Humberto Uy Kimpang (Migration)

[2018] AATA 2653

Humberto Uy Kimpang (Migration) [2018] AATA 2653 (12 June 2018)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANT:  Humberto Uy Kimpang

CASE NUMBER:  1801064

DIBP REFERENCE(S):  OPF2017/12392

MEMBER:Cathrine Burnett-Wake

DATE:12 June 2018

PLACE OF DECISION:  Melbourne

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

Statement made on 12 June 2018 at 10:27am

CATCHWORDS
Migration – Cancellation – Employer Nomination – Sponsorship obligations – Method of payment of wages – Cash wages – Record keeping – Willingness to pay wages via EFT – Departmental policy conflict – Independent verification by accountant – Credible witness – Decision under review set aside

LEGISLATION
Fair Work Act 2009 (Cth), s 323
Migration Act 1958 (Cth), s 140M
Migration Regulations 1994 (Cth), rr 2.19, 2.82, 2.89

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. By way of background, the applicant, Mr Humberto Uy Kimpang, trades as a sole proprietor and operates Chadz Chickenhaus, with two locations in Sunshine and Werribee. Chadz Chickenhaus focuses on Filipino cuisine and also sells a range of Filipino grocery products.

3. At hearing the applicant outlined that he was having difficulty recruiting and obtaining a qualified cook for his business. He and his wife were operating the business and doing all the cooking between them, seven days a week. He explained that one of his children suffers from Prader-Willi syndrome and requires around the clock care; as such he and his wife were struggling to balance the operation of the business and caring for their son given his medical condition, so they decided to employ a cook to assist them.  Through family friends the applicant was introduced to Ms Christina Mosquite, who, at the time, was in Australia on a student visa having recently completed qualifications in commercial cookery. The applicant agreed to sponsor Ms Mosquite on a 457 visa. As part of that process, the applicant was approved as a standard business sponsor on 27 February 2012. The agreement ceased on 27 February 2015.

4. On 10 January 2018, the delegate decided to bar the applicant for six months from making future applications for approval as a standard business sponsor under s.140M(2) on the basis that the applicant failed to meet r.2.89, ‘Failure to satisfy sponsorship obligation’, because of the Department’s findings that the applicant had failed to satisfy r.2.82, ‘Obligation to keep records’, as the applicant was found to have paid the 457 employee, Ms Mosquite, cash wages and did not keep independently verifiable records of payment to her.

5. The Notice of Decision also discusses a possible breach of r.2.87, ‘Obligation not to recover, transfer or take actions that would result in another person paying for certain costs.’ However, no action was taken by the Department on this point and they did not pursue or make a finding on it as a failure of sponsorship obligations by the applicant as per r.2.89. As such, the Tribunal is not addressing this in its findings or decision.

6. The applicant appeared before the Tribunal on 10 May 2018 to give evidence and present arguments.

7. The applicant was represented in relation to the review by his registered migration agent. The representative attended the Tribunal hearing.

8. The applicant stated at hearing the reason for lodging the review application regarding the sponsorship bar was twofold. Firstly, because he did not believe he had done anything wrong and had acted lawfully at all times in regards to Ms Mosquite’s employment; and secondly, because although he was not planning on sponsoring anyone further on a temporary work visa that the bar related to, there was a pending ENS and associated 186 visa application for Ms Mosquite and the sponsorship bar could be considered adverse information.

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

   CONSIDERATION OF CLAIMS AND EVIDENCE

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

11. 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.

12. 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.

13. Where a prescribed circumstance has been found to exist, the Migration Regulations 1994 (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?

14. The applicant does not dispute that he paid Ms Mosquite cash wages up until the Department informed him of a possible breach following sponsorship monitoring and the issue of a Notice of Intention to Take Action (NOITTA) on 3 November 2017. Once the NOITTA was issued, the applicant immediately changed his payment method for Ms Mosquite’s wages from cash to electronic funds transfer (EFT).

15. During the hearing the applicant outlined that his accountant advised him it was lawful to pay employees cash wages and he had always done so. The applicant outlined that he kept records of payments to employees and issued payslips. He also outlined that his employees, including Ms Mosquite, were provided with a group certificate at the end of each financial year that demonstrated what gross and net wages had been paid, and correlated with what was reported to the Australian Taxation Office (ATO) in the BAS prepared by the accountant. The applicant also outlined that he paid superannuation for his employees, and the amounts paid in superannuation represented the correct percentage in accordance with the wages paid. Evidence of payslips and group certificates relating to Ms Mosquite’s employment with the applicant are before the Tribunal.

16. The applicant’s accountant Paul Koppen of Tyrrell Partners provided a letter to the Tribunal dated 10 May 2018. The letter states:

    I confirm that Humberto Uy Kimpang (Abovenamed) is my Client and I have acted as his Accountant/Tax Agent for the past 9 to 10 Years.

    I have completed and lodged all required Business Activity Statements and Tax Returns for Humberto, as required, for this period.

