Shoolin Consultancy Pty Ltd (Migration) - [2024] AATA 2261

Shoolin Consultancy Pty Ltd (Migration) [2024] AATA 2261 (3 May 2024)
DECISION RECORD
DIVISION:Migration & Refugee Division
APPLICANT:  Shoolin Consultancy Pty Ltd
REPRESENTATIVE:  Mr Ashish Sethi
CASE NUMBER:  2300041
HOME AFFAIRS REFERENCE:               OPF2022/9921
MEMBER:R. Skaros
DATE:3 May 2024
PLACE OF DECISION:  Sydney
DECISION:The Tribunal sets aside the decision under review and substitutes a decision to bar the applicant for a period of six months (from the date of the delegate’s decision) from sponsoring more people under the terms of the existing approval as a standard business sponsor.

Statement made on 03 May 2024 at 5:03pm

CATCHWORDS
MIGRATION – cancellation – sponsorship cancellation – applicant had failed to comply with the sponsorship obligation – sponsored persons were not working for the applicant who had nominated them –– five sponsored employees were incorrectly nominated via the SBS instead of the OHLA – acted promptly to mitigate the impact of their failure – applicant has made efforts to implement updated processes and procedures to ensure future compliance with sponsorship obligations – it was not the applicant’s intention to deliberately breach their sponsorship obligations – substitutes a decision to bar the applicant for a period of six months – decision under review set aside
LEGISLATION
Migration Act 1958, s 140
Migration Regulations 1994, rr 1.13, 2.72, 2.82, 2.83, 2.86, Schedule 2
CASES
Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT) (2009) 239 CLR 27
CIC Insurance Ltd v Bankstown Football Club Limited (1997) 187 CLR 384
STATEMENT OF DECISION AND REASONS
APPLICATION FOR REVIEW
1.This is an application for review of a decision made by a delegate of the Minister for Home Affairs to take an action under s 140M of the Migration Act 1958 (Cth) (the Act) in relation to the applicant’s sponsorship.

The applicant[1] was approved as a standard business sponsor. On 14 December 2022, the delegate decided to cancel that approval under s 140M of the Act on the basis that the applicant had failed to comply with the sponsorship obligation in reg 2.86. A copy of the delegate’s decision record was provided to the Tribunal.
[1] Referred to interchangeably as ‘Shoolin’ or ‘the sponsor’ throughout this decision.
The applicant’s director, Ms Archana Sisodia, appeared before the Tribunal on 20 February 2024 to give evidence and present arguments.
The applicant was represented in relation to the review by Mr Ashish Sethi. The representative attended the hearing. Also present at the hearing to assist the applicant was Mr Martin Hildebrand, an Accredited Specialist Lawyer from Philip Yip & Associates.
5.For the following reasons, the Tribunal has decided to set aside the decision under review and substitute a decision to bar the applicant for a period of six months from the date of the delegate’s decision from sponsoring more people under the terms of the existing approval as a standard business sponsor.
CONSIDERATION OF CLAIMS AND EVIDENCE
Sections 140K, 140L and 140M of the Act provide for the imposition of sanctions on approved sponsors in certain circumstances.
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 regs 2.89–2.94B 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.
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: regs 2.89–2.94B. 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?
10.In the present case, the delegate found that the applicant failed to satisfy a sponsorship obligation.
Failure to satisfy a sponsorship obligation: reg 2.89
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: reg 2.89(2).
The delegate considered that the applicant had failed to satisfy the sponsorship obligations in reg 2.86 based on a finding that the sponsored persons were not working for the applicant who had nominated them.
Obligation to ensure the primary sponsored person works in the nominated occupation
The sponsorship obligations in reg 2.86, as it applied to the applicant, relevantly required the applicant to:
·ensure that a primary sponsored person works in the nominated occupation and does not work in an occupation unless; (i) the occupation was nominated by the applicant under s 140GB(1) of the Act; and (ii) the nomination was approved under s 140GB(2) of the Act: reg 2.86(2).
·ensure that the primary sponsored person is engaged only as (i) an employee of the applicant; or (ii) an employee of an associated entity of the applicant: reg 2.86(2A)(c).
·ensure that (a) the primary sponsored person is employed under a contract of employment; and (b)(i) the applicant does not engage in activities that relate to the recruitment of a sponsored person for the purpose of supplying them to a business that is not associated with the applicant, and (ii) the applicant does not engage in activities that relate to the hire of a sponsored person to a business that is not associated with the applicant: regs 2.86(2AA)(a) and (b).
There are exemptions from complying with the obligations in regs 2.72(2A) and (2AA), however, these only apply to occupations specified in an instrument made under reg 2.72(13). As none of the occupations nominated by the applicant were specified in the relevant instrument,[2] the exemptions are not applicable in this case.
[2] LIN 19/212: Specification of Exempt Occupations Instrument 2019.
Background
Departmental records indicate that the applicant had been approved as a standard business sponsor since 2015, with the most recent approval being on 30 August 2021 for a period of five years, i.e., until 30 August 2026.
During the most recent period of approval as a standard business sponsor, the applicant successfully nominated the following five people (the sponsored persons), four of whom were already holders of Subclass 482 visas at the time the nominations were approved:
·Mr Sambit Abhilash Behera in the occupation of ICT Systems Test Engineer, approved on 21 July 2022.
·Mr Prince Moun in the occupation of Software Engineer, approved on 7 March 2022. Mr Moun’s corresponding Subclass 482 visa was subsequently approved on 11 April 2022.
·Mr Saroja Kanta Maharana in the occupation of Software Engineer, approved on 19 January 2022.
·Mr Manivel Rajendiran in the occupation of Analyst Programmer, approved on 9 February 2022.
·Mr Ram Avtar Bhardwaj in the occupation of Analyst Programmer, approved on 18 March 2022.
The Department commenced monitoring the applicant in August 2022. A site visit was conducted on 12 October 2022, during which departmental officers attended the applicant’s business premises in Sydney. During the site visit, officers observed that none of the above‑named sponsored persons were at the premises. The applicant’s director, Ms Sisodia, was also not present, however, officers were able to conduct a telephone interview with her. A record of the interview indicates, in part, that Ms Sisodia could not provide the names of any of above-named sponsored persons even though she claimed to have met with them daily, interviewed them during the recruitment process and approved their timesheets.
18.Departmental officers also conducted telephone interviews with the sponsored persons. Records of the interviews with Mr Bhardwaj and Mr Behera were on the Department’s file. Relevantly, Mr Bhardwaj indicated that he was working for Energy Australia and that previously he had worked for Westpac. He said he was employed by the applicant, but he was undertaking work for those clients. He said he reports directly to the manager at Energy Australia and does not undertake any internal projects for the applicant. Mr Behera, during his interview, told departmental officers that he works for Colonial First State (CFS), he was aware that he had an employment contract with the applicant and indicated that he reports directly to the manager at CFS.
As part of the monitoring process, the Department wrote to the applicant pursuant to reg 2.83 requesting records and information, which relevantly included those relating to the employment of the above-named sponsored persons. In response to the request, on 24 October 2022, the applicant provided a written submission, together with the following documents:
·Signed employment contracts for the sponsored persons.
·Payslips, funds transfer, payroll records and superannuation records for the sponsored persons.
·Information relevant to the annual market salary rate in respect of the approved occupation.
·Evidence of the labour market testing conducted.
