Metwest Steel Pty Ltd (Migration)

Metwest Steel Pty Ltd (Migration) [2018] AATA 5952 (9 August 2018)
DECISION RECORD
DIVISION:Migration & Refugee Division
APPLICANT:  Metwest Steel Pty Ltd
CASE NUMBER:  1804622
DIBP REFERENCE(S):  OPF2017/8099 OPF2018/12023
MEMBER:Kate Millar
DATE:9 August 2018
PLACE OF DECISION:  Adelaide
DECISION:The Tribunal varies the decision under review by varying the period of the bar such that it ends on the date of this decision.
Statement made on 09 August 2019 at 2:45pm

CATCHWORDS
MIGRATION – cancellation – sponsorship approval – compliance with sponsorship obligations – ‘ensure’ sponsored person engaged only as an employee of the sponsor or an associated entity – work for different entity during period of unpaid leave – reasonable and prudent steps required – action to be taken – previous contraventions – recklessness – processes to ensure future compliance – other sponsorship obligations – equivalent terms and conditions of employment – ongoing employment of Australian citizens and permanent residents – decision under review varied

LEGISLATION
Migration Act 1958 (Cth), ss 140L, 140M
Migration Regulations 1994 (Cth), rr 2.57A, 2.72, 2.75, 2.79, 2.86, 2.89