    I can also confirm that Humberto obtained advise with myself in regards to the keeping of wage records and the payment of those wages in cash to his employees. All Humberto’s PAYG obligations for his Employees are paid and up to date…

17. Further to the advice received from the accountant, the applicant outlined that his former migration agent who assisted with the lodgement of the Standard Business Sponsorship application also advised him that payment in cash was not in breach of workplace laws. On that basis the employment contract that was submitted with the nomination and 457 applications for Ms Mosquite clearly stated that cash wages were to be paid. The applicant submitted to the Tribunal at hearing that he has been upfront from the beginning with the Department on how he was intending to and ultimately paid Ms Mosquite, as it was clearly set out in the employment contract submitted to the Department. He stated that if the Department had an issue with cash payment, as outlined in the employment contract, that they should have informed him before the 457 visa was approved, and he would have ensured wage payments were made by EFT.

    The law and policy

18. Regulation 2.82(3)(e) applies to standard business sponsors or a party to a work agreement and requires that the person keep a record of money paid to the primary sponsored person, and that it must be maintained in a manner capable of being verified by an independent person.[1]           

    [1] Regulation 2.82(2)(c)(ii).

19. Regulation 2.82(3)(e) does not prescribe that money must be paid by EFT. Further, the meaning of ‘capable of being verified by an independent person’ is not defined in the Act or Regulations.

20. The Department policy states, however:

    The ABF’s position is that cash payments are generally not capable of being verified by an independent person. To avoid any doubt, sponsors are strongly encouraged to use salary payment methods which clearly meet the requirements of regulation 2.82, such as electronic funds transfers.

    In most instances where an employee is paid in cash it will be viewed by the ABF as a breach of regulation 2.82, because it cannot be independently verified. If a failure of regulation 2.82 prevents a proper assessment of regulation 2.79, it will be viewed by the ABF as a serious breach, because it limits the ABF’s ability to determine a sponsored person’s terms and conditions of employment.

21. In contrast to the Department policy is s.323(2)(a) of the Fair Work Act2009, which explicitly prescribes that ‘cash’ is a permissible method of payment for wages.

22. Further, the Fair Work Ombudsman website provides advice about the paying of wages for employers and employees. It states:

    Paying wages

    Employees must be paid at least monthly and can be paid by one, or a combination of, the following:

    •cash

    •cheque, money order or postal order, payable to the employee

    •electronic funds transfer (ie. EFT or bank transfer)…[2]

    [2]

23. The Tribunal finds that paying cash to an overseas worker does not in itself breach r.2.82 as policy suggests. As discussed, paying wages by EFT is not prescribed in the regulation in question; further, the Fair Work Act 2009 prescribes employers can pay wages in cash. In this instance, the policy is in conflict with not only r.2.82, but also s.323(2)(a) of the FairWork Act 2009. As such, the Tribunal will not be following the Department’s policy in this instance as to do so would be applying requirements in excess of what is stated in the law.

24. The Tribunal understands the Department’s policy intention behind why EFT is the preferred method of payment of wages for overseas workers, especially for business monitoring purposes, as bank statements are one type of document from an independent verifiable source that wages are being paid direct to overseas workers. However, EFT payments would not necessarily stop unscrupulous employers from taking advantage of their overseas workers, they could simply ask the overseas worker to withdraw cash from their bank account and hand it back once the wages had been paid in. There are several reported instances of this occurring.[3] Arguably, EFT wage payments may however reduce the exploitation of overseas workers as it adds an additional layer of compliance an employer needs to adhere to. Notwithstanding this, if the Department want to eradicate cash payments to overseas workers completely, within the context of r.2.82, it needs to be prescribed in the law, not set out in policy alone as it is now.

    Failure to satisfy a sponsorship obligation: r.2.89

    [3]

25. 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).

26. The Tribunal has considered the applicant’s position. The Tribunal found that the applicant’s conduct at the hearing was co-operative and that he provided frank and truthful evidence that was corroborated by supporting documentation. The Tribunal finds the applicant to overall be a credible witness. The applicant maintained throughout the hearing that he believed he was doing everything right and was complying with his responsibilities as an employer and was at all times acting lawfully. He outlined that not only was he issuing payslips when he paid Ms Mosquite her cash wages, but he was paying all superannuation correctly, along with PAYG to the ATO and reporting wages appropriately in the BAS that were lodged by his accountant for his business and that his accountant could independently verify this. The applicant acknowledged that he understood the Departmental policy was such that EFT payments for wages should be made to minimise possible exploitation of overseas workers. He submitted to the Tribunal that Ms Mosquite was not being exploited. However, to ensure that he also met the policy requirements, he stated he was committed to only pay wages via EFT. It’s noted that the Department decision record also confirms it is satisfied that the applicant will comply with this policy requirement.

27. The payslips the Tribunal has before it correlate with the information contained on the group certificates and reported to the ATO in the BAS. Further, and of significant weight, the applicant’s accountant has independently verified that employee obligations relating to the employees, including Ms Mosquite, have been met.

28. The Tribunal is satisfied in this instance that the applicant has substantially complied with r.2.82. He maintained payslips, provided PAYG group certificates at the end of each financial year, and reported wages paid to the ATO each BAS reporting period. This has also all been independently verified by the applicant’s accountant.

29. Accordingly, the Tribunal is not satisfied that the prescribed circumstance in r.2.89 exists for the purpose of s.140M of the Act.

    Action to be taken

30. As the Tribunal finds that none of the circumstances for s.140L(1)(a) exist, it follows that the power to take an action under s.140M does not arise. 

    DECISION

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

    Cathrine Burnett-Wake

    
    

    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.

    …