In the written submission, the applicant admitted that upon review of their records they have come to notice that, due to an administrative error, the current employees sponsored under the standard business sponsorship (SBS) should have in fact been sponsored under the applicant’s On-Hire Labour Agreement (OHLA) which was in effect and available at all the relevant times. It was submitted that there were internal discussions about sponsoring people to work solely on in-house projects, which led to the sponsored employees being incorrectly nominated under the SBS.
21.It was submitted that the applicant’s clients (to whom the sponsored employees had been hired) had been notified accordingly and that all five sponsored persons had ceased client work as of 19 October 2022 and, as of 20 October 2022, three of the sponsored employees have been working exclusively on in-house projects, and the other two employees will be resigning and/or transferring their employment to the client’s vendor through an OHLA. It was submitted that the applicant’s director was terribly sorry for the mistake, is reviewing current processes and will establish additional protocols and checks to ensure this never happens again.
22.On 15 November 2022, the Department issued the applicant with a Notice of Intention to Take Action (NOITTA) setting out information in relation to which action was being considered. In relying on information before them, including information gathered during the interview with Ms Sisodia and the applicant’s own admission that the five sponsored employees were incorrectly nominated via the SBS instead of the OHLA, the Department considered that the employees nominated under the SBS had been working for external clients and the applicant appears to have failed to comply with their sponsorship obligation in reg 2.86.
In responding to the NOITTA, the applicant provided the following documents:
·Copy of the OHLA agreement issued by the Department on 1 October 2021, indicating that the labour agreement was effective until 18 September 2024, together with a copy of the Deed of Variation between the Commonwealth of Australia and the applicant.
·Copies of employment contracts indicating that the sponsored persons were employees of the applicant and that their salaries were paid by the applicant.
·Copies of emails to each of the sponsored persons informing them of the error in respect of their nomination, apologising for the error, requesting they cease work for any third party and informing them that the client had been notified.
·Emails from two of the sponsored persons to the applicant advising that their employment is in the process of being transferred (via a new nomination) to the client’s own approval.
In a submission dated 30 November 2022, Ms Sisodia provided details about her professional background, career progression, the establishment of Shoolin and the growth of that business. It states that she is a first-generation Australian woman entrepreneur. She completed a Master of Project Management at the University of Sydney and went on to work for various Australian telecommunication companies. She excelled in her career and was awarded the CIO medal at Telstra. In 2015 she observed a gap in the market and established a business to recruit and provide highly skilled technology workers to the IT industry and to deliver IT projects. The business had steadily grown and operates in Australia, New Zealand and India. In Australia, Shoolin has a workforce of approximately 65 highly skilled IT professionals which includes contractors and employees. Despite the challenges of the pandemic, Ms Sisodia was able to attract high level clients including the Australian Defence Force, HCL Australia Services Pty Ltd (HCL), a part of HCL Technologies Limited, a multinational technology company with offices in 44 countries, Wipro Ltd, a global tech giant with approximately US$11 billion in revenue, LTIMindtree, a subsidiary of Larsen and Toubro, and Cognizant, an American multinational information technology services and consulting company with US$19 billion in revenue. The sponsored persons were on-hired to HCL, Wipro and LTIMindtree.
It was submitted that at the time of the audit, four of the sponsored persons were holders of Subclass 482 visas, whilst one (Mr Bhardwaj) was the holder of a bridging visa A (held since August 2022) which had nil conditions. In referring to the documents provided, Ms Sisodia submitted that the sponsored persons are employees of Shoolin, who pay their entitlements, and that at all times they have control of their employees, as recently demonstrated by their decision to instruct the sponsored persons to cease working for the clients. It was submitted that the sponsored persons were highly skilled, specialised IT professionals who had worked in their nominated occupation. It was submitted that at the time the persons were sponsored under the SBS, Shoolin had an OHLA in place which had sufficient places available. It was submitted that they do distinguish between the employees sponsored under the SBS and those sponsored under the OHLA. They have also received advice that Shoolin is able to provide “business services” to third parties and that Subclass 482 sponsored employees can work on client sites if a business service is being provided by Shoolin, though Ms Sisodia expressed uncertainty about the distinction between providing a business service and the on-hiring of an employee. It was submitted that the sponsored persons primarily worked from home, but at times attended the office and client sites.
In relation to the telephone interview conducted with her on 12 October 2022, Ms Sisodia explained that while she knows all the employees and contractors, she could not immediately recall who had been sponsored under the SBS and who was sponsored under the OHLA. She said she has an HR team who support her in the running of the business and while she may not participate in every interview conducted with prospective employees and contractors, she does participate in the final interview of those who require a visa.
It was submitted that Shoolin takes their sponsorship obligations very seriously and when it became apparent that there was a potential breach of sponsorship obligations the company immediately informed impacted clients that the sponsored persons may not have been allowed to attend client sites. The company also instructed the sponsored workers to immediately cease working for clients and not attend client sites. They have kept the sponsored workers informed of the audit process and continued to pay them until a satisfactory outcome was achieved. They do not wish to disadvantage the employees by their mistake and, as noted earlier, Mr Behera and Mr Moun had already resigned of their own accord. It was submitted that the applicant had provided training to their staff in the past, though based on the audit checklist received from the Department, they have updated their training materials and incorporated practical guidance on how to meet obligations. They have also updated their employment contract templates to clearly differentiate between the SBS employees and those sponsored under the OHLA. This, as submitted by the applicant, would ensure that overseas workers are nominated under the agreement relevant to their situation.
28.Ms Sisodia stated that they have welcomed the audit and considered it an opportunity to improve their internal processes. They took immediate action and were proactive in informing their clients and the sponsored employees. This had an immediate impact on their business operations. The applicant has suffered immediate loss of business and reputation, with some clients withholding work and/or indicating they no longer wish to work with them. They have had to withdraw some of their 482 OHLA nominations and two of their sponsored employees have since resigned. Ms Sisodia stated that the audit has highlighted they need to improve their internal processes and requested that, if Shoolin is found to have breached its sponsorship obligations, they be given an opportunity to update their regulatory compliance process and undergo a further audit in future to demonstrate that they have complied with all the laws and policies.
After considering the evidence before it, on 14 December 2022, the Department decided to cancel the applicant’s approval as a standard business sponsor. The Department found that the applicant had breached their obligations by nominating five Subclass 482 visa employees between August 2020 and November 2022, a period of over two years and three months, that sponsoring the employees under the SBS was more beneficial for the applicant and that the breach was intentional.
The applicant sought the assistance of an Accredited Specialist in Immigration Law, Mr Hildebrand, who wrote to the Department on 22 December 2022 requesting the decision be vacated on the basis it was affected by jurisdictional error. The Department did not vacate the decision and notified the applicant on 17 January 2023 that their decision to cancel the sponsorship approval under s 140M of the Act, effective from 14 December 2022, stands. By that time, the applicant had already sought review of the decision to cancel their approval as a standard business sponsor.
The Tribunal notes that any errors (jurisdictional or otherwise) made by the delegate can be addressed by the Tribunal on review. As provided for in s 349 of the Act, the Tribunal can, for the purposes of this review, exercise the powers and discretions that are conferred by the Act on the primary decision-maker. It is therefore not necessary for the Tribunal to consider whether the delegate’s decision was affected by jurisdictional error.
Submissions to the Tribunal
On review, the Tribunal received detailed submissions from the applicant’s representative.

