Bob Kinnaird. Foreign worker exploitation.

To reduce foreign worker exploitation, enforce employer sanctions laws

2015 produced a never-ending stream of stories of exploited foreign workers on all kinds of temporary visas. They include overseas students, working holiday and 457 ‘skilled’ visa-holders. Nearly all temporary visas and some permanent residence visas are implicated.

A Senate committee on Australia’s temporary work visa programs is due to report by end- February 2016.   Changes are needed in many policies and practices.

In an earlier blog (9/10/15), I argued for changes in ‘government international education and visa policies that are feeding the growth in Australia of a vast underclass of temporary visa holders desperate for work and ripe for exploitation’.

This blog shows that strengthened employer sanctions provisions of the Migration Act 1958 put in place by the former Labor government are not being adequately enforced by the Coalition government. These came into effect in June 2013. They would deter much exploitation of visa workers if more effectively enforced.

Background

Fairfax investigative journalist Adele Ferguson exposed the staggering scale of wage fraud at 7-11 convenience stores. 7-11 has now agreed to fund up to $25 million of wage fraud claims. If the claims exceed $25 million, franchisees will pay the next $5 million with anything more split equally between franchisees and 7-11 head office.

The 7-11 case and many others involve allegations that overseas students have to work beyond the maximum hours permitted by their visa conditions (40 hours/fortnight during term, unrestricted hours outside term). Their employers then use this visa non-compliance against the students, threatening to report them to Immigration and have their visas cancelled unless they accept even more substandard wages and conditions. The practice has been going on for years.

Nearly all these employers engaging overseas students to work in breach of their visa terms are committing an offence under the employer sanctions provisions. Strangely there has been little or no public discussion of these and other relevant laws that can and should be used to penalise these employers and deter the practice. This includes the Senate committee on temporary visas, whose October 2015 interim report did not mention these laws.

As the 2010 Howells review of employer sanctions laws said, the absence of an effective deterrent to these practices has serious consequences. They include ‘the vulnerability of such workers to severe exploitation, the distortion of the labour market and the tendency for their presence to be associated with cash industries and abuses of Australia’s taxation, employment and welfare laws.’

Targeting the employers who exploit foreign workers is central to effective deterrence.

Every Coalition Immigration Minister repeats a version of the mantra that their government is as tough on employers exploiting visa workers as it is on people-smugglers. This includes the current Immigration Minister Dutton:

“Australians can be assured that we are committed to being as tough on those who seek to rort our migration programmes as we are on those who arrive illegally by boat. We will devote the same resolve, resources and commitment that is necessary to get the job done,” Mr Dutton said. 

“Under the Coalition Government, immigration compliance teams are not just targeting illegal workers but also employers who are doing the wrong thing. The Government will actively pursue substantial fines to deter further illegal work practices.” (Minister Dutton media release, ‘17 illegal workers detained in Woody Point Brisbane’, 29 April 2015).

But the evidence shows the Coalition government is nowhere near as ‘tough’ on these employers. Contrary to Mr Dutton’s claims, it is not pursuing the ‘substantial fines’ against them available under Labor’s strengthened employer sanctions provisions.

The key provisions created a new ‘no-fault’ or strict liability civil offence for employers and others (eg labour hire companies) of allowing or referring ‘illegal workers’ to work. ‘Illegal workers’ here means foreign nationals working in breach of their visa conditions, or those with no valid visa (‘unlawful non-citizens’, mainly visa ‘overstayers’).

There is no need to prove that a business knew of (or was reckless as to) the person’s visa status. The provisions also establish liability for principal contractors and others who ‘participate in an arrangement’ but are not themselves the direct employers of the illegal workers. Criminal offences and penalties including prison time were also maintained for more serious breaches.

The 2013 legislation provides very substantial maximum penalties for the ‘no-fault’ civil offence of employing illegal workers – $16,200 for ‘individuals’ (eg a sole trader) and $81,000 for companies. Note that these penalties apply for each illegal worker. So a company found with say three ‘illegal workers’ is strictly liable for a maximum penalty of $243,000.

