal evidence that with the refurbishment of the Harbour Town precinct and patrons returning it is having a direct positive effect on the bottom line. Notwithstanding the before tax net profit, the balance sheet reflects a net asset liability for 2018. This is however offset by intercompany loans from other entities within the group, which Mr Tenaglia said would not be called upon. Mr Tenaglia also confirmed to the Tribunal that the group can and would, if required, inject capital into Esprit Hair to meet any financial obligations that may fall due if it was not able to meet them. Mr Tenaglia also outlined the losses in one company within the group has tax deduction advantages for the group overall and did not mean because one entity was making a loss that the overall group was not financially viable. The Tribunal accepts this.

40. The Tribunal finds, on balance, that the applicant has the financial capacity to maintain the nominee’s employment has they have done since 2013.  Although losses have occurred, reasonable explanations as to why they occurred have been provided, being relocation and establishment of two salons and the capital expenditure and investment required, coupled with the issues experienced at the Docklands Salon because of the Melbourne Wheel operational failings and the flow on impact it had on the Harbour town precinct based businesses. Further, recovery of the financial position of Esprit Hair has been demonstrated with the before tax net profit in the 2018 financial year. The Tribunal also accepts, based on Mr Tenaglia’s evidence, that if required, the group can and will support Esprit Hair to meet any financial obligations.

41. The Tribunal is satisfied on the totality of the evidence that the nominator has the financial capacity to maintain the nominee's employment as they have done since 2013.

42. The Tribunal is satisfied on the material before it that the nominee will be employed on a full-time basis for at least 2 years on terms that do not exclude the possibility of extending the period of employment.

43. Given the above findings, the requirement in r.5.19(3)(d) is met.

    No less favourable terms and conditions of employment: r.5.19(3)(e)

44. Regulation 5.19(3)(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.

45. The evidence on file indicates the nominee's base salary is $54,400 plus superannuation. It was noted in the application form that there is no Australian performing equivalent work at the same location, which is also supported by the organisational chart provided to the Tribunal.

46. The applicant has made claims that the nominee’s salary is based on market rates. Therefore, the Tribunal considers it appropriate to have regard to 'relevant information' which may include, but is not limited to, local knowledge and evidence of appropriate terms and conditions of employment, including information from employer associations and unions and broader labour market data including the Australia Bureau of Statistics (ABS) Employee Hours and Earnings Survey, the Australian Government Job Outlook website, remuneration surveys and job vacancy advertisements.

47. The Tribunal has consulted a range of sources of information, including:

    • the Government's Job Outlook website (accessed May 2019) which indicates that the average weekly earnings before tax for Customer Service Managers are $1274 before tax (or $66,248 annually, not including superannuation) (data stated to be based on an Australian Bureau of Statistics survey undertaken in August 2015).
    • Payscale website ( ) report (accessed May 2019) provides a salary range for a Transport Manager in Australia of $49,016 to $89,256, with the median salary being $61,433: ;.

48. The Tribunal is satisfied, from the most recent salary survey information from Job Outlook, that the salary package attached to the nominated position is within the range of salaries for the occupation.

49. On balance, the Tribunal is satisfied that the nominee's salary is no less favourable than those that would be offered to the relevant Australian equivalent.

50. Accordingly, the requirement in r.5.19(3)(e) is met.

    Training commitments and obligations: r.5.19(3)(f)

1. Regulation 5.19(3)(f) requires the applicant to have fulfilled any commitments made relating to meeting training requirements, and complied with applicable obligations relating to training  requirements, during the period of the  applicant’s most recent sponsorship approval.  These requirements may be disregarded if it is reasonable to do so.

2. Esprit Hair’s most recent sponsorship approval is from 1 August 2016 until 1 August 2021.

3. The nominator has provided evidence to the Tribunal of training expenditure for the 2017, and 2018 financial years. The expenditure is in excess of 1% of their payroll as reflected in the financial statements, and recorded in the BAS.

4. The Tribunal is satisfied on the evidence before it that the applicant has fulfilled commitments made relating to meeting the training requirements during the relevant period.

5. In addition to fulfilling the commitment relating to training, the Tribunal is also satisfied that the applicant has also kept the required records showing that they have complied with their sponsorship obligation relating to the training requirement.

6. Accordingly, the requirement in r.5.19(3)(f) is met.

   No adverse information known to Immigration: r.5.19(3)(g)

7. Regulation 5.19(3)(g) 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 rr.1.13A and 1.13B. 

8. There is no information before the Tribunal to indicate that there is adverse information known to the Department about the nominator or an associated person.