In addressing the obligations in reg 2.86, the representative submitted that the applicant, who was the approved sponsor in relation to the sponsored persons, has ensured that the sponsored persons work only in the occupation for which they have been nominated, as required by reg 2.86(2). It was further submitted that the sponsored persons who hold (or last held) Subclass 482 visas were engaged only as employees of the applicant, as required by reg 2.86(2A)(c), and were employed by the applicant under a written contract of employment, as required by reg 2.86(2AA)(ac)(a). Copies of the contracts of employment in respect of each of the sponsored persons were provided.
34.It was also contended that the applicant’s recruitment and on-hire of the Subclass 482 visa holders (the sponsored persons) to other businesses was not in contravention of reg 2.86(2AA)(b) because those businesses were “associated with” the applicant. In relying on the definition of “associated with” in reg 1.13B(1)(b), which provides that two persons are associated with each other if one is or was a consultant, adviser, partner or representative on retainer of the other, it was submitted that the applicant was a recruitment consultant and adviser on recruitment matters and a representative on retainer for recruitment activities of the businesses for whom the primary sponsored persons were working. It was also contended that, given that the businesses were large multi-billion-dollar, multinational corporations, they were able to exercise considerable influence over the applicant in relation to the work undertaken by the applicant for them. It was also submitted that, as provided for in reg 1.13B(3), the circumstances in which persons are associated with each other is not limited to those in reg 1.13B. In support of the contention that Shoolin was “associated with” the businesses they on-hired the sponsored persons to, the applicant provided copies of the professional services agreements/staffing agency agreements between Shoolin and HCL, Wipro and LTIMindtree. They also provided copies of invoices issued by Shoolin to the respective corporates and copies of bank statements showing payments of these invoices.
35.It was contended that the Department had erred by conflating the terms of the provision in reg 2.86(2AA)(b), which refers to a business that is “associated with” the applicant, with the term “associated entity” as defined in s 50AAA of the Corporations Act 2001 (Cth).
36.It is not in dispute that Shoolin and the companies to whom the sponsored persons were on-hired (namely, HCL, Wipro and LTIMindtree) were not associated entities as defined in s 50AAA of the Corporations Act2001.[3]
Considerations
[3] Extract attached.
37.In determining whether the applicant has failed to comply with their obligation in reg 2.86, the Tribunal has carefully considered the evidence and submissions before it as follows.
38.In relation to the obligation in reg 2.86(2), the occupations nominated by the applicant were ICT Systems Test Engineer, Analyst Programmer and Software Engineer. These occupations were nominated by the applicant, in relation to the sponsored persons under s 140GB(1) of the Act.
39.The nominations were approved by the Minister under s 140GB(2) of the Act. Section 140GB(2) of the Act required the applicant to satisfy, among other things, the prescribed criteria in reg 2.72, which includes the requirement in reg 2.72(3) that the nomination was made in accordance with the prescribed process in reg 2.73.
40.Regulation 2.73 applies in relation to an applicant who nominates a proposed occupation under s 140GB(1)(b) of the Act in relation to a Subclass 482 visa holder. Relevantly, it required the applicant to certify, among other things, that the occupation is a position in the applicant’s business or a business of an “associated entity” of the applicant: reg 2.73(14). At the hearing, Ms Sisodia acknowledged that such a certification would have been made on each of the nomination application forms. She also acknowledged that, in response to the question on the form about whether the applicant was nominating the position to recruit or hire out overseas workers to an unrelated business, the applicant had indicated “No”. Ms Sisodia gave evidence that the response on the form was provided in error by her staff.
41.For the purposes of determining whether the applicant had failed to comply with the obligations in reg 2.86(2), the Tribunal considers that the responses provided on the forms were relevant to the nominations that were approved by the Minister under s 140GB(2) of the Act. Having made the relevant certifications on the nomination forms, as well as satisfying the prescribed criteria in reg 2.72, the nominations of the occupations made in relation to the sponsored persons were approved under s 140GB(2) of the Act. Accordingly, the Tribunal considers that the nominations of the occupations approved by the Minister under s 140GB(2) of the Act were in respect of positions in the applicant’s business or in a business of an associated entity of the applicant.
42.The Tribunal considers, therefore, that the applicant was required to ensure that the sponsored persons worked in their respective nominated occupations in the business of the applicant or an associated entity of the applicant.
43.The applicant contends that the sponsored persons worked only in the occupations for which they have been nominated. While the Tribunal accepts that the sponsored persons worked in (or carried out tasks which corresponded to) their respective nominated occupations, the Tribunal is not satisfied that the work was undertaken in accordance with the nominations that were approved by the Minister under s 140GB(2) of the Act. This is because the nominations of the occupations that were approved were in respect of positions in the business of the applicant or in the business of an “associated entity” of the applicant. The evidence before the Tribunal indicates that the sponsored persons were on‑hired to undertake project work for LTIMindtree, Wipro and HCL. As none of these corporates were an “associated entity” of the applicant, it follows (and the Tribunal finds) that the sponsored persons had not worked in the occupations for which the nominations were approved by the Minister under s 140GB(2) of the Act.
44.The Tribunal consequently finds that the applicant has failed to comply with the obligation in reg 2.86(2)(b).
45.In relation to the obligation in reg 2.86(2A), the Tribunal accepts that the sponsored persons were employees of the applicant. The evidence before the Tribunal indicates that the sponsored persons were engaged by the applicant under a contract of employment which set out the terms and conditions of their employment, including the salary, superannuation, leave and other entitlements. The applicant paid the sponsored persons their salaries, withheld the required tax, issued them with payslips and paid their superannuation. The applicant has therefore complied with their obligation in reg 2.86(2A).
46.In relation to reg 2.86(2AA), the Tribunal accepts, as noted above, that the sponsored persons were employed under a written contract of employment, as required by the obligation in reg 2.86(2AA)(a).
47.In relation to the obligation in reg 2.86(2AA)(b), the representative advanced an interesting legal argument in relation to the interpretation of that provision. This obligation required the applicant to ensure that:
(i)  the person does not engage in activities that relate to the recruitment of a visa holder, an applicant for a visa or a proposed applicant for a visa for the purpose of supplying the holder, applicant or proposed applicant to a business that is not associated with the person; and
(ii)  the person does not engage in activities that relate to the hire of a visa holder to a business that is not associated with the person.
48.It was submitted that having regard to the definition of “associated with” in reg 1.13B,[4] the applicant and the businesses to whom the sponsored persons were on-hired were “associated with” each other because one (the applicant) is or was a consultant, adviser, partner, representative on retainer, officer, employer, employee or member of the other (the corporates), as provided for in reg 1.13B(1)(b), and/or one (the corporates) were able to exercise influence or control over the other (i.e. the applicant) as provided for in reg 1.13(1)(e).
[4] Extract attached.
49.On the applicant’s interpretation, Shoolin had not failed to comply with their obligation in reg 2.86(2AA)(b) because, having entered into a recruitment and labour supply/on-hire agreements with HCL, Wipro and LTIMindtree, their businesses became “associated with” the applicant, as defined in reg 1.13B.
50.The representative referred to the following extract from the Explanatory Statement which accompanied the Amending Regulations[5] that introduced reg 2.86(2AA)(b):
This amendment strengthens the existing requirement for the primary sponsored person to be engaged as an employee of the sponsor by introducing a new sponsorship obligation to:
·     Require the sponsor to ensure that the primary sponsored person is employed under a written contract of employment; and
·     Depending on whether the sponsor was approved as a standard business sponsor who lawfully operated a business in Australia at time of sponsorship approval, prohibit the sponsor from engaging in certain on-hire activities.
[5] Migration Amendment Regulations 2013 (No.5) SLI 2013 of No.145.
