31 Mar 2016

Business Restructures – implications for employer sponsors

Many businesses often restructure without noting the impact this can have on their business sponsorship approval and on the sponsored employees. This feature explains four important immigration implications of business restructures and what to do should this situation arise.
Examples of these business restructures include:
Moving from trust to company to partnership or vice versa
Closing an operating entity
Changing a payroll structure
Acquisition of the business – either through purchase of shares in the operating company or acquiring the underlying business
Changing directors and/or shareholders

Notification Requirement

Sponsoring employers must notify immigration of a change to their company structure within 28 days. This obligation applies during the validity period of the sponsorship approval, and would cover all of the above types of business restructure .

Failure to meet this obligation can result in fines, sponsorship bars and cancellations. If you are relient on hiring 457 workers, the repercussions of missing this obligation could be significant.

457 Work Condition

A common example of business restructure is to change the operating entity from a trust or partnership to a company structure. Usually the original structure would then be wound up payroll shifted to the new entity.

Even though the trading name of the business may stay the same, this would in fact result in any 457 visa holders being in breach of their 457 Work condition. This condition requires employees not to change employer whilst holding a 457 visa.

Training Requirement

If you change the entity which is paying 457 employees this could have a serious implication on being eligible for the training obligation. Whilst it is lawful to change payroll to an ‘associated entity’ within the same group of companies, the training obligation must be met by the 457 sponsor.
If the 457 sponsor is no longer the payroll entity or no longer pays for training activities, it will not be possible to meet the training obligation.
This could impact on renewal of sponsorship status and on applications for ENS for existing 457 employees.

Eligibility for Permanent ENS visas

The temporary residence transition stream of the ENS visa allows for 457 holders to apply for permanent residence once they have worked for their 457 sponsor for a period of 2 years.
If the business restructures during this 2 year period, it can drastically affect eligibility for this permanent residence pathway because the employing entity would generally change.
If the new entity is part of the same group, there is a solution. If the position remains essentially the same, but the employer changes, we can still look at the ENS pathway after 2 years. However, in this case, we would need to get the employer approved as a sponsor and lodge a nomination to transfer the employee to the new entity.

Sheila Woods

Posted by: Sheila Woods

A very experienced migration agent, Sheila has always been fascinated by this field. Her university degree thesis was on Australia’s post-war immigration history (and it earned her first-class honours).

Filed in: Visas


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