Fair Work’s hospitality focus: What it means for accommodation providers

Australian accommodation businesses have long relied on international students and working holiday makers as employees, but scrutiny is increasing for employers who hire overseas workers.

Earlier this year, the Fair Work Ombudsman inspected 25 Gold Coast restaurants for compliance, resulting in the opening of investigations after “a number of concerning practices” were found, they said in a joint statement with the Australian Taxation Office (ATO). 

The businesses were inspected for a range of reasons, with the “employment of vulnerable workers such as visa holders” being one such criteria.

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ATO Assistant Commissioner Tony Goding said after the inspections that businesses not following the rules should be worried. 

“If you run a business, take this as your warning that you can’t get away with exploiting your workers or ripping off the community.”  

With proposed changes to second and third year Working Holiday Maker visas on the horizon, the landscape is shifting. Businesses that were previously confident should consider auditing their compliance to avoid penalties that could run from thousands of dollars to millions in extreme cases. 

Related AccomNews story: Working holiday maker changes threaten WA hospitality and tourism workforce

AccomNews spoke to Citation Legal‘s Partner Rod Marshall and Head of Migration Yvette Gasic about what employers should be considering when it comes to ensuring Fair Work compliance. 

Why is Fair Work paying particular attention to hospitality employers that rely on working holiday makers and international students? What makes this workforce particularly vulnerable to non-compliance or exploitation? 

Rod Marshall: In some parts of the industry, there has traditionally been a more relaxed approach to compliance when it comes to workers on working holiday or student visas. In some cases, both employers and workers may see short-term benefits in arrangements such as cash payments, longer working hours or not strictly following minimum award conditions. The assumption can be that, because the arrangement appears to suit both sides at the time, no one will raise an issue. 

Yvette Gasic: From a migration perspective, with significant changes affecting the working holiday and student visa programs this will have an impact on workforce planning, recruitment strategies and labour shortages as we head into the busy season for the hospitality, food and accommodation sector. With the tightening of these immigration programs likely to lead to shortages in staffing, there is greater potential for non-compliance.

What does heightened Fair Work enforcement actually mean for a hospitality operator? Should businesses expect more audits, inspections, requests for payroll records or other forms of scrutiny? 

Yvette Gasic: Fair Work inspectors are afforded powers under both the Fair Work Act 2009 and the Migration Act 1958, which allow them to inspect and audit for potential non-compliance under both the Fair Work and Migration Act, making it even more important to have solid business records that can easily be produced in the event of an audit under either the Fair Work Act or Migration Act. Not having proper records, complete records – or even worse, false records – creates a non-compliance risk and the penalties can be significant if breaches are found under both Acts. 

Rod Marshall: Employers who do not meet record-keeping or pay slip obligations and cannot give a reasonable excuse will need to disprove allegations in wage claims made in a court – what is often referred to as a “reverse onus of proof”. 

What are the most common compliance problems you are seeing hospitality and accommodation businesses employing visa holders? Are there particular issues around minimum rates, penalty rates, overtime, unpaid work or record-keeping? 

Yvette Gasic: The most common immigration compliance issues are working in breach of visa conditions, for example: working holiday makers working beyond six months with the one employer and students working more hours than the allocated 48 hours per fortnight.  

Related AccomNews story: Regional Australia will be the big loser in Canberra’s visa lottery

Rod Marshall: Record keeping, such as payslips and employment agreements, have been common issues for employers. If an employer cannot provide proper records or complete records, when an immigration audit is being conducted, then this immediately places the business at significant risk in the context of a Fair Work Ombudsman investigation and/or an underpayment claim from any affected employee.

Does the use of working holiday makers or student workers itself create any additional compliance risks for employers, or is the greater concern simply that these workers may be less familiar with their workplace rights? 

Yvette Gasic: The immigration compliance risks are focused on the employers ensuring foreign nationals are working within visa conditions and having solid systems in place to monitor visas, such as VEVO checking every three months, as well as migrant workers not being aware of their workplace rights and entitlements.   

Rod Marshall: It is the employer’s responsibility, not the employee’s, to ensure that working arrangements and payments are compliant with the relevant provisions of the Fair Work Act and Migration Act. If an employer has taken advantage of migrant workers’ lack of awareness, then this will be a potential aggravating factor in any prosecution for non-compliance where workers have been exploited. 

What responsibility do owners and senior managers have for ensuring compliance when payroll or HR is outsourced, or when labour is supplied through a labour-hire provider? 

Rod Marshall: The employer will always have primary responsibility for ensuring that the employee is paid correctly and in full. So, if business owners and managers outsource their HR or payroll to an external provider the responsibility to ensure proper payment, and the liability that arises if arrangements are non-compliant, still rests with the employer. Engaging personnel through a labour hire provider does shift the responsibility for core compliance to the labour provider as the direct employer, but host employers still risk potential involvement as an accessory to contraventions of the Fair Work Act if they are knowingly involved in non-compliance. 

Fines under the Fair Work Act can be significant, with fines for an individual, such as a company director or responsible manager, up to $21,840 per unintentional contravention or $218,400 for a “serious contravention” (where the conduct is deliberate). For a company with 15 or more employees, fines can be up to $546,000, or for contraventions relating to an underpayment, the greater of $546,000 or three times the underpayment amount per contravention, or up to $5,460,000 for a serious contravention. 

Yvette Gasic: The Migration Amendment (Employer Sanctions) Act 2007 also captures employers, labour hire companies and others in the employment chain who repeatedly break the law and may have other visa programs they utilise affected, such as barring their sponsorship or having it cancelled. In addition, this would prevent employers from employing foreign workers for a period of time – a measure called a prohibition declaration. A prohibition declaration can be made if an individual or business breaches parts of the Migration Act or Fair Work Act. The employer may also find their name appears on a ‘prohibited employer register’ for five to 10 years. If criminal penalties are imposed, directors may be held personally liable and face imprisonment for serious offences, including hiring foreign workers without a valid visa, and the penalty is two years’ imprisonment or $655,200 or both.  

What would you recommend hospitality operators do now if they have a large cohort of working holiday makers or international students? What should their compliance checklist look like? 

Rod Marshall: Ensure that the business is aware of correct minimum award rates that apply, including when shift and weekend penalties apply, and when overtime rates apply. 

Implement a comprehensive and robust record-keeping system in relation to all employee records, time and attendance records and payroll records which can readily be accessed and produced in the event of an audit. 

Yvette Gasic: Undertake or outsource an audit of all foreign visa holders, check conditions on their visas and cross check hours worked and whether the 6-month work limitation applies to your business for your foreign workers.  

Check which working holiday makers have visas expiring in the next three months, and if they are intending to apply for a second or third working holiday visa in next three months, noting that a ballot system is being introduced and the visas are no longer guaranteed to be granted. Would you consider sponsoring some of these staff members?  

Check your student visa cohort and those with visas expiring in next three months and engage in a conversation with those you want to keep on, about what visa options they have explored. Students have limitations now on applying for further student visas once their initial course has been completed. Check what type of student visa they hold and if they are the primary visa holder or a family member of a primary visa holder. Is the primary visa holder undertaking a Master’s or PhD?