51.It was contended that reg 2.86(2AA)(b) allows certain on-hire activities for Australian sponsors. It was further contended that as Shoolin had recruited and on-hired the sponsored persons to businesses who were associated with them, they had complied with the obligations in reg 2.86(2AA)(b)(i) and (ii).
52.It was also submitted that reg 1.13B(3) does not limit the circumstances in which persons are associated with each other and that a wide interpretation of the meaning “associated with” was reflected in the policy instructions, which state:
The term ‘associated with’ also refers to the commonly understood meaning of persons being related, linked or connected to each other in some way. This association may be of a business or personal nature, and past or current. For example, two organisations could be ‘associated’ if they are operating out of the same location.
53.It was contended that, as recruitment consultants to HCL, LTIMindtree and Wipro under the service agreements, Shoolin and those corporates were “associated with” each other and that if the intention of legislators was to restrict the recruitment and on-hire arrangements only to business of an “associated entity”, then this could have simply been so stated in the wording of the provision in reg 2.86(2AA)(b)(i) and (ii).
54.It was submitted that departmental policy in relation to reg 2.86(2AA)(b), which indicates that sponsors must not engage in the recruitment and hire of sponsored persons to a business that is not an “associated entity” of the sponsor, reflects a misunderstanding of the obligation in reg 2.86(2AA)(b) and imports a meaning that is not supported by the clear wording of that provision.
The proper construction of reg 2.86(2AA)(b)
55.The question for the Tribunal is whether reg 2.86(2AA)(b) can be construed in the manner suggested by the applicant. For the reasons that follow, the Tribunal does not consider the interpretation suggested by the applicant to be the proper construction of the provision in reg 2.86AA(b).
56.Taking a literal approach to the interpretation of the words in reg 2.86(2AA)(b), including the incorporation of the defined term “associated with” as it appears in reg 1.13B, may suggest that the applicant had not breached the sponsorship obligation in that provision. This is because the definition of “associated with” in reg 1.13B is so broad and non-exhaustive that it may encompass businesses that enter into agreements with each other for the recruitment and supply of labour and on-hire arrangements. Such an interpretation, however, appears to be completely at odds with the context and purpose for which reg 2.86(2AA)(b) was introduced, as well as the mischief that this provision had intended to remedy.
57.In considering the proper construction of reg 2.86(2AA)(b) the Tribunal has had regard to the following principles relevant to the interpretation of statutes, including delegated legislation.
58.The High Court in CIC Insurance Ltd v Bankstown Football Club Limited (1997) 187 CLR 384 at 408 (per Brenan CJ, Dawson, Toohey and Gummow JJ) stated that the ‘modern approach’ to statutory interpretation “insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise”, and “uses ‘context’ in its widest sense to include such things as the existing state of the law and the mischief which, by legitimate means, one may discern the statute was intended to remedy”. While giving meaning to the words actually used is integral to statutory interpretation, the ‘modern approach’ appears to favour a meaning that is consistent with the context and purpose of the law.
59.In 1998, the High Court in Project Blue Sky[6] per McHugh, Gummow, Kirby and Hayne JJ said the primary objective of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute. Their Honours emphasised that the process of construction must always begin by examining the context of the provision that is being construed.[7]
[6] Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355.
[7] Ibid at 381–382 [69].
60.In Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT) (2009) 239 CLR 27 (per Hayne, Heydon, Crennan and Kiefel JJ) at [47], the High Court appeared to shift its focus to first considering the text, stating that the language employed in the text of legislation is the surest guide to legislative intention. Their Honours also said that the meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy.
61.In SAS Trustee Corporation v Miles (2018) 265 CLR 137 at 157, the High Court concluded that statutory text must be considered from the outset in context and attribution of meaning to the text in context must be guided so far as possible by statutory purpose on the understanding that a legislature ordinarily intends to pursue its purposes by coherent means.
62.In the High Court judgement of Tu’uta Katoa v MICMSMA [2022] HCA 28, (2022) 403 ALR 604, the Court (per Gordon, Edelman and Steward JJ at [31]), citing earlier authorities, indicated that the proper construction of a provision is to be resolved by applying the fundamental principles of statutory interpretation, which require reading the text of the relevant provision in their context and having regard to statutory purpose.
63.The use of explanatory statements (in the case of regulations) to ascertain the meaning of a provision appears to be supported by s 15AB(1) of the Acts Interpretation Act1901 (Cth).
64.In light of the above principles, the Tribunal has had regard to the text of reg 2.86(2AA)(b), the context in which that provision appears and the purpose for which that provision was enacted.
65.The obligation in reg 2.86(2AA)(b) required the applicant not to engage in activities that relate to the recruitment of a sponsored person for the purpose of supplying them to a business that was not associated with the applicant. It also required the applicant not to engage in activities that relate to the hire of a sponsored person to a business that is not associated with the applicant.
66.The Tribunal acknowledges that, as provided for in reg 1.03, “associated with” is a defined term in the Regulations. The definition of “associated with” is set out in reg 1.13B. The expanded definition of “associated with” came into effect on 18 March 2018[8] and replaced the previous definition. In the accompanying Explanatory Statement, the following was said in relation to the expanded definition and the context in which the definition appears:
Item 15 – Regulations 1.13A and 1.13B
This item inserts new definitions of adverse information (regulation 1.13A) and associated with (regulation 1.13B). The definitions replace the previous definitions. The concepts are used in criteria for approval as a sponsor, approval of nominations, and grant of visas. At all three stages of the process of bringing a worker to Australia, it is a criterion that there is no adverse information known about the sponsor or a person associated with the sponsor, or it is reasonable to disregard such information. This is an important integrity measure, intended to prevent exploitation of overseas workers and ensure that Australian employment standards and opportunities for Australian workers are not compromised.
The previous definitions were inadequate to deal with some abuses. For example, a company approved as a standard business sponsor could have its approval cancelled for underpayment of wages, but the person behind the company was able to continue sponsoring workers via a different company. Instances of ‘phoenixing’ and businesses operating through multiple corporate entities need to be addressed through flexible definitions which can address these types of arrangements.
…..
The definition of associated with in regulation 1.13B is also non-exhaustive. The definition has been drafted in terms which encompass the wide range of associations among family, friends and associates which can be used to continue unacceptable or unlawful business practices via different corporate entities.
[8] Migration Legislation Amendment (Temporary Skill Shortage Visa and Complementary Reforms) Regulations 2018 (the Amending Regulations).
67.Having regard to the above, the Tribunal considers that the definition of “associated with” in reg 1.13B is relevant to the criteria for approval as a sponsor, approval of nominations and the grant of visas. The context in which the definition appears relates to whether there is adverse information, as defined in reg 1.13A, known to Immigration about an applicant or a person “associated with” the applicant, as defined in reg 1.13B. Such information would be relevant to that applicant’s suitability as an approved sponsor or as a nominator: reg 1.13A(1). There is nothing in the Explanatory Statement to the Amending Regulations which suggests that the expanded definition of “associated with” in reg 1.13B is applicable to the use of that expression in reg 2.86(2AA)(b).
68.Accordingly, the Tribunal considers that the expanded definition of “associated with” is confined to the context of an applicant seeking approval as a sponsor or a nominator and to visa applications which require a visa applicant to be sponsored or nominated. The Tribunal does not consider that the expanded definition of “associated with” in reg 1.13B extends to the use of that expression in reg 2.86(2AA)(b).