STATEMENT OF DECISION AND REASONS
APPLICATION FOR REVIEW

Metwest Steel Pty Ltd (Metwest) supplies and fabricates steel for the building industry in Western Australia. It estimates that 40% of its workforce is made up of overseas workers. It was first approved as a standard business sponsor in 2009.
In September 2017 Metwest as monitored by the Department for compliance with its obligations as a standard business sponsor. A delegate of the Minster for Home Affairs found it had breached its obligation as a sponsor to ensure a sponsored worker only works for Metwest, or for an associated entity of Metwest. This was because one of the sponsored workers had been employed by another business during a period of unpaid leave from his employment with Metwest.
As a result, on 8 February 2018 the delegate decided to bar Metwest for a period of two years from making future applications as a standard business sponsor. Metwest has applied to the Tribunal for a review of this decision.
Mr Yan, a director of Metwest, appeared before the Tribunal on 27 June 2019 to give evidence and present arguments. The Tribunal also received oral evidence Chengsi Liu, who is an employee of Metwest. Metwest was represented in relation to the review by its registered migration agent, and the representative attended the Tribunal hearing.
For the following reasons, the Tribunal has decided to varies the decision under review by varying the period of the bar such that it ends on the date of this decision
CERTIFICATE ISSUED UNDER S.376 OF THE ACT
The Department file contained a certificate issue under s.376 of the Act. A validly issued certificate under this section allows the Tribunal to have regard to any matter contained in documents subject to the certificate and may, having had regard to any advice given by the Secretary, disclose the information to the applicant or any other person who has given evidence to the Tribunal.
In this case, the material that is subject to the certificate was considered by the Tribunal but is not relevant to this decision.
THE BUSINESS
Mr Yan said Metwest was founded in April 2007 and is a steel fabricator. It supplies and fabricates steel for commercial and residential construction. It imports material from China. Mr Yan said he employs approximately 60% Australian citizens and permanent residents and 40% overseas workers, with a current total of approximately 25 people.
Mr Yan said they Metwest increases its competitiveness by importing material and overseas workers as the local market cannot fill the skills they require.
CONSIDERATION OF CLAIMS AND EVIDENCE
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.
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.
For these purposes, the circumstances are prescribed in r.2.89 - r.2.94B of the Migration Regulations 1994 (the Regulations). As it applies to Metwest in this case, these circumstances include a failure to satisfy a sponsorship obligation.
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. These criteria, as they 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?
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).
In this case, the delegate states that Metwest breached the obligation in r. 2.86(2A) to ensure that the visa holder is engaged only as an employee of the sponsor or an associated entity of the sponsor.
This applies to a person who is or was an approved sponsor in relation to a primary sponsored person if the primary sponsored person holds or had held a visa for which they wore required to be nominated by an approved sponsor. This includes a person who is or was the holder of a Subclass 457 visa.
In this case, one of the 457 visa holders employed by Metwest, Mr Zhongfei Yao, worked for a different employer, Quantum International, during a period of unpaid leave from Metwest. In issue is whether Metwest failed in its obligation to ensure Mr Yao was engaged only as an employee for Metwest or an associate entity of Metwest.
Mr Yan said Mr Yao commenced employment with Metwest in March 2016, and within the first few months the foreman identified that Mr Yao’s skill level was not up to the required standard. The foreman reported that Mr Yao was tired and stressed and that they needed to reconsider his employment. Mr Yan decided to give Mr Yao a chance for a few months, however in that time the foreman again came to discuss Mr Yao’s performance on several occasions.
Mr Yan then decided to speak to Mr Yao who told him that Metwest has a high volume, there was high pressure and he was feeling stressed. As Mr Yan said he was concerned about Mr Yao’s safety at work, he sent him home to think about what he would do.
Mr Yan said Mr Yao proposed that he would take leave to think about whether he could continue in the position, and one week of paid leave was granted.
Mr Yao said after this Mr Yao called the foreman and asked for a further four weeks of unpaid leave. The foreman asked Mr Yan who approved the leave. Mr Yan did not seek medical records or ask Mr Yao how he would support himself financially in his period. On subsequent occasions Mr Yao sought further leave. In total, he was away from work from 21 July 2016 to 4 November 2016, a period of 3 and a half months.
Mr Yan said the initial discussion with Mr Yao was less than half an hour in duration. He was not sure if Mr Yao had seen a doctor at this point, and later said that Mr Yao had not seen a doctor. He did not ask Mr Yao how he would support himself financially in the period of unpaid leave.
Mr Yan did not have Mr Yao’s skills assed prior to commencing work as he said they were satisfied with his resume, and he was doing OK but was slow at work.
