Terminating an employee on a 457 visa – a guide for employers

What are an employer’s obligations upon termination of employment of an employee on a 457 visa? Sarah Thapa provides her tips.

Terminating an employee on a 457 visa – a guide for employers
What are an employer’s obligations upon termination of employment of an employee on a 457 visa? Sarah Thapa provides her tips.

The 457 visa program offers employers a great deal of benefits such as the ability to access top talent from around the world, to create competitive advantage through hiring people with skills that can’t be found locally, as well as increase diversity in the workplace. For the sponsored employee a 457 sponsorship promises strong pay and work conditions, quality work experience and high living standards for the employee and his or her family.

Parties go into a sponsorship relationship assuming the placement will go well. Sometimes, however, despite the best of intentions, the relationship does not work out as planned. 

The Issue
The 457 visa holder is not getting along with his or her colleagues. Colleagues are complaining about his or her management style and it is creating conflict in the workplace. The culture fit is not right. 

Or perhaps a performance issue emerges.The sponsored employee is not meeting service levels or performance targets, or is not engaging with clients as you might expect for the position.

Sometimes it is simply a change in business needs that make the role redundant and the business cannot otherwise redeploy the sponsored employee. These situations are tricky for organisations to manage because after all time, expense and significant financial and personal commitment on the part of the sponsored employee, unwinding the sponsorship can pose practical challenges. The employee has assumed financial commitments, property leases, children are enrolled in school, the spouse or partner has settled into a new job. 

The sponsored employee comes to you seeking the support of the company to minimise disruption to the children who are enrolled in school, or to find a new job and sponsor. You are asked to agree to delay the termination of the employment contract.

How should you balance the welfare of the sponsored employee (and family) against the interests and legal obligations of the business?

Here are some key issues for any HR team to keep in mind in relation to the 457 visa:

Visa condition 8107 – the employee must not to cease work
The 457 visa terms require that the sponsored employee not to cease working for the employer for more than 90 days.  The Migration Regulations state that a sponsored employee is taken to have ceased employment if the visa holder “no longer has a genuine intention to perform the nominated occupation” for the employer.

Once the sponsored employee is absent from work for more than 90 days with no intention to resume work then the Department of Immigration will deem the work to have ceased.

Caution: periods of “unpaid leave”
Once a termination notice has been given, an employer can elect to pay the employee in lieu of working the notice period. There is no issue with putting a 457 employee on gardening leave during the notice period.

It is also work noting that periods of unpaid leave during the term of the employment contract (for example, in case of extended illness, maternity leave, study or sabbatical leave) are permitted where the period of unpaid leave is agreed by the employer. A 457 visa will not be cancelled in such circumstances.

However, any periods of unpaid leave of more than 90 days where the employee has no intention of returning to work for the employer is a breach of the 457 visa conditions.

As an example, notice of termination has been given and an employer and sponsored employee wish to negotiate a deed of release whereby the parties mutually agree that the 457 visa holder’s notice period shall be comprised of 3 months’ paid and 3 months’ unpaid leave (total 6 months). This arrangement would breach the visa holder’s 457 visa condition not to cease work because the employee had no genuine intention of returning to work after the first 3 months.

Such a breach can result in cancellation of the visa, and in some cases detention and deportation. Employers can also be liable for allowing an employee to be employed in breach of his or her visa conditions – this is a strict liability offence under the Migration Amendment (Reform of Employer Sanctions) in 2013.

What are an employer’s obligations upon termination of employment?
  • Employers must not allow 457 visa holders to work in breach of their visa conditions.  
  • Employers must notify the Department of Immigration within 28 days of actual cessation or expected cessation of employment.  They must retain all personnel records for the sponsored employee for 2 years after termination of employment.
  • Employers are also obliged to pay the reasonable repatriation costs of the employee and family members if requested to do so.
  • Employers are also liable for costs of detection and removal of 457 visa holders who overstay their visa.
  • Sponsors who are found not to not to have met these obligations can be subject to significant fines and sanctions, including cancellation of sponsorship approval and a bar from future sponsorship approval.

About the author 
Sarah Thapa is managing director of The Migration AgencyP: (02) 8896 6056  |  M: 0407 727 247 | E: sarah@themigrationagency.com.au


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