Hairway Fountain Gate Pty Ltd (Migration)

[2019] AATA 6065

Hairway Fountain Gate Pty Ltd (Migration) [2019] AATA 6065 (14 October 2019)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANT:  Hairway Fountain Gate Pty Ltd

CASE NUMBER:  1714900

DIBP REFERENCE(S):  OPF2017/4989

MEMBER:Sean Baker

DATE OF ORAL DECISION:  14 October 2019

DATE OF WRITTEN STATEMENT:         16 October 2019

PLACE OF DECISION:  Melbourne

DECISION:The Tribunal varies the decision under review by barring the sponsor from sponsoring further persons under the existing approval as a standard business sponsor AND preventing the sponsor from making any future applications for approval as a standard business sponsor and any other specified classes of sponsor for the period from the date of the delegate’s decision, 27 June 2017, until 6 May 2018.

Statement made on 16 October 2019 at 1:05pm

CATCHWORDS

MIGRATION – cancellation – standard business sponsorship – barring the sponsorship for a specified time – failure to satisfy sponsorship obligations – working in the nominated occupation – working as beauty therapists rather than hairdressers for a single monitoring period – ineffective management communication – business sold to new owners – new operating processes – decision under review varied 

LEGISLATION

Migration Act 1958, s 140
Migration Regulations 1994, rr 2.86, 2.89, 2.96

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 to take an action under s.140M of the Migration Act 1958 (the Act) in relation to the applicant’s sponsorship.

2. The applicant was approved as standard business sponsor of overseas skilled workers under the Temporary Work (Skilled) (Subclass 457) visa programme. The applicant was first approved as a standard business sponsor on 14 November 2012. They have sponsored a total of eight 457 holders since this date. Their current sponsorship was approved 26 April 2016.

3. On 27 May 2017, the Department wrote to the sponsor in the form of a Notice of intention to take action (NOITTA) under Regulation 2.96, which stated that a delegate of the Minister was satisfied that circumstances for cancelling the approval of the sponsor in relation to the class or classes of visa to which the sponsor belongs, or for barring the sponsor from further use of the programme for a specified time, exist or existed.

4. On 27 June 2017, the delegate decided under Section 140M(1)(c) of the Act to bar the sponsor from sponsoring more people for Subclass 457 Temporary Work (Skilled) visas until the end date of the existing sponsorship (26 April 2021) and prevent the sponsor from making any future applications for approval as a standard business sponsor and any other specified classes of sponsor for the period specified on the basis that the applicant had not complied with r.2.89 (Failure to satisfy sponsorship obligation), because the delegate found the applicant had not complied with its sponsorship obligation to ensure a primary sponsored person works or participates in nominated occupation, program or activity (r.2.86).

5. The Tribunal gave its decision on the review at the conclusion of the hearing held on 14 October 2019. The following are the reasons for that decision. The applicant was represented in relation to the review by its registered migration agent.

6. For the following reasons, the Tribunal has decided to vary the decision under review by varying the period of the bar.

   CONSIDERATION OF CLAIMS AND EVIDENCE

   Certificate

7. On the Department file there is a purported s.376 certificate. The certificate however does not describe a public interest reason; simply indicating that disclosure could prejudice Departmental procedures. It has been held that certificates must provide enough detail to make out a valid public interest reason. Given the brevity here, I find that the certificate is not valid. I discussed this with the applicant and their representative at hearing and they indicated they did not wish to make further submissions.

   The legislative scheme

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

9. 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.

10. For these purposes, the circumstances are prescribed in r.2.89 - r.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.

11. 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: r.2.89 – r.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?

12. In the present case, the delegate found that the applicant failed to satisfy a sponsorship obligation.

    Failure to satisfy a sponsorship obligation: r.2.89

13. 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: r.2.89(2).

14. In this case the Department undertook a site visit to the principal place of business, Hairway Fountain Gate. At that site visit the Department was provided with information in the form of point of sale records which appeared to indicate that three persons sponsored by the business were undertaking a significant role as beauty therapists rather than their nominated occupation of hairdresser.

15. A range of explanations was put forward by the applicant as to why this had occurred. Ultimately the delegate was not satisfied with these explanations and found that the applicant had not satisfied its sponsorship obligation, namely r.2.86 - Obligation to ensure primary sponsored person works or participates in nominated occupation, program or activity.