Mr Yan said his understanding is that if an employee asks for leave he has to grant it if he can see the person is unfit for work.
Mr Yan said Mr Yao returned to work for Metwest and continued to work until his visa was cancelled in August 2018 for breaching the condition that he does not work for a person other than his sponsor.
Mr Yan said he had no idea Mr Yao was working for someone else and this was out of his control.
A statement was provide from Mr Yao on Metwest letterhead stating that he approached management on 16 July 2016 to request annual leave to deal with personal and family issues that were affecting his productivity at work. It states he was having difficulty adjusting to life in Australia and his his mental and physical health was not in a position to cope with the demands of a busy workplace safely. He was granted one week paid leave and three weeks unpaid leave. He subsequently requested a further two blocks of 4 weeks unpaid leave.
Regulation 2.86(2A) requires a sponsor to ensure a person who holds a Subclass 457 visa is only engaged as an employee of the sponsor or an associated entity. In this case the 457 visa holder was engaged as an employee by another employer.
Metwest argues it could not have known that Mr Yao was working for another employer.
It is submitted by Metwest that if the word “ensure” is interpreted strictly this would be invalid because it is unreasonable or capricious to impose such an obligation because the employer cannot control what an employee doe when not at work.
Regulation 2.86(2A) requires it to ensure, or make certain, that he only works for Metwest. That he worked for another employer shows it did not ensure this was the case. Even if the Tribunal were to be satisfied that “ensure” did not mean “make certain of”, at the least it would require reasonable and prudent steps to have been taken by the sponsor to prevent the sponsored worker form working for someone else. In this case, reasonable and prudent steps would have been to ask for a medical assessment of Mr Yao’s fitness to work and to enquire as to his ability to support himself while on unpaid leave.
In this case Metwest granted extended unpaid leave without requiring any medical information about whether Mr Yao was unfit for work and when he could return as well as failing to enquire how he would support himself finally while on unpaid leave. Mr Yao was manifestly not unfit for all work as he commenced work for another employer.
It is further submitted that Metwest would have been obliged to grant leave if medical evidence had been provided, and if it had dismissed him in circumstances where he was unfit for work would be in breach of the Fair Work Act 2009. This is hypothetical as medical evidence was not, in fact, provided.
It is also submitted that the company was in a position to grant the leave he sought for the reasons he sought as it had the benefit of observing him at work to assess his well-being. Granting unpaid leave may be an option for an employer where they do not have obligations as a sponsor of the person. However, Metwest has an obligation (among others) in taking on the sponsorship of workers to ensure that the person works for it. That it could grant unpaid leave to other employees does not show it has met its obligations as a sponsor.
In these circumstances the Tribunal finds Metwest failed to satisfy the sponsorship obligation in r.2.86(2A), and the prescribed circumstance in r.2.89 exists for the purpose of s.140M of the Act.
Action to be taken
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.
Mr Yan said the effect of the bar was enormous, and that the company has 40% overseas welders and fabricators. He said they tried to change their employment strategy and advertised in the local media without success. Mr Yan said that before Metwest was approved as a sponsor it had local employees and found there were a lot of attendance issues, and no-one was there on Fridays and Mondays as the employees had no commitment. They had employees failing drug and alcohol tests. He said since they have employed 457 visa holders this has not been an issue, the workplace was safer and attendance is better. Many of their existing employees are long term, and have worked for the company for up to 11 years.
They currently have 457 visa holders working for them who are concerned about their future and he spends a lot of time calming them down. He said several of the visa holders have applied for Subclass 187 visa which have been refused, and there are five matters where applications have been lodged to the Tribunal.
Mr Yan said if the bar remains in pace it will be difficult for Metwest to operate and they will lose their employees. He is not confident they can return to the state of business they have now and if the results are poor they may need to close.
In considering what action to take, the Tribunal has also had regard to the prescribed criteria, as extracted in the attachment to this decision.
(a)The past and present conduct of the person in relation to Immigration
Mr Yan said Metwest had previously been sanctioned twice by the Department, once in 2012 and once in 2016.
As a result of monitoring in 2012, it was found that one of the sponsored workers had been paid $1.32 per hour less than what should have been paid. It was also found that Metwest had failed to notify the Department of a change to its business address. The outcome was that Metwest was counselled as to its sponsorship obligations.
