Singh Auto Care Pty Ltd (Migration)

[2021] AATA 4459

Singh Auto Care Pty Ltd (Migration) [2021] AATA 4459 (1 November 2021)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANT:  Singh Auto Care Pty Ltd

CASE NUMBER:  1917696

HOME AFFAIRS REFERENCE(S):          OPF2018/9922

MEMBER:Cathrine Burnett-Wake

DATE:1 November 2021

PLACE OF DECISION:  Melbourne

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

Statement made on 01 November 2021 at 4:53pm

CATCHWORDS

MIGRATION – sponsorship cancellation or bar – record keeping obligations – ensuring equivalent terms and conditions of employment  – nominee did not receive his Guaranteed Annual Earnings – extended Leave Without Pay period for personal financial reasons – undocumented and unverified leave process – cash payments – extended LWOP not considered compatible with filling specific skill shortages – formal leave arrangements now in place – testimony of leave mutually agreed between staff – substantial compliance – decision under review set aside        

LEGISLATION

Fair Work Act 2009
Migration Act 1958, s 140
Migration Regulations 1994, rr 2.79, 2.82, 2.89-2.94

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 (the Act) in relation to the applicant’s sponsorship.

2. The applicant has received approval as a standard business sponsor on three occasions since 2013. The last approval was on 18 September 2014 with the agreement in place until 18 September 2017. On 17 June 2019, the delegate decided to bar the sponsor for 3 years under s 140M from making applications for approval as a standard business sponsor and temporary activities. The delegate found that circumstances existed to bar the sponsor from using the program as they had failed to meet their obligations[1] to ensure equivalent terms and conditions of employment[2] and to keep records.[3]

   [1] Regulation 2.89

   [2] Regulation 2.79  

   [3] Regulation 2.82

3. Ms Hardeep Kaur for the applicant appeared before the Tribunal on 7 May 2021 to give evidence and present arguments. The Tribunal also received oral evidence from Iqbal Singh, Sarabjeet Singh, Simranjeet Grewel and Jasbir Sijan. The Tribunal hearing was conducted with the assistance of an interpreter in the Punjabi and English languages.

4. The applicant was represented in relation to the review by its lawyer. The representative attended the Tribunal hearing.

5. For the following reasons, the Tribunal has decided to set aside the decision under review and substitute a decision not to take one or more of the actions specified in s.140M of the Migration Act 1958.

   CONSIDERATION OF CLAIMS AND EVIDENCE

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

7. 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.

8. 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.

9. 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 had failed to meet their obligations to ensure equivalent terms and conditions of employment and to keep records.

    Failure to satisfy a sponsorship obligation: reg 2.89

11. 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).

12. The delegate made the following findings in their decision in respect to the applicant:

    Regulation 2.89 Failure to satisfy sponsorship obligation
    Regulation 2.79 Obligation to ensure equivalent terms and conditions of
    employment
    Iqbal Singh – Nominated Position: Motor Mechanic
    The sponsor acknowledges that Iqbal Singh did not receive his Guaranteed Annual
    Earnings (GAE) of $54,000, which would normally be considered a failure of Regulation
    2.79(3). However, the sponsor has stated in response to the NOITTA that from the
    period of 02 October 2017 and 02 October 2018, the visa holder took a total of 11 weeks Leave Without Pay (LWOP).

    In relation to this leave, the sponsor claims the following:

    ·     LWOP was taken for significant personal reasons;

    ·     LWOP did not exceed 3 months;

    ·     LWOP arrangements were mutually agreed upon by sponsor and visa holder; and,

    ·     A leave application process was in place between sponsor and staff and such records were conveyed to the sponsor’s accountant.

    I have noted the sponsor’s response to the NOITTA and the other evidence gathered during monitoring and considered the following factors to be key considerations. LWOP is certainly permitted under Australian Workplace laws, however it is a claim that will come under scrutiny when assessing a sponsor and the sponsored person’s use of this leave type as its extended use is not considered compatible with the purpose of these visas. Therefore, I have considered the reasons for the leave, the amount of leave taken and the manner in which it was taken to be key factors when assessing this regulation.

    The sponsor contends that the significant personal reasons for the LWOP was that the visa holder was required to care for his young child because his partner works two jobs, working 12 hour days and the cost of child care was prohibitive. I do not accept the sponsor’s assertion that this constitutes ‘significant personal reasons’. It is not reasonable, and in fact incongruous to argue that a temporary visa holder who is in Australia to fill a skill shortage can take 11 weeks of LWOP in order to alleviate claimed financial pressures. Limited sporadic use of this leave under such circumstances may be considered acceptable. However, I do not accept that 11 weeks of LWOP taken under
    these circumstances to be justified.