9. Accordingly, the requirement in r.5.19(3)(g) is met.

   Satisfactory compliance with workplace relations laws: r.5.19(3)(h)

10. Regulation 5.19(3)(h) requires the applicant to have 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.

11. There is no information before the Tribunal to suggest that the applicant does not have a satisfactory record of compliance with workplace relations laws.

12. Accordingly, the requirement in r.5.19(3)(h) is met.

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

    Genuine need to employ nominee: r.5.19(3)(i)

14. Regulation 5.19(3)(i) requires that there is a genuine need for the nominator to employ the person, as a paid employee, to work in the position under the nominator’s direct control.

15. Mr Tenaglia states in his signed written statement provided that the nominee has worked in the nominated occupation since 2013. He adds that, the nominee has a Diploma in management and marketing giving him up to date working knowledge and skills that have proved to be a major asset for his hair and beauty business. He further adds that the nominee has been managing social media and similar online interactive applications and has significantly raised the retention of existing customers whilst gaining new clients for the business.

16. At hearing Mr Tenaglia explained to the Tribunal the duties the nominee performed, and how they benefited the business. It was explained to the Tribunal that role was crucial for the business’ ongoing success and without him the business would suffer. It was explained that the company has hundreds of customers the nominee is responsible for both within the salons and through their online sales for their products.

17. After the hearing Mr Tenagila provided the Tribunal with a written statement, which detailed the need for the nominee within the business, and also confirmed the duties performed.

18. The Tribunal is satisfied given the size of the business that there is a genuine need for a paid employee to work in the position of Customer Service Manager under the nominator's direct control.

19. Accordingly, the requirement in r.5.19(3)(i) is met.

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

    DECISION

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

    Cathrine Burnett-Wake
    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.

    Temporary Residence Transition nomination

    (3)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 person who holds a Subclass 457 … visa granted on the basis that the person satisfied the criterion in subclause 457.223(4) of Schedule 2; and

    (iii)     identifies an occupation, in relation to the position, that:

    (A)is listed in ANZSCO; and

    (B)has the same 4-digit occupation unit group code as the occupation carried  out by the holder of the Subclass 457 … visa; and

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

    (b)the nominator:

    (i)       is, or was, the standard business sponsor who last identified the holder of the Subclass 457 … visa in a nomination made under section 140GB of the Act or under regulation 1.20G or 1.20GA as in force immediately before 14 September 2009; and

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

    (iii)     did not, as that standard business sponsor, meet regulation 1.20DA, or paragraph 2.59(h) or 2.68(i), in the most recent approval as a standard business sponsor; and

    (c)either:

    (i)       both of the following apply:

    (A)in the period of 3 years immediately before the nominator made the application, the holder of the Subclass 457 …visa identified in subparagraph (a) (ii) has:    

    (I)held one or more Subclass 457 visas for a total period of at least 2 years; and

    (II)been employed in the position in respect of which the person holds the Subclass 457 … visa for a total period of at least 2 years (not including any period of unpaid leave);

    (B)the employment in the position has been full-time, and undertaken in Australia; or

    (ii)      all of the following apply:

    (A)the person holds the Subclass 457 … visa on the basis that the person was identified in a nomination of an occupation mentioned in sub-subparagraph 2.72(10)(d)(iii)(B) or sub-subparagraph 2.72(10)(e)(iii)(B);

    (B)the nominator nominated the occupation;

    (C)the person has been employed, in the occupation in respect of which the person holds the Subclass 457 … visa, for a total period of at least 2 years in the period of 3 years immediately before the nominator made the application; and

    (d)for a person to whom subparagraph (c)(i) applies:

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

    (ii)      the terms and conditions of the person’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)       the nominator:

    (A)fulfilled any commitments the nominator made relating to meeting the nominator’s training requirements during the period of the nominator’s most recent approval as a standard business sponsor; and

    (B)complied with the applicable obligations under Division 2.19 relating to the nominator’s training requirements during the period of the nominator’s most recent approval as a standard business sponsor; or

    (ii)      it is reasonable to disregard subparagraph (i); and

    Note Different training requirements apply depending on whether the application for approval as a standard business sponsor was made before 14 September 2009 or on or after that date.

    (g)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

    (h)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

    (i)there is a genuine need for the nominator to employ the person, as a paid employee, to work in the position under the nominator’s direct control.