In 2016, Metwest was again monitored for compliance with its obligations and it was found that Metwest had failed to notify the Department of the cessation of a sponsored worker’s employment and failed to notify that it had paid the return airfares for four sponsored workers and thee secondary sponsored person. Metwest states that it provided of the cessation of employment six days outside the required period. As a result, Metwest was notified of a minor contravention, and was not given a formal warning.
Mr Yan said they have always looked after the local and overseas workers applying local employment land migration law and the only breaches had been minor and quickly rectified. However, that there had been previous contraventions should have given rise to an increased awareness of the responsibility to comply with the sponsorship obligations.
(b)The number of occasions on which the person has failed to satisfy the sponsorship obligation
Mr Yao worked for one other employer, and Metwest failed to comply with its obligations while he worked for this employer.
(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
Metwest failed to satisfy the obligation in the period in which Mr Yao worked for another employer. The period in which Mr Yao worked for another employer is not clear, however the period where he was granted leave without pay was three and a half months.
(d) The period of time over which the person has been an approved sponsor
Metwest was first approved as a standard business sponsor on 27 September 2009. It was again approved as a sponsor on 26 July 2011 and again on 1 October 2017. This approval ceased on 1 October 2017.
(e)Whether, and the extent to which, the failure to satisfy the sponsorship obligation has had a direct or indirect impact on another person
In this case, Mr Yao’s visa was cancelled for a breach of the conditions of his visa. This has a direct impact on Mr Yao.
The delegate raises that Mr Yao filled a position in another company which may have been able to be filled by an Australian citizen or permanent resident. Metwest submits this is mere conjecture, and points the shortage of welders in Western Australia. It is submitted that Mr Yao’s employment has not had an impact on another person. In the absence of further information about the nature of Mr Yao’s other employer, the position he filled and the duties undertaken the Tribunal is unable to form a conclusion about whether it had an impact on the employment of an Australian citizen or permanent resident.
(f)Whether, and the extent to which, the failure to satisfy the sponsorship obligation was intentional, reckless or inadvertent
Metwest asserts it could not have known that Mr Yan was working for another employer. It did not take steps to find out if he was unfit for work, whether he was partially fit for work, or how he would support himself during an extended period of unpaid leave. On this basis, the Tribunal finds the failure to satisfy the sponsorship obligation was reckless.
(g)Whether, and the extent to which, the person has cooperated with Immigration, including whether the person informed Immigration of the failure
Metwest did not notify of the failure, and disputes there was a failure to comply with its sponsorship obligations. Metwest does not acknowledge there has been a breach of its obligations, or that it could change its response in the future.
(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
As the failure occurred in the past, with Mr Yao having ended his employment with Quantum International and retuned to Metwest in November 2016, there are no steps that can be taken to rectify the failure.
(i)The processes (if any) the person has implemented to ensure future compliance with the sponsorship obligation
Mr Yan said Metwest have employed a lawyer to advise it of any changes to their obligations. In practical terms this means Metwest is sent a letter advising of any changes. He has not attended any training courses or other education as to the obligations of a sponsor, and relies on the immigration lawyer to advise of any changes.
The company has a human resources department which monitors the overseas workers and has introduced an employer handbook from 2018 to cover issues such as taking leave.
A copy of the company handbook was provided. This policy does not specifically address request for unpaid leave, nor does it specify the obligations of Metwest as a sponsor of overseas workers, and that it has an obligation to ensure the workers only work for Metwest or an associated entity.
The company provided an example of an application for sick leave and a medical certificate for an employee. It provided a signed form with the title “Employee Commitment Form” which states the employee understands the company handbook, and acknowledges the employee should consult with the HR manager regarding any questions. It states the employee understands that the employee handbook is subject to change from time to time. and contains a statement that it is the employee’s responsibility to read and comply with its policies.
Metwest is to be commended on producing a policy document that provides information on its obligations to its employees. This does not, however, specify how it will comply with its obligation to ensure that sponsored workers only work for Metwest. For example, it does not specify a process to address applications for unpaid leave. The policy contains a personal leave policy which addresses personal leave, carers leave or unpaid carers leave. It specifies that for sick leave a medical certificate or statutory declaration is required, and specifies for carers leave that a medical certificate or statutory declaration is required. It is not clear to the Tribunal how a future application for unpaid leave that is not sick leave or carers leave would be addressed by Metwest.
(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