    Furthermore, I am not willing to accept the sponsor’s claim that the above LWOP was taken after a formal application was processed, or that the leave was mutually agreed upon by the sponsor and sponsored person. Information received in response to the NOITTA conflicts with information obtained onsite from both the sponsor and the visa
    holder. During a site visit conducted by ABF on 23 August 2018, the manager and only mechanic at work that day, Jasbir Sajjan, was unable demonstrate a process or provide any physical evidence that might support any of the sponsored persons current and past employment including time sheets, rosters, correspondence or leave records. Jasbir Sajjan advised they simply start at 8:30 and finish at 5:00pm, and when staff are sick they let him know by phone.

    Similarly during a site visit on 20 March 2019, Jasbir Sajjan was asked specifically about Iqbal Singh’s unpaid leave arrangements. Jasbir Sajjan could not provide any reasons for such leave, claiming he did not have access to paperwork. Iqbal Singh was asked directly during this visit for the details of his unpaid leave including being shown the ‘leave application forms’ allegedly used by the sponsor. Iqbal Singh could not explain
    the use of these forms and claimed he could not recall all reasons for leave except that he ‘texts the boss’ when he needs leave. When asked to provide reasons he may have taken leave for specific periods listed in the forms he responded that some may have been to look after his child and some ‘might be sick’.

    In light of the information provided in response to the NOITTA which claims the sponsor has leave processes in place, leave records and hard copy leave applications onsite, I find it reasonable to have expected the following during either site visit:

    ·Jasbir Sajjan to have demonstrated or at least explained the process for recording staff attendances including how the reasons for leave are recorded, where this information is recorded and how and to whom this information is conveyed to external sources; and

    ·Iqbal Singh would have evidenced the process for LWOP or at least conveyed these ‘significant personal reasons’ to ABF officers during the latter site visit.

    Given the above, I do not accept the sponsor has (or at least had) sound leave processes or that the sponsored person’s circumstances warrant the amount of LWOP taken. This has resulted in significant underpayment of sponsored person Iqbal Singh’s GAE. I therefore find a failure of subregulation 2.79(3) has occurred which requires a sponsor, at a minimum, to pay a sponsored person their GAE approved at nomination.

    Sarabjeet Singh– Nominated Position: Motor Mechanic
    I acknowledge that Sarabjeet Singh may have had sound personal reasons to take leave however for the reasons outlined above, I am not satisfied that a formal leave application was undertaken which may have shed light on why LWOP was required and mutually agreed upon as opposed to other leave types. LWOP cannot be used to excuse paying a sponsored person’s GAE, especially when the process for granting LWOP is not transparent and cannot be verified.

    As such I find the sponsor failed to pay Sarabjeet Singh his GAE and a second failure of regulation 2.79(3) has occurred.

    Regulation 2.90 Provision of false or misleading information

    I have noted the sponsor’s response to the NOITTA and other evidence gathered during monitoring and consider the sponsor has adequately explained those payslips provided to Iqbal Singh along with corresponding bank deposits and I am satisfied these payslips are not considered false or misleading.

    The sponsor has claimed the specific payslips detailed in the NOITTA for Simranjeet Grewal and Sarabjeet Singh do not correlate because they were paid cash. In light of his information I am satisfied there is insufficient evidence to support a finding the sponsor has submitted false or misleading payslips.

    Regulation 2.89 Failure to satisfy sponsorship obligation
    Regulation 2.82 Obligation to keep records
    In relation to this regulation, the sponsor stated in response to the NOITTA that cash payments are permissible according to the Australian Tax Office and there is sufficient evidence to support their contention that these cash payments can be independently verified. In support of this claim the sponsor provided the following:

    ·Wages Reconciliation Report;

    ·Service Receipts Ledger;

    ·Accountant letter;

    ·Business Activity Statements;

    ·Superannuation extracts;

    oExtracts from sponsor’s payroll reports;

    I have noted the sponsor’s response to the NOITTA and the other evidence gathered during monitoring and consider the evidence provided by the sponsor in support of their claim is not a record of the money paid to the sponsored persons that is in a format that is capable of being verified by an independent person.