69.The Explanatory Statement to the Amending Regulations also refers to the amendments made to reg 2.86, about which the following was stated:
Items 114 to 122 – Amendments to regulation 2.86
These items amend regulation 2.86, which deals with the obligations of sponsors to ensure that the primary sponsored person works or participates in the nominated occupation, program or activity. The effect of the amendments is as follows:
-    Item 114 repeals and substitutes subregulation 2.86(2) to omit redundant material and to strengthen the obligation to ensure that a primary sponsored person holding a Subclass 457 (Temporary Work (Skilled)) visa or a Subclass 482 (Temporary Skill Shortage) visa works in the nominated occupation. The previous form of the subregulation only imposed an obligation to ensure that the visa holder did not work in any other occupation. There was a gap in the sponsorship obligations framework for Subclass 457 in situations where the sponsor made no effort to require the visa holder to work in the nominated occupation. A visa holder may be liable for visa cancellation in this situation, and it is also appropriate to have a basis for imposing sanctions on the sponsor;
-    Items 115 to 122 make changes to regulation 2.86 to reflect the creation of the Subclass 482 (Temporary Skill Shortage) visa. There is no change to the content of the obligations, which relate to the requirement for the visa holder to be employed by the sponsor (or by an associated entity in the case of a standard business sponsor that is an Australian business), and to be employed under a written contract of employment and, in the case of standard business sponsors, for the sponsor not to engage in labour hire to unrelated businesses. A legislative instrument creates an exception for the occupations of General Manager, Chief Executive or Managing Director, and medical occupations, as explained in relation to subregulation 2.72(13) at item 79.
70.The obligation in reg 2.86(2) requires a sponsor to ensure that a sponsored person works only in the occupation for which they had been nominated by the sponsor under s 140GB(1) of the Act and approved by the Minister under s 140GB(2) of the Act. As discussed above, a nomination of an occupation made and approved under those provisions, in the case of a standard business sponsor, is for a position in the sponsor’s business or in the business of an associated entity of the sponsor. This is relevant when considering the proper construction of reg 2.86(2AA)(b) in the context of the obligations in reg 2.86.
71.In addition to strengthening a sponsor’s obligation to ensure a sponsored person works in the occupation for which they had been nominated by the sponsor, the Explanatory Statement states that the amendments to the obligation in reg 2.86(2) correspond to the work condition imposed on visa holders which, if breached, may make them liable for visa cancellation. Relevantly, in the case of primary Subclass 482 visa holders, condition 8607 requires:
8607(1):The holder must work only in the occupation (the nominated occupation) nominated by the nomination identified in the application for the most recent Subclass 482 (Temporary Skill Shortage) visa granted to the holder; and
8607(2):Unless Subclause (3) applies, the holder must:
…
(c)if the most recent Subclass 482 (Temporary Skill Shortage) visa granted to the holder is in the Short-term stream or Medium-term stream and the person who nominated the nominated occupation was not an overseas business sponsor at the time the nomination was approved—work only in a position in the person's business or a business of an associated entity of the person.
72.Subclause (3) relates to exempt occupations or to fulfill the requirement to give notice of termination of employment (to the former sponsor) under industrial relations law.
73.Accordingly, a sponsored person who held a Subclass 482 visa is required to work only in the nominated occupation identified in the application for their most recent visa. Further, in circumstances where the person who most recently nominated them was not an overseas business sponsor (i.e., was an Australian business sponsor) at the time of the nomination approval, the sponsored person is also required to work only in a position in the person’s business or a business of an associated entity of the person.
74.As the purpose of the amendment to reg 2.86(2) was to strengthen the sponsor’s obligation in a manner consistent with the work condition 8607 imposed on Subclass 482 visa holders, it reinforces the Tribunal’s earlier finding that the obligation in reg 2.86(2) is in respect of work (in the nominated occupation) undertaken by a Subclass 482 visa holder in a position that is in the business of the sponsor or an associated entity of the sponsor. This is also relevant to the context and legislative framework within which reg 2.86(2AA)(b) appears and consideration of the proper construction of that provision.
75.In light of the above, it would seem entirely incongruous to construe reg 2.86(2AA)(b) as encompassing the expanded definition in reg 1.13B in circumstances where firstly, the obligation in reg 2.86(2) requires the sponsor to ensure that the Subclass 482 visa holder works in their nominated occupation in a position in the business of the sponsor or in the business of an associated entity; and secondly, where a Subclass 482 visa holder is required to work in their nominated occupation in a position in the business of the person who most recently nominated them or an associated entity of that person.
76.The Tribunal has also considered the extract referred to by the representative from the Explanatory Statement which introduced reg 2.86(2AA)(b). While the extract indicates that “certain” on-hire activities are permitted, the Tribunal considers that this refers to the exemptions provided for in reg 2.86(2AA)(ab) in respect of specified occupations. The Explanatory Statement states the following regarding the purpose and intent of the amendments, including the introduction of reg 2.86(2AA)(b):
·     the purpose of the Regulation is to amend the Migration Regulation 1994 to strengthen the integrity of temporary skilled visa programs by refining the obligations and requirements of the sponsor in the sponsorship framework at Division 3A of Part 2 of the Act. The Regulation also strengthens the requirement for holders of a Subclass 457 (Temporary Work (Skilled)) visa (Subclass 457 visa) to work directly for the sponsor.
·     … Similarly, it is intended that a Subclass 457 visa holder not be on-hired to another business (unless permitted by an approved work agreement or in an exempt occupation).
·     The Regulation clarifies for standard business sponsors what type of employment relationship they are expected to have with a Subclass 457 visa holder, in that they will be required to engage the visa holder under a written contract of employment.
In particular, the Regulation amends the Principal Regulations to:
…
clarify that Subclass 457 visa holders must work in a position in the business of the standard business sponsor and cannot be on-hired to work for another business. If the sponsor lawfully operates a business in Australia, then the Subclass 457 visa holder may also work in a position in the business of an associated entity of the sponsor.
·By prohibiting on-hire arrangements (unless permitted through an approved Labour Agreement or in an exempt occupation), as well as employment relationships misrepresented as independent contractor arrangements (unless in an exempt occupation), the Legislative Instrument will help ensure that sponsors only employ temporary sponsored visa holders in a direct employer/employee relationship with all of the attached protections, benefits and entitlements.
·The standard business sponsorship program is designed to enable employers to address skilled labour shortages in Australia by recruiting skilled overseas workers where skilled local workers are not available in Australia. Employers seeking access to the program are required to meet a series of requirements before they can sponsor an overseas worker. As such, it is not intended for sponsors to be able to on-hire an overseas worker because it is intended for the overseas worker to provide the skills necessary for the employer’s business.
77.The Explanatory Statement indicates that the mischief the provision seeks to remedy is the on-hiring of primary sponsored persons by an approved standard business sponsor to businesses other than those of an associated entity of the sponsor, unless the occupation nominated is exempt. The Explanatory Statement indicates that on-hire arrangements are permitted but only via a Labour Agreement.
78.Interestingly, at the time reg 2.86(2AA)(b) came into effect, on 1 July 2013, the words “associated with” were defined in reg 2.57(2) of the Regulations. Relevantly, in the case of a corporation, a person (the associated person) is associated with a person that is a corporation if the associated person is an officer[9] of the corporation, a related body corporate[10] or an associated entity.[11] The Tribunal notes that related bodies corporate are associated entities within s 50AAA(2) of the Corporations Act2001. This indicates that the intended purpose of reg 2.86(2AA)(b), when that provision was introduced, was (in the case of a company that was an approved standard business sponsor and operating a business in Australia) to prohibit that company from engaging in activities that related to the recruitment, supply and on-hire of sponsored persons to businesses of entities that were not associated with them as provided for under the Corporations Act2001.