16. On 7 October 2019 the applicant’s representative provided a submission. In this submission it was conceded that there was a breach of r.2.86, and therefore there was a failure to satisfy a sponsorship obligation under r.2.89. The submission sets out background information including the situation of the former owner, Mr Bansal, the workplace assessments that have been undertaken following the sponsorship bar, a discussion of the sales reporting inaccuracies, the remedial actions taken by the business, and the sale of the business to Mr Gulati and Ms Chand on 7 May 2018. It is noted that Mr Bansal remained as a director of the company to progress this review. The submission goes on to discuss the potential for the bar period to be revisited.

17. At the hearing I spoke with Directors Mr Bansal and Mr Gulati, the current owner.

18. Mr Bansal conceded the circumstance for the taking of an action existed. He explained that because the business had successfully sponsored a number of others previously, he was of the view that the systems in place were sufficient to ensure compliance with their obligations; but that the site visit had indicated that there were deficiencies. He expressed regret for failing to take a more pro-active approach to the management of the business, and stated that because the business did need greater management, he had reluctantly sold the business. Prior to the sale, the business hired an independent assessor, Silver man solutions, which utilised the services of a registered training organisation to carry out an assessment of the business. As per the report which has been provided, this identified significant problems, including that the sponsored persons had been conducting beauty services despite their status as sponsored hairdressers. It is maintained, and I accept, that the sponsored hairdressers conducted these beauty services as they were not aware of their obligations and to maintain their relationships with clients. Silver man solutions identified that there had been a failure of effective communication in the employment process of these individuals which led to the breaches that had occurred. Further limitations were identified by the RTO in the point of sale system which had limitations and constraints around accurately reflecting work undertaken. Silver man solutions stated that it did not consider the business had acted deliberately with the intent to utilise sponsored persons in areas other than their primary nomination, and that their principal failing was a lack of communication at the workplace around the sponsorship obligations.

19. In this case, the business, through director Mr Bansal, has conceded that the business did not satisfy sponsorship obligations at the time of the site visit. As below, he set out the remedial actions that have been taken, but did concede the historical failure to satisfy the sponsorship obligations as set out in the NOITTA

20. Accordingly, the Tribunal is satisfied that the prescribed circumstance in r.2.89 exists for the purpose of s.140M of the Act.

    Action to be taken

21. For these reasons, the Tribunal is satisfied that a relevant circumstance for s.140L(1)(a) exists. Accordingly, it is necessary to consider whether one or more of the actions mentioned in s.140M should be taken.

22. In considering what action to take, the Tribunal has had regard to the prescribed criteria. [1]

    the past and present conduct of the sponsor in relation to Immigration;

    [1] r.2.89(3).

23. As noted in the decision record, the sponsor has at all times cooperated with the Department. The sponsor has continued this cooperation with the Tribunal. According to the Delegate’s decision, this was the first time the sponsor has been monitored. I note also that according to the submission, and the attached documents, the business held a sponsorship and successfully sponsored a number of people with no issues prior to the current sponsorship.

    the number of occasions on which the sponsor has failed to satisfy the sponsorship obligation;

24. In this case it is conceded that the business failed to satisfy the obligations that the primary sponsored persons work or participate in the nominated occupation in relation to three persons, that is, on three occasions. It is argued in the submission, and I accept on the basis of the information before me, that these breaches are in relation to the single monitoring period as opposed to separate monitoring periods and the breach has not been recommitted.

25. It is also noted in the submission, and I accept, that the business has sponsored eight persons, and found to be genuinely working in their nominated positions, and three of whom have successfully secured ENS.

    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;

26. The delegate’s decision reasons that the period of time over which the failure occurred was significant, being the periods of employment of the three sponsored persons identified since the beginning of their employment, but notes that the third named person’s work outside hairdressing had been only minimal.

27. The submission from the representative largely concedes the above, but explains why these breaches occurred, largely due to inadvertence on the part of the named persons and lack of management oversight at the time of the monitoring. Having had regard to all the evidence I do accept this submission and find that the breaches here may have been over an extended period of time but were inadvertent.

    the period of time over which the sponsor has been an approved sponsor;

28. As noted in the delegate’s decision and in the submission, the business was first approved as a standard business sponsor on 14 November 2012 and again on 26 April 2016 until 26 April 2021. At hearing Mr Bansal explained that he believed he had put in place appropriate processes to ensure the sponsorship obligations of the business, but it is conceded that these were insufficient, due to a range of factors including Mr Bansal’s relocation to Canberra for work in the relevant period.