    The sponsor is seeking to demonstrate that the circumstantial evidence provided is enough to support their contention that cash payments were in fact made. Such evidence is considered to be internally generated documents or documents that contain information supplied by the sponsor which cannot be independently verified. Whilst the sponsor seeks to contend ‘a balance of probabilities’ that the cash payments were made, this is not the fundamental issue. The ABF’s position is that cash payments are generally not capable of being verified by an independent person and the information provided does little to challenge this position. Based on this, I have assessed that the sponsor has not met its obligation under regulation 2.82.

13. The applicant has requested the Tribunal set aside the decision under review and substitute a decision not to take one or more of the actions specified in s 140M of the Migration Act. Or in the alternative, they have sought if the Tribunal is minded in taking action, that a ‘Reminder to Comply’ letter is appropriate. Their grounds to seek such action is because they consider:

    1. Singh Auto actions in relation to the alleged breaches identified were minor and inadvertent. This is particularly evident in the context of a small, family owned business. It is important to view these alleged breaches outside the prism or lens of “big businesses” who can afford to absorb significant fines;
    2. The Temporary Work (subclass 457) visa holders (“subclass 457 visa holders”) were not in any way exploited nor received terms or conditions less favourable than what would have been provided to an equivalent Australian worker. In contrast the subclass 457 visa holders have been adversely affected by ABF decision as it has resulted in two of the three workers visa refusals in relation to their Employer Nomination Scheme (“ENS”) (subclass 186) visa applications;

    3. The unpaid leave provided to the subclass 457 visa holders were mutually agreed and leave processes were recorded by Singh Auto; and

    4. Since the ABF investigation and decision, Singh Auto have implemented further processes to ensure that leave is appropriated recorded and all wages paid by EFT.[4]

    [4] Page 1 of submission from Clothier Anderson Immigration Lawyers, dated 3 December 2020.

14. The applicant has submitted and relies on in support of its matter:

    • Statement by Jasbir Sajjan dated 1 December 2020;
    • Bundle of email correspondence evidencing leave requests by employees;
    • Iqbal’s ENS (subclass 186) visa grant notice;
    • Leave balance report in relation to Simranjeet and Sarabjeet;
    • Letter from Tax Guru confirming that all wages have been paid by EFT and no unpaid leave has been taken.
    • Statutory declaration by Hardeep Kaur dated 15 February 2019 and 7 May 2019;
    • Statutory declaration by Iqbal Singh dated 6 May 2019; and
    • Statutory declaration by Sarabjeet Singh dated 6 May 2019.

15. The Tribunal has taken into consideration the above listed supporting evidence along with legal submissions from the applicants lawyers dated: 3 December 2020, 7 May 2019, 9 May 2019 and 31 May 2019 and their letter to the Tribunal dated 4 September 2020 responding to the Tribunal’s invitation to comment and request for more information. The Tribunal has also considered the contents of the Department file.

16. The Tribunal notes that the applicant employed Subclass 457 visa holders for the following period:

    • Iqbal Singh 4 September 2013 to 1 October 2018;
    • Simranjeet Grewal 10 October 2014 to 10 October 2018;
    • Sarabjeet Singh 26 August 2013 to 26 August 2017.

17. All three individuals attended the hearing and confirmed their employment status. Although their 457 visas have now ceased, they continue to work for Singh Auto. Iqbal is now a permanent resident having been granted his ENS (subclass 186) visa. However, Simranjeet and Sarabjeet’s ENS (subclass 186) visa applications were refused because of the adverse information relating to Singh Auto as a result of this decision currently under review.

    Regulation 2.79 Obligation to ensure equivalent terms and conditions of employment

18. The delegate found that there were two failures under regulation 2.79 that occurred over at least one 12-month period that related to leave entitlements, specifically Leave Without Pay (LWOP) in relation to Iqbal Singh and Sarabeet Singh.

19. The delegate found that the applicant did not have sound leave processes or that Iqbal’s circumstances warranted the 11 weeks of LWOP taken. The delegate, using the same reasoning, also found that the LWOP taken by Sarabeet Singh did not comply.

20. The applicant disputes that failures occurred and emphasised that as a small business the leave processes implemented were appropriate and neither Iqbal or Sarabeet were underpaid as the delegate found and the LWOP they took was appropriate and they were entitled to it.