[9] As defined in s 9 of the Corporations Act2001.
[10] As defined in s 50 of the Corporations Act 2001.
[11] As defined in s 50AAA of the Corporations Act2001.
79.In light of the above, the Tribunal does not consider the words “associated with” as expressed in reg 2.86(2AA)(b) were intended to incorporate the expanded definition in reg 1.13B which came into effect on 18 March 2018. To do so would be entirely inconsistent with the context in which the provision appears, namely the obligations in reg 2.86, and particularly the obligation in reg 2.86(2) which, as discussed above, requires sponsors to ensure a sponsored person works in the occupation for which they were nominated in a position in the business of the sponsor or an associated entity. To incorporate the expanded definition of reg 1.13B would also be inconsistent with the purpose of reg 2.86(2AA)(b) which, as discussed above, was to ensure that sponsors only employ temporary workers in a “direct” employer/employee relationship and to prohibit on-hire arrangements, unless it is in the business of an associated entity.
80.Having regard to the context and purpose of the obligation in reg 2.86(2AA)(b), and in reconciling the matters discussed above, such as the requirements for approval of a nomination of an occupation by an approved standard business sponsor under s 140GB of the Act and the work condition 8607 imposed on visa holders, the Tribunal considers that the meaning of “associated with” in reg 2.86(2AA)(b) can only be properly construed as requiring an approved (or former approved) standard business sponsor to ensure they do not engage in activities that relate to the recruitment of sponsored persons for the purpose of supplying those persons (or on-hiring them) to a business that is not a business of an associated entity of the sponsor.
81.In light of the above, the Tribunal considers that Shoolin failed to comply with its sponsorship obligation in reg 2.86(2AA)(b) when it engaged in activities involving the recruitment and supply or on-hire of their sponsored employees to the businesses of HCL, Wipro and LTIMindtree. As these corporates were not associated entities of the applicant, it follows, and the Tribunal finds, that the applicant has failed to comply with their sponsorship obligation in reg 2.86(2AA)(b).
82.In relation to Mr Bhardwaj, who at the time of the monitoring held a bridging visa A (with no conditions) pending his application for a permanent residence visa, the Tribunal considers that the obligations in reg 2.86 continued to apply in relation to him. This is because the obligation in reg 2.86 commences on the day the nomination (made by the applicant) in relation to Mr Bhardwaj was approved and does not end until Mr Bhardwaj is granted a further substantive visa that was not a Subclass 482 visa.[12] Therefore, the applicant’s failure to comply with reg 2.86 was in relation to all five sponsored persons.
[12] See reg 2.86(3).
83.As the applicant has failed to comply with the sponsorship obligations in regs 2.86(2) and 2.86(2AA)(b), the Tribunal finds that the prescribed circumstances in reg 2.89 exist for the purpose of s 140M of the Act.
Action to be taken

For the above 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.
In considering what action to take, the Tribunal has had regard to the prescribed criteria in reg 2.89(3), as extracted in the attachment to this decision.
The past and present conduct of the sponsor in relation to Immigration:
86.The applicant has not been previously monitored and there have been no previous findings of non-compliance with sponsorship obligations. In respect of the present matter, the Tribunal observes that the applicant promptly responded to the Department’s request for information and documents. In their response, the applicant disclosed that, upon reviewing their records, it had come to their attention that the sponsored persons were incorrectly nominated under the SBS when they should have been nominated under the OHLA. Ms Sisodia expressed regret over the error and indicated that immediate action would be taken to rectify the situation. The Tribunal is satisfied on the evidence before it that the applicant has been cooperative in their dealings with the Department.
The number of occasions on which the sponsor has failed to satisfy the sponsorship obligation:
87.The applicant contends that they have failed to satisfy the sponsorship obligations in reg 2.86 on four (not five) occasions because Mr Bhardwaj held a bridging visa A with nil conditions at the time of the monitoring. However, as discussed above, the obligations in reg 2.86 continue to apply to sponsored persons until such time they are granted a substantive visa that is not a Subclass 482 visa. On this basis, the Tribunal finds that the applicant has failed to satisfy the obligations in reg 2.86 in respect of all five sponsored persons. The failure has therefore occurred on five occasions.
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:
88.The failure to satisfy the obligations in reg 2.86 occurred because the applicant recruited and on-hired the sponsored persons to businesses of entities that were not associated with (or, as discussed above, an associated entity of) the applicant.
89.The applicant contends that the failure occurred due to an operational error and was over a much shorter period of time than that found by the delegate.
90.At the hearing Ms Sisodia provided a detailed account of how the errors made by the applicant’s recruitment team in India, who misclassified the sponsored persons’ nomination type, had led to the applicant failing their sponsorship obligations. After the hearing, the Tribunal received extracts of emails, documents and correspondence between the various parties which appear to substantiate Ms Sisodia’s evidence of how the errors transpired. The applicant’s overseas HR team indicated on an initiating email that the nomination was under the SBS. This led to the incorrect contracts being generated and incorrect instructions being forwarded to the solicitor who lodged the nominations. While Ms Sisodia appears to have been copied in on the correspondence, it was explained that she is copied in on all emails pertaining to the business’ operations and that it would have been impossible for her to review every email. It was further submitted that the process occurred over a matter of days and the nominations were processed by the Department in less than two weeks. Ms Sisodia gave evidence that the events occurred during the COVID-19 pandemic period and there was a lot of pressure on her company to meet the high demand for ICT professionals. She said amid that pressure, and the speed at which applications were being processed, checks were not undertaken.
91.The Tribunal accepts Ms Sisodia’s evidence regarding the circumstances which led to the applicant’s failure to satisfy the obligation in reg 2.86. It was an unfortunate error on the part of the applicant’s overseas HR staff and neither Ms Sisodia, nor the legal representative who lodged the nominations, identified the error until monitoring had commenced.
92.In relation to the period of time over which the failure occurred, the delegate found that the failure occurred between 5 August 2020 and 30 November 2022, which is a period of two years and three months.
93.It appears that the delegate considered the period over which the failure occurred to be the period during which the sponsored persons held their Subclass 482 visas. This is incorrect. Regulation 2.86(3) provides that the obligations in regs (2) to (2C) apply from the date the nomination is approved (where the sponsored person already holds a Subclass 482 visa) and, in the case of Mr Moun, it is from the date that he was granted the Subclass 482 visa. The nominations in respect of the sponsored persons were approved in February 2022, March 2022 and July 2022. In Mr Moun’s case, his Subclass 482 visa was approved in April 2022.
94.Upon realising that they may have failed to comply with their sponsorship obligations, the applicant directed the sponsored persons to cease working for the client. This occurred on 19 October 2022. Accordingly, the periods over which the failures occurred ranged from three months (in respect of the nomination approved in July 2022) to eight months (in respect of the nominations approved in February 2022). The Tribunal accepts that the applicant’s failure to comply with their obligations in reg 2.86 was for much shorter periods than those found by the delegate.
95.The Tribunal has also considered the applicant’s submission regarding the delegate’s concern that the companies for whom the sponsored persons were working had used the applicant’s SBS agreement rather than applying for their own. The delegate was concerned that this conduct prevented the Department from ascertaining whether those companies were fit to be approved as sponsors and left the sponsored workers vulnerable to exploitation.