29. It is noted in the submission that the business was compliant for the prior period.

    whether, and the extent to which, the failure to satisfy the sponsorship obligation has had a direct or indirect impact on another person;

30. The delegate was of the view that Australian citizen or permanent resident beauty therapists could have been employed. The submission notes that this would not have been the case because Mr Bansal had employed a number of beauty therapists for the volume of work the salon had, and would not have employed any more – and it is noted that the number of beauty therapists has generally remained the same until now. Attached to the submission were rosters which appeared to illustrate this point.

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

31. At the hearing Mr Bansal gave convincing evidence that the breach had been inadvertent. He explained in detail the history of his involvement with the business, and what had led to the failings. He explained that he had thought the processes he had put in place were sufficient because of their previous nominations. He explained that when he went to Canberra, he relied on the senior staff without having instructed them properly, and handed over other functions to an accountant, meaning he had very little involvement with the business. He expressed strong remorse and regret for this and for his actions, and noted that these actions had led his employees to be disadvantaged, for which he was sincerely sorry. The submission sets out further detail on these matters. I am persuaded that the business, through the director Mr Bansal, was not aware of the details of the business including who was undertaking particular work on any given day in the salon.  I am satisfied that the failure to satisfy the sponsorship obligation in this case was not intentional or reckless, but as a result of inadvertence which came from Mr Bansal’s earlier successful approvals for ENS, the fact no prior issues had been identified, and his relocation to Canberra.

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

32. The delegate’s decision noted that the sponsor had cooperated with the Department throughout the monitoring process and provided information in response, but that the sponsor (that is, the Director of the business at that time, Mr Bansal), had refused to acknowledge their failure of their sponsorship obligations, claiming systems and user error, which the delegate found unconvincing and self-serving. Furthermore the delegate went on; the sponsor appeared to take issue with why the visit was conducted and how the documentation was obtained rather than addressing the more important issue at hand being the duties of its staff members. Delegate was satisfied the failures were only identified via the unannounced site visit and was not convinced that similar data would have been obtained in the event the same information was requested with notice. The delegate concluded that they considered the sponsor’s response to be a key factor in their decision.

33. I have had regard to the views of the delegate that the sponsor cooperated. In relation to the other matters discussed by the delegate, I have dealt with these below.

    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;

34. The delegate’s decision notes that the sponsor did not acknowledge their sponsorship obligation failure, and claimed to have rectified the system errors by instructing staff to accurately record all service transactions. The delegate did not accept this explanation provided by the sponsor and therefore gave little weight to this claim.

35. I agree with the delegate that at the time of their decision the business, through the then director, had not acknowledged their sponsorship obligation failure, nor taken adequate steps to rectify the failure.

36. Since the delegate’s decision, there have been some very significant changes. Having spoken to Mr Bansal, I accept that he has acknowledged the sponsorship obligation failures that took place. He has expressed contrition for the manner in which he dealt with the Department. He has also taken steps to rectify the failure.

37. The business has undertaken a workplace compliance assessment, which has included a number of visits by an assessor, and demonstrated changes made to the business as a result of that assessment, which are detailed in the submission. At the hearing, Mr Bansal explained the operating processes which had been put in place since the department site visit and the workplace compliance assessment. This includes detailed and specific actions designed to address the shortcomings identified in the site visit, and to ensure as far as is reasonably practicable that person sponsored for a particular profession or occupation only perform work in that field.

38. Further, ownership of the business has changed since the original decision, and Mr Bansal no longer has an ownership interest in the business. He remains a director only to see this process to completion. It appears from the evidence provided at the hearing, the information in the submission, and the processes that remain in place, that the current owners are aware of their sponsorship obligations, and have taken steps to ensure that there will not be further failures of the businesses sponsorship obligations.

39. The submission sets out the business has improved communication of workplace requirements fire the employee Handbook, developed a guide to the operation of the POS system, and requires staff to periodically review this, has highlighted employability constraints within staffing lists, and communicated to all staff the limitations and boundaries of the tasks that can be performed by personnel employed under sponsorship arrangements.