21. Both the applicant and Iqbal have given evidence to the Tribunal, in written form and verbally at hearing, that the reason for Iqbal’s leave was due to caring responsibilities for his young children. Iqbal explained to the Tribunal that for a period of several months he and his wife were struggling to find suitable childcare for their young children as they had to change childcare arrangements from what they had in place previously. He explained that his wife was working two jobs, however she had no leave entitlements to care for the children and her workplaces were not flexible. He told the Tribunal that he approached his employer about the struggle with finding suitable childcare arrangements, to which he said his employer was sympathetic to and said that on the days he needed to care for the children he could take LWOP. He told the Tribunal that when suitable childcare arrangements were found, he returned to work full-time and no longer accessed LWOP.

22. The Tribunal notes the following extract from policy concerning LWOP:

    3.6.10.2. Leave Without Pay (LWOP)

    Many Australian employers provide conditions of employment allowing their employees to access LWOP while continuing to remain employed. Given the purpose of the Subclass 457 and Subclass 482 visas is to fill specific skill shortages in the Australian market, and given the full-time position requirement at nomination stage and ongoing market salary rate requirements, extended LWOP is not considered compatible.

    As with part-time work, a sponsor will generally fail to satisfy regulation 2.79 where LWOP is provided to the primary sponsored person due to earnings being less favourable/less than what the earnings were when the nomination was approved. This may not be the case if they can demonstrate that the LWOP was for a reason other than to lower earnings.

    Some businesses have mandatory Christmas shutdown periods. Primary sponsored persons in these circumstances who have exhausted their leave entitlements may request a short period of LWOP to cover the mandatory shutdown, or another period of leave as described above.
    LWOP should generally not exceed three months unless the sponsor is obliged to provide the leave under Australian workplace laws (for example, sick/maternity/paternity leave or where compelling and/or compassionate personal reasons exist and are documented) [emphasis added].

    For any LWOP, it is expected that:

    ·the arrangement is mutually agreed between the sponsor and primary sponsored person

    ·there is an application for leave without pay that the employer has formally approved (including leave applications that are processed and approved electronically) [emphasis added].

    Refer to: Visa condition 8107 - Not cease or change work and Visa condition 8607 - approved work only for advice on temporary lay-offs.

    Note: Where there is evidence that a primary sponsored person has been forced to take LWOP, or the situation is not allowed by the Fair Work Act 2009 (Fair Work Act) or the primary sponsored person’s contract of employment, this may be considered a failure by the work sponsor to satisfy regulation 2.79.

1. As noted in the above policy extract it provides that LWOP should generally not exceed three months and if it does then it is generally only acceptable if it is for maternity/ paternity leave, sick leave, a work based injury or significant personal reasons. The policy provides a clear discretion for officers to consider circumstances relating to the LWOP.

2. The applicant’s lawyers made the following submission regarding LWOP and the Department’s policy:

   The Subclass 457 visa holders have been employed with Singh Auto for approximately seven years. To suggest that a discrete period of LWOP which occurred over a nine-month period in 2017/18 is incongruous to their purpose for residing and working in Australia is disproportionate and taken out of context. Further, Iqbal’s pressures involved finding suitable childcare arrangements in circumstances where his wife had no leave entitlements and they had no family support in Australia.

3. Iqbal Singh and Sarabeet Singh provided verbal evidence to the Tribunal that the leave processes used to be informal, given it was a small business and they all worked very closely together. It would be done via a telephone call, an email, or a text message. Both gave further evidence to the Tribunal that they now however have formal arrangements in place, and they put everything in email and a formal email comes back approving the leave. The Tribunal has before it a bundle of leave requests submitted this way, which demonstrates the implementation of a formal leave process.

4. The applicant provided a statutory declaration confirming the earlier informal leave processes. It relevantly provides:

   15. Our leave processes at the time was not as formal or structured as that
   practised by larger companies. On any given day I would have four employees
   working for me. When working closely in a small business, more formal processes seemed unnecessary. However, if an employer came to us and requested a long period of leave, for a holiday or personal reasons this would be considered by us and recorded.
   16. When considering annual leave, we were aware that our employees wanted
   to spend time back in India to see their families. Having family who live
   overseas, my wife and I understood this. Provided that another employee did
   not also have annual leave at the same time, we would typically approve
   annual leave. Being a small business, we could not afford to have multiple
   workers away for extended periods. Our employees were aware of this so
   usually coordinated their leave they would take amongst themselves before
   letting us know what time they needed off.
   17. For sick leave, the employees would often text or call to let me know. If they
   needed to take more than one day off due to being unwell, they would obtain
   a medical certificate.
   18. Any leave taken was noted and we informed our accountant of this.