It was put to Metwest at the hearing that allowing a sponsored worker to take extended unpaid leave would also result in it breaching the sponsorship obligation in r.2.79, as it would not have paid Mr Yao the annual salary specified in the nomination. Metwest was given time after the hearing to provide a written submission on this matter, as it was not previously on notice that this could be in issue.
In response Metwest submitted there was no such obligation because the nomination of an occupation was made before 18 March 2018 and the obligation is to be determined at the time of the decision. It is submitted the evidence does not show a failure to comply with r.2.79(3). It is stated this provision could not be construed as requiring that guaranteed annual earnings are paid regardless of periods of unpaid leave because the obligations are not designed to undermine the terms of the employment contract which include unpaid leave. It is stated this would means there is no unpaid leave and what must occurred if he prescribed paid leave it taken and more leave is sought.
In the view of the Tribunal, the time at which the sponsorship obligations are determined is the time at which it was found an obligation was breached. This is the time of the delegate’s decision. The circumstances up to and including the date of this decision can be taken into account in determining what action should be taken if a breach is established.
It follows the obligations under consideration are then the obligations as they were at the time of decision, being 8 February 2018.
At this time, r.2.79(3) states that the sponsor must ensure that the terms and conditions of employment provided to the primary sponsored person are no less favourable than the terms and conditions of employment the Minster was satisfied, under paragraph 2.72(10(c)) were no less favourable than the terms and conditions of employment that are provided, or would be provide, to an Australian citizen or permanent resident.
Regulations 2.72(10(c) requires that the terms and conditions of employment of the person identified in the nomination will be no less favourable than the terms and conditions (including if applicable the terms and conditions under the Fair Work Act 2009) that are provided or would be provided to an Australian citizen or Australian permanent resident for performing equivalent work in the same location.
Regulation 2.75 provides for when a set of terms and conditions is less favourable than another set of terms and conditions and states:
(3A)In this Part, a set of terms and conditions of employment for a person (the first set) is less favourable than another set of terms and conditions of employment for a person if:
(a) the earnings provided for in the first set are less than the earnings provided for in the other set; and
(b) there is no substantial contrary evidence that the first set is not less favourable than the other set.
The term “earnings” is defined in r.2.75A as including (among other things) the person’s wages.
The effect of these provisions is that Mr Yao is required to earn the amount specified in his contract. He did not. While he was given unpaid leave, the Tribunal is not satisfied this amounts to substantial contrary evidence that his terms and conditions were not less favourable.
As noted in the submissions, this means that there is no provision for unpaid leave. This is not surprising as the visa Mr Yao held was a temporary work visa. If a person is unable to work, it would not be consistent with the purpose of the visa for the reason to remain in Australia on that visa. An argument to the contrary would allow a person to come to Australia as a sponsored worker to purportedly work for a sponsor, and then take unpaid leave unless or until the Department was notified or became aware that the person had breached the conditions of his or her visa. It also places on obligation on employers to take some action if the employee is unable to work.
As a result, the Tribunal finds Metwest did not comply with its obligation under r.2.79 to ensure equivalent terms and conditions as Mr Yao was not paid the amount specified when the nomination was approved.
(k)Any other relevant factors.
Metwest Steel employs a number of people. It provided a statement from Mr Chengsi Lui, who also attended to give evidence. Mr Liu states Metwest is like a big family and he enjoys his work with Metwest. Mr Lui states he came to Australia three years ago and is now married and has a baby due soon. He states he would like his baby to be born here. He states that due to a downturn in the economy, if his visa expired he would not be able to obtain a new sponsor.
The Tribunal accepts that Metwest has treated Mr Liu well in his employment and that Mr Liu wants to remain in Australia. However, the purpose of a work visa is to fill gaps in the Australia employment market. If, as Mr Liu states, these gaps no longer exist due to a downturn in the economy, the basis for the visa does not exist.
Metwest employs a number of people, and said it generally employs approximately 25 people, with 60% being Australian citizens and permanent residents. As such, careful consideration must be given to a decision that may affect the employment of a number of people.
In this case, there has been a breach of an obligation to ensure Mr Yao works for Metwest or an associated entity. Metwest does not accept that it should take responsibility for the breach as it could not know Mr Yao was working for another entity. It did not take any steps to ensure that he did not do so, such as requiring medical evidence that he was unfit for work or enquiring how he would support himself financially. It has previously been counselled regarding a breach of its obligations, and the Tribunal does not consider the steps it has taken fully engage with the breach or provide any assurance about how an application for unpaid leave form a sponsored worker would be addressed in the future.
As a result, and having considered all of information before it, the Tribunal finds that the action mentioned in s.140M(1)(c) should be taken.
However, in recognition of the ongoing employment of Australian citizens and permanent residents, the Tribunal considers the bar should end at the date of this decision. That a bar is imposed will still require consideration on any future application for approval as a standard business sponsor, and the circumstances of the business and its employees can be considered at that time in determining if it is reasonable to disregard this bar.
DECISION
The Tribunal varies the decision under review by a The Tribunal varies the decision under review by varying the period of the bar such that it ends on the date of this decision.
Kate Millar
Senior 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.
…

[2018] AATA 5952

9 August 2018

Key Legal Topics

Areas of Law

Immigration

Administrative Law

Legal Concepts

Judicial Review

Procedural Fairness

Statutory Construction

Remedies

Breach