The provisions also allow for lesser sanctions: an’ Infringement Notice’ fine – maximum $3,240 fine for sole traders and $16,200 for companies, and ‘Illegal Worker Warning Notices’ (carrying no fine at all).

Enforcement under the Coalition

The Coalition’s enforcement of the employer sanctions provisions can only be described as derisory. In 2014-15 there were:

  • No prosecutions at all for the civil or criminal offences, and hence no penalties.
  • Only 8 ‘infringement notices issued to non-compliant employers, with fines totalling $62,730’ – less than the maximum civil penalty for a single company with one illegal worker ($81,000), and an average of only $7,840 per employer.
  • 655 ‘Illegal Worker Warning Notices’ (carrying no fine) issued ‘to educate businesses about their responsibilities when hiring non-citizens and (warn) them of the consequences of continued non-compliance with legislation.’ Of these, 210 notices to businesses related to visa holders working in breach of their visa conditions.

(This information is from the DIBP Annual report, 2014-15 and DIBP email to author, December 2015)

This is an incredibly low level of serious activity when considered against the scale of the practice of employers allowing or referring illegal workers to work, and the government’s claim that it is seriously committed to ‘pursuing substantial fines’ to deter the practice.

There is no official data on the total number of ‘illegal workers’ or the number of employers that they work for. A December 2015 Auditor-General’s report concluded that even today ‘the extent of non-compliance with other visa conditions, for example visa holders working illegally, is not well understood’ by DIBP.

My best estimate is that there were at least 140,000 ‘illegal workers’ in Australia, and around 49,000 or so employers of these ‘illegal workers’ in 2014-15.[i] This means there are more ‘illegal workers’ than 457 primary visa-holders (104,000), and more employers of ‘illegal workers’ than of 457s (36,500).

Even the 655 employers served with ‘Illegal Worker Warning Notices’ – the least effective sanction available – represent a mere 1.3 per cent of the estimated 49,000 or so employers of ‘illegal workers’ in 2014-15.

The Coalition’s ‘softly-softly’ approach to employer sanctions enforcement is not surprising. The LNP vehemently opposed Labor’s 2013 employer sanctions bill from Opposition.

The Coalition’s real intentions are revealed in the 2015-16 Budget papers. They are merely to ‘promote voluntary compliance by Australian employers with employer sanctions legislation through the provision of targeted education and engagement activities’, where ‘voluntary compliance is maintained as the primary approach to resolving breaches’.

The Coalition government also appears less than enthusiastic about enforcing other Labor legislation relevant to the more extreme forms of employer abuse of temporary visa workers.

Labor also introduced new laws in 2013 creating new criminal offences of ‘forced labour’ and ‘servitude’ (outside the sex industry) under the Commonwealth Criminal Code Act 1995, alongside the existing ‘sexual servitude’ offence.

As at end-2015, there have been no prosecutions under the new ‘forced labour’ provisions and only one has commenced under the ‘servitude’ provisions. The ‘servitude’ case involves allegations that 24 young Taiwanese on working holiday visas were locked in rented Brisbane houses by Asian crime gangs and forced to participate in phone scams extorting Chinese nationals.

Conclusion

This week Senator Cash,the Employment Minister told The Australian that ‘when there is an effective regulator who enforces laws with meaningful penalties,people will think twice before breaking the law’.

The government should acknowledge that its ‘voluntary compliance’ approach to the employer sanctions provisions has not been an effective deterrent against employers engaging ‘illegal workers’.

It should now give priority to serious enforcement action under the civil penalty provisions. Any future claims that its actions are deterring the practice of employers engaging ‘illegal workers’ should be backed up with evidence, the collection of which is long overdue.

Bob Kinnaird is Research Associate with The Australian Population Research Institute and was National Research Director CFMEU National Office 2009-14.

[i] The 2010 Howells review of the employer sanctions regime found there could be over 100,000 ‘illegal workers’ in Australia, not including overseas students working more than their permitted weekly hours. It did not estimate the number of employers of these workers. My employer estimate assumes the same employer profile as for 457 visa-holders – an average of around 3 per employer – and is conservative.

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