5. At hearing the applicant told the Tribunal that they have now formalised their processes and implemented a software program by which all information entered in relation to payroll is automatically provided to the ATO and their accountant.

6. The applicant, Iqbal Singh and Sarabeet Singh asserted to the Tribunal that all leave was always mutually agreed between them, even when the less formal process was in place.

7. The evidence before the Tribunal is that Iqbal Singh had 11 weeks of LWOP which was mutually agreed between him and the applicant. Sarabeet Singh, only had a short period of LWOP, which was also mutually agreed with the applicant. Given both had mutually agreed LWOP for less than the 3 months, which is the amount of time which the Department’s policy deems acceptable, the Tribunal is of the view that no breach has occurred. Further, the reasons Iqbal Singh put forward for his leave, are in line with suitable reasons as set out in the policy if LWOP was to exceed 3 months.

8. Although there is evidence that the leave process used to be very informal, there was still a process albeit it one that was not sophisticated. Informal record keeping is not best practise. However, the Tribunal is of the view that in this instance this is no evidence that any of the 457 workers were underpaid or that the applicant failed in their obligation to ensure equivalent terms and conditions of employment.

9. The Tribunal is satisfied that the applicant has now put in place sufficient measures to ensure accurate records of leave are recorded and maintained.

   Regulation 2.82 Obligation to keep records

10. The delegate’s findings in relation to cash payments occurred because the applicant informed the Department of the payments. The applicant claims the cash payments, in the seven years in which they employed Subclass 457 visa holders were isolated to seven occasions and were as follows:

    • Iqbal was paid cash on three occasions for the pay periods of 11 December 2017

    to 24 December 2017 and 19 February 2018 to 25 February 2018;

    • Simranjeet was paid cash on three occasions for the pay period of 4 June 2018 to 24 June 2018;
    • Sarabjeet was paid cash on one occasion for the pay period, 10 September 2018 to 16 September 2018.

11. At hearing Ms Hardeep Kaur for the applicant told the Tribunal that prior to their dealings with the Department about possible breaches they were not aware that cash payments were not permitted according to their sponsorship obligations as they understood payment of wages by cash was permissible. Ms Kaur contended that they did keep records of all wages, including cash which comprised of Wage Reconciliation Reports, Service Receipt Ledges, and payslips. Ms Kaur told the Tribunal that they have not paid any employee cash since the Department advised them it was a ‘breach’ and all payments are now always through EFT to avoid any issues. Iqbal, Simranjeet and Sarabjeet all confirmed in verbal evidence to the Tribunal, that on the few occasions they had received cash wages, payslips were issued for the correct amount.

12. In Humberto Uy Kimpang (Migration) [2018] AATA 2653 the Tribunal considered whether paying cash to an overseas worker was in breach of Regulation 2.82 and found:

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

13. There are seven instances where the applicant paid cash to the 457 holders. However, as per the reasoning in Humberto Uy Kimpang, paying cash to an overseas worker does not in itself breach Regulation.2.82. The payslips the Tribunal has before it correlates with the information contained on the group certificates and reported to the ATO in the BAS. The affected workers have also provided verbal evidence to the Tribunal that on the very rare occasion they were paid cash, that payslips were provided to them as record of payment.

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

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

    Action to be taken

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

    DECISION

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

    Cathrine Burnett-Wake
    Member

    
    

    ATTACHMENT – Extract from the Migration Regulations 1994

    2.89   Failure to satisfy sponsorship obligation

    …

    (3) For paragraph 140L(1)(b) of the Act, the criteria that the Minister must take into account in determining what action (if any) to take under section 140M of the Act in relation to the circumstance mentioned in subregulation (2) are:

    (a)    the past and present conduct of the person in relation to Immigration; and
    (b)    the number of occasions on which the person has failed to satisfy the sponsorship obligation; and

    (c)     the nature and severity of the circumstances relating to the failure to satisfy the sponsorship obligation, including the period of time over which the failure has occurred; and

    (d)    the period of time over which the person has been an approved sponsor; and

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

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

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

    (h)    the steps (if any) the person has taken to rectify the failure to satisfy the sponsorship obligation, including whether the steps were taken at the request of Immigration or otherwise; and

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

    (j)     the number of other sponsorship obligations that the person has failed to satisfy, and the number of occasions on which the person has failed to satisfy other sponsorship obligations; and

    (k)    any other relevant factors.

    …