40. Having considered the documentation, including the employee Handbook, the processes for staff to acknowledge that they have read and understood this handbook and the data entry process, and having considered the changes to the staff rosters, which now clearly identify those persons who are sponsored, and the other steps outlined, I am satisfied that the business has taken significant steps to rectify the failure identified by the Department.

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

41. The delegate noted again that the sponsor had not acknowledged any failure, and was therefore not satisfied the sponsor would rectify or take any measures to ensure future compliance.

42. Before the Tribunal, it does appear that the business, and Mr Bansal, have made very significant changes, and as above have implemented what I consider robust processes to ensure future compliance with the sponsorship obligations. I note that the new owners have held the business now for over a year, and that these processes have been operating whilst they have been owners and directors of the business, and from our discussion at the hearing, it appears that the new owners will continue to implement and develop processes to ensure future compliance.

    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;

1. The delegate noted that there were no other sponsorship obligations. The submission notes that there was a technical breach of sub regulation 2.84(3)(a) in that the sponsor did not inform the Department of the appointment of the two new directors (the new owners) on 1 September 2017, but that this has been rectified by reporting the appointments on 1 October 2019. I do not consider this technical breach significant.

   any other relevant factors.

2. The delegate again noted that the sponsor’s refusal to acknowledge their failings was a key issue in their unwillingness to show contrition or provide a meaningful remedy led the delegate to the view that the staff would continue to undertake duties outside the scope of their profession or appointment as hairdressers.

3. In the submission the refusal to acknowledge the failure of obligations was addressed, and as above Mr Bansal expressed what I accept was genuine contrition for his refusal to acknowledge the failings (which he is now acknowledged in full), I consider the business has put in place steps to avoid future failures of their sponsorship obligations, and the business has changed hands. I consider that the evidence before me indicates that there are now sufficient processes in place to ensure that sponsored persons did not undertake duties outside their remit at the business.

4. I have also had regard to, and accept, the submission that despite the intention of the delegate who made this decision, the decision has significantly disadvantaged Ms Dewage and the new owners.

5. I have carefully weighed the discretionary factors. I agree with the delegate that at the time of that decision the evidence before the delegate tended to indicate that the business would or may have continued to allow for breaches of its sponsorship obligations, through failures of processes, and a refusal to acknowledge the identified failures.

6. Since then however, the business, and directors, have acknowledged the failures, and it appears to me have undertaken significant and robust changes in process so that these failures are much less likely to occur. I consider that the bar imposed by the delegate was the impetus for these changes.

7. Having carefully weighed the above discretionary factors I consider that a bar is appropriate in the circumstances. However, given what I have found to be material changes in the business, both in the processes and the ownership of the business, it appears to me that the bar has acted as intended, to be a corrective to the identified failures, and it appears from all of the evidence before me at the business will not fall into sponsorship obligation failures now or into the future.

8. At the hearing, it was submitted, that the sponsorship bar was imposed to address the concerns the delegate had in particular with Mr Bansal. Having read the delegate’s decision I agree that this is the case. The question then is, Mr Bansal having no ownership interest since the sale of the business on 7 May 2018, and given the changes to process, what is the most appropriate course of action. I consider that the bar has done its work and that the most appropriate course of action is to vary the decision so that the bar is no longer in place from the date on which the business changed ownership. In making this decision I have in particular taken into account that the information indicates a material change in the business processes, and that the information before me indicates the other visa holders discussed by the delegate, and the new owners, should no longer be disadvantaged by the bar.

9. Considering the totality of the circumstances, and having regard to the prescribed criteria the Tribunal finds that the action mentioned in s.140M(1(c)to barring the sponsor from sponsoring further persons under the existing approval as a standard business sponsor AND preventing the sponsor from making any future applications for approval as a standard business sponsor and any other specified classes of sponsor for the period from the date of the delegate’s decision, 27 June 2017, until 6 May 2018should be taken.

   DECISION

10. The Tribunal varies the decision under review by barring the sponsor from sponsoring further persons under the existing approval as a standard business sponsor AND preventing the sponsor from making any future applications for approval as a standard business sponsor and any other specified classes of sponsor for the period from the date of the delegate’s decision, 27 June 2017, until 6 May 2018.

    Sean Baker
    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.

    …