96.It was submitted that the companies to whom the sponsored persons were on-hired are multinational, multi-billion-dollar publicly listed companies that have their own SBS agreements. The Tribunal accepts this evidence. As things transpired, when the applicant’s failure was discovered, some of the sponsored persons were promptly nominated by those companies under their own agreements.
97.In relation to the sponsored persons’ work conditions, the evidence before the Tribunal indicates that they were highly skilled ICT professionals. Their approved annual salaries ranged from $110,000 to $135,000. The records provided to the Department indicate that the sponsored persons had been paid their nominated salary and other entitlements in each pay period. The records also indicate that the salaries were consistent with (and not less than) the annual market salary rates that would have been provided to an equivalent Australian worker. The Tribunal is satisfied that the sponsored persons were not underpaid and there is no evidence before the Tribunal which suggests they had been exploited. These factors, in the Tribunal’s view, greatly lessen the severity of the circumstances of the failure to satisfy the sponsorship obligation in reg 2.86.
The period of time over which the sponsor has been an approved sponsor:
98.The applicant has been approved as a standard business sponsor since 9 December 2015.
Whether, and the extent to which, the failure to satisfy the sponsorship obligation has had a direct or indirect impact on another person:
99.The Tribunal considers that the failure to satisfy the sponsorship obligation in reg 2.86 has had an impact on the sponsored persons. Firstly, the failure would have resulted in the sponsored persons to be in breach of the mandatory work condition (8607) imposed on their Subclass 482 visas. That condition required the sponsored persons to work only in a position in the nominator’s business or in the business of an associated entity of the nominator. The breach of a visa condition may have an impact on future visa applications lodged by the sponsored persons. Secondly, as indicated by the delegate, the sponsored persons, who had the requisite qualifications and knowledge to work in Australia, would have to find a new sponsor or return to their home country.
100.The applicant acknowledged the impact of their failure on the sponsored persons. The applicant submitted, and the Tribunal accepts, that they acted promptly to mitigate the impact of their failure by having some of the employees move to the client’s sponsorship or finding them another position with another employer who could sponsor them.
101.The failure has also had a significant and detrimental impact on the applicant’s business, in that it caused reputational damage, a substantial decline in revenue and may also impact their ability to renew the OHLA. Ms Sisodia informed the Tribunal that as soon as they discovered the error with the nominations, they promptly notified the clients, some of whom distanced themselves from the applicant and have not had further dealings with them. The applicant’s revenue suffered, declining from $9.8 million in the six months ending 31 December 2022 to $5.8 million in the six months ending 30 June 2023.
Whether, and the extent to which, the failure to satisfy the sponsorship obligation was intentional, reckless or inadvertent:
102.In their response to the NOITTA, the applicant contended that there was no reason to nominate the sponsored persons under the SBS agreement as they had a labour agreement (the OHLA) in place. The delegate considered that the labour agreement had a limit on the number of people that could be nominated and that it was more beneficial for the applicant to rely on the SBS to increase their quota.
103.The evidence before the Tribunal, however, indicates that the applicant was approved to nominate 20 positions each year under the OHLA. In the first year of the agreement the applicant nominated one position. In the second year, they did not nominate any positions. In the third year (from 18 September 2021 to 18 September 2022), being the period during which the sponsored persons were nominated under the SBS, the applicant had nominated six positions. With 14 positions still available, the applicant had nothing to gain by nominating the sponsored persons under the SBS agreement. There was certainly no need for the applicant to increase their quota of positions via the SBS as they had not nearly exhausted the number of places available to them under the OHLA.
104.The Tribunal is satisfied that the applicant did not derive any benefit from nominating the sponsored persons under the SBS. It is also observed that the labour supply and staffing agreements between the applicant and the various corporates stipulated that a breach of applicable immigration laws may result in the termination of the agreement. In this context, the Tribunal considers it highly unlikely that the applicant would have taken the risk of deliberately nominating the sponsored persons under the SBS given the significant financial losses that could ensue.
105.These circumstances strongly support the conclusion that the failure to satisfy the sponsorship obligations in reg 2.86 was not intentional.
Whether, and the extent to which, the person has cooperated with Immigration, including whether the person informed Immigration of the failure:
106.The evidence before the Tribunal indicates that the applicant cooperated with the Department throughout the monitoring process. The failure to satisfy the sponsorship obligation in reg 2.86 was identified by the applicant when they were requested by the Department to provide records and information to demonstrate compliance with their sponsorship obligations. Prior to the issuing of the NOITTA, the applicant promptly informed the Department that while gathering the information they had come to realise that they may have breached the sponsorship obligations. Much of the information set out in the NOITTA (and relied upon by the delegate to take action under s 140M) concerned the applicant’s own admissions that they may have failed to comply with the obligations in reg 2.86. The Tribunal is satisfied that the applicant informed the Department of the failure prior to the issuing of the NOITTA.
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:
107.The evidence before the Tribunal confirms that the applicant promptly informed the corporates of the potential breach and directed all primary sponsored persons to cease work immediately. The applicant also kept the corporates and sponsored persons informed about the progress of the audit and the outcome. In respect of the sponsored persons, the Tribunal is also satisfied that the applicant sought to have their employment transferred to the client’s sponsorship approval or assisted them with finding alternative suitable employment.
The processes (if any) the person has implemented to ensure future compliance with the sponsorship obligation:
108.It was submitted that Shoolin has reassessed and updated the process for training their overseas staff on Australian immigration requirements and policies. They also undertook a thorough review of their processes to ensure the breach does not reoccur. In support of these submissions, the Tribunal received a large volume of documents indicating that the applicant had updated their training material for staff and implemented changes to their internal processes, including the following:
·OHLA and SBS applications to be handled by separate teams.
·A “four eyes” review process (a form of internal audit) to be implemented prior to engaging the immigration lawyer.
·Revised colour-coded contracts for OHLA and SBS candidates that clearly indicate which one is to be used.
·Regular training to be provided for all recruitment team members on Australian immigration law and policy.
109.The Tribunal is satisfied that the applicant has made efforts to implement updated processes and procedures to ensure future compliance with sponsorship obligations.
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:
110.Other than the sponsorship obligation found not to have been complied with by the applicant, the Tribunal is not aware of any other sponsorship obligations that the applicant has failed to comply with.
Any other relevant factors:
It was submitted that the Department’s decision to cancel the applicant’s sponsorship approval has led to significant financial loss and reputational damage. The evidence before the Tribunal, as discussed above, indicates that the applicant has experienced a 40% decline in revenue following the decision to cancel the sponsorship approval. The applicant contends that the financial loss has been compounded by irreparable reputational damage. It was submitted that most of Shoolin’s on-hire clients, including HCL Australia and Cognizant, who accounted for a large slice of Shoolin’s business activity, have indicated they no longer wish to work with Shoolin following the sanction.
It was contended that the decision also has ramifications which could result in the cancellation of the labour licences held by Shoolin in Victoria and Queensland. The applicant is required to provide (to the relevant authorities in Queensland and Victoria) details of any disciplinary or enforcement action taken under the Act. The applicant fears the decision to cancel their sponsorship approval will lead to their labour licences in Queensland and Victoria being cancelled, which the applicant claims would be catastrophic for their business.
At the hearing, Ms Sisodia did not seek to rely on the legal arguments advanced by the representative, nor did she rely on advice she had received suggesting that the sponsored persons were providing “business services” on behalf of the applicant. Ms Sisodia was forthright in her evidence, stating that the sponsored persons should have been nominated under the OHLA, an operational error had occurred by her overseas on-boarding team which led to the sponsored persons being sponsored under the SBS agreement, and that she failed to pick up the error due to the pressure of the high demand for ICT professionals during the COVID‑19 period and the speed at which the nominations were processed. Ms Sisodia expressed her remorse for the breach and undertook to ensure future compliance with all obligations.
In providing details of her professional and employment history, Ms Sisodia said she had worked extremely hard to establish and grow her business despite facing so many obstacles as a woman in a male-dominated industry. She said the process has been extremely stressful for her, as she has suffered significant financial losses and reputational damage, but she has made changes to internal processes to ensure the error never happens again and she wants the opportunity to rebuild the business and move forward.
In addition to the above, the Tribunal has also had regard to the post-hearing submissions in which it was submitted that the decision to cancel the applicant’s approval as a standard business sponsor constitutes ‘adverse information’ under reg 1.13A. It was further noted that departmental policy provides that, in relation to any future applications for approval as a sponsor or for approval of a nomination, it is unlikely to be reasonable to disregard adverse information in circumstances where an applicant has had the sponsorship approval cancelled by the ABF in the preceding five years.[13] This suggests that the applicant is unlikely to be approved as a sponsor or have a nomination approved by the Department until after 14 December 2027, being five years from the date of the sponsorship cancellation. The Tribunal accepts that this would be a significant adverse consequence for the applicant.
[13] Policy – Migration Regulations – Divisions – Adverse information – Regulation 1.13A and 1.13B, 3.4.2.3 Circumstances in which it is unlikely to be reasonable to disregard adverse information.
Conclusion
The applicant’s approval as a standard business sponsor was in effect until 30 August 2026. The Department decided to cancel the approval on the basis of a failure to comply with the sponsorship obligation in reg 2.86. The purpose of that obligation is to ensure that sponsored persons work in the occupation for which they have been nominated in a position in the business of the applicant or in a business of an associated entity of the applicant. It is also an obligation that sponsors do not recruit persons and on-hire them to a business that is not associated with (or an associated entity of) the applicant. The applicant’s director understood these obligations and had previously complied with them.
The Tribunal is satisfied that it was not the applicant’s intention to deliberately breach their sponsorship obligations. The Tribunal accepts that the failure to comply with the obligations in reg 2.86 was due to an operation error made by the applicant’s overseas staff who failed to appreciate the significance of ensuring the onboarding procedures were initiated under the correct agreement. It is indeed unfortunate that this error was not identified by the applicant’s director or legal representative before the nominations were lodged with the Department. The Tribunal has found that the applicant’s failure has had an impact on the sponsored persons, who would have found themselves in breach of the mandatory work condition 8607 imposed on their Subclass 482 visa. This could potentially impact future visa applications made by the sponsored individuals. The Tribunal, nevertheless, accepts that the applicant acted promptly to mitigate the impact of the failure.

The applicant’s director was co-operative with the Department and made admissions of the failure upon discovering that the sponsored persons had been nominated under the wrong agreement. The failures occurred over much shorter periods than those found by the delegate. The Tribunal considers that the applicant’s director is genuinely remorseful for the failure, which the Tribunal accepts has come at a significant cost to her by way financial losses, reputational damage and personal stress. Ms Sisodia has demonstrated a commitment to ensuring future compliance with sponsorship obligations and the Tribunal gives favourable weight to the efforts made by the applicant to train their staff and implement substantive changes to their internal processes and procedures.
Having regard to the above, the Tribunal considers the decision to cancel the applicant’s approval as a standard business sponsor to be unduly harsh, particularly given the Department’s policy that such an action would make it unlikely for the applicant to be approved as a standard business sponsor or have a nomination approved until December 2027. Such an action may also impact the applicant’s ability to renew their OHLA and possibly lead to the cancellation of their licences to provide labour in the state of Victoria and the state of Queensland. The Tribunal accepts that these potential implications would devastate the applicant’s business. For these reasons, the Tribunal will set aside the Department’s decision to cancel the applicant’s approval as a standard business sponsor and will substitute it with a decision to take a different action as provided for in s 140M.
The Tribunal considers a bar of a relatively short period (of six months) to be more commensurate with the nature of the non-compliance having regard to the matters (discussed above) prescribed by reg 2.89(3). The Tribunal acknowledges that any action taken under s 140M of the Act will still constitute “adverse information” as defined in reg 1.13A, however, it is open for the applicant to rely on the favourable findings made in this decision to establish that it would be reasonable to disregard the adverse information in relation to any future application they may lodge with the Department. It is also open for them to rely on the findings in this decision to support their application for renewal of the OHLA and state labour licences.
121.Considering the totality of the circumstances, and having regard to the prescribed criteria, the Tribunal finds that the action provided for in s 140M(1)(c) to bar the applicant for a period of six months (from the date of the delegate’s decision) from sponsoring more people under the terms of their existing approval as a standard business sponsor should be taken. This effectively means that the bar ended on 14 June 2023.
DECISION
122.The Tribunal sets aside the decision under review and substitutes a decision to bar the applicant for a period of six months (from the date of the delegate’s decision) from sponsoring more people under the terms of the existing approval as a standard business sponsor.
R. Skaros
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.
…
Reg 1.13B    Meaning of associated with:
(1) Two persons are associated with each other if:
(a) they:
(i) are or were spouses or de facto partners; or
(ii) are or were members of the same immediate, blended or extended family; or
(iii) have or had a family-like relationship; or
(iv) belong or belonged to the same social group, unincorporated association or other body of persons; or
(v) have or had common friends or acquaintances; or
(b) one is or was a consultant, adviser, partner, representative on retainer, officer, employer, employee or member of:
(i) the other; or
(ii) any corporation or other body in which the other is or was involved (including as an officer, employee or member); or
(c) a third person is or was a consultant, adviser, partner, representative on retainer, officer, employer, employee or member of both of them; or
(d) they are or were related bodies corporate (within the meaning of the Corporations Act 2001); or
(e) one is or was able to exercise influence or control over the other; or
(f) a third person is or was able to exercise influence or control over both of them.
(2) For the purposes of subregulation (1), it does not matter if a person has ceased to exist.
(3)  This regulation does not limit the circumstances in which persons are associated with each other.
(4)  In this regulation:
officer has the meaning given by section 9 of theCorporations Act 2001.
Meaning of associated entity
(1)  One entity (the associate) is an associated entity of another entity (the principal ) if subsection   (2), (3), (4), (5), (6) or (7) is satisfied.
(2)  This subsection is satisfied if the associate and the principal are related bodies corporate.
(3)  This subsection is satisfied if the principal controls the associate.
(4)  This subsection is satisfied if:
             (a)  the associate controls the principal; and
             (b)  the operations, resources or affairs of the principal are material to the associate.
(5)  This subsection is satisfied if:
             (a)  the associate has a qualifying investment (see subsection   (8)) in the principal; and
(b)  the associate has significant influence over the principal; and
(c)  the interest is material to the associate.
(6)  This subsection is satisfied if:
             (a)  the principal has a qualifying investment (see subsection   (8)) in the associate; and
             (b)  the principal has significant influence over the associate; and
             (c)  the interest is material to the principal.
(7)  This subsection is satisfied if:
             (a)  an entity (the third entity) controls both the principal and the associate; and
(b)  the operations, resources or affairs of the principal and the associate are both material to the third entity.
(8)  For the purposes of this section, one entity (the first entity) has a qualifying investmentin another entity (the second entity) if the first entity:
             (a)  has an asset that is an investment in the second entity; or
(b)  has an asset that is the beneficial interest in an investment in the second entity and has control over that asset.