global executive mobility – more than just a people issue · global executive mobility – more...

Global Executive Mobility –more than just a people issueAllan Drake-Brockman, Partner

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Perth – A mining hub

Perth is an international hub for mining, resources and energy

Perth is also becoming a magnet for mining and resource professionals

At the same time, there is an unprecedented skills shortage in the mining industry in Western Australia.

The value of Western Australia’s mining and petroleum (including LNG) industry was a staggering $107 billion in 2011

Source: WA Department of Mines and Petroleum – Latest Statistics Release

20 March 2013 2

Perth – A mining hub (cont.)

This represented a 16% increase from the previous year, with iron ore sales alone increasing 29% to be worth $62.8 billion

WA accounted for a record 46% of Australia’s merchandise exports (the next highest state was Queensland, with 20%)

Asia continues to be WA’s major export market, with China taking 43%, Japan 19% and South Korea 9%

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The record sales means WA’s mineral and petroleum industry remain globally competitive and is in a very strong position given the uncertain global economic outlook

Source: WA Department of Mines and Petroleum – Latest Statistics Release

Growth in overseas projects

Equally significant, is the unprecedented growth in recent years in overseas projects operating from Perth

Arguably as a result of the Mineral Rent Resource Tax, there is a significant incentive for Perth mining entrepreneurs to shift their focus and expertise overseas

For example, there are 146 Australian companies based in Perth with interests in African mining projects

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Increasing trend of Global Executive Mobility

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Source: http://www.immi.gov.au/media/statistics/statistical-info/visa-grants/migrant.htm

0

5

10

15

20

25

30

35

40

45

50

2007/2008 2008/2009 2009/2010 2010/2011 2011/2012

Th

ou

san

ds

Migration Program Statistics

Employer Sponsored


(cont.)

Number of 457 visas granted in 2011/12 by Major Group of the nominated occupation

Source: Department of Immigration and Citizenship 457 State/Territory summary report 2011-12, pg 8

20 March 2013 6

More than just a skills shortage

Developing leaders of the business

Attracting and retaining talent

Transferring knowledge

Dealing with emerging markets

20 March 2013 7


(cont.)

Planning for Global Executive Mobility

20 March 2013 8

Employment Law

Local, National,

International Regulation

Immigration Employee Safety & Security

Taxation

Global Executive Mobility

When do Australian employment laws apply?

Long Service Leave (note some differences between States)

Documentation

20 March 2013 9

Compliance with employment laws –

Inbound Executives

Scenario

Foreign corporation – home country employer

Foreign citizen – employee

Australian corporation – host company

Fair Work Act 2009 (Cth)

National system employer

Constitutional corporation

Foreign corporation

Foreign corporation will be required to comply with the Fair Work Act 2009 (Cth)

20 March 2013 10


Inbound Executives (cont.)

Implications?

National Employment Standards eg minimum wages, annual leave, personal leave, parental leave, requests of flexible working arrangements

Modern award coverage: Professional Employees Award 2010?

Provisions relating to termination eg unfair dismissal and adverse action

Redundancy

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Inbound Executives (cont.)

Gardner v Milka–Ware International Limited [2010] FWA 1589

Gardner commenced working for Milka in New Zealand

Gardner split his time 50/50 in Australia and New Zealand

At time of termination Mr Gardner was working in Australia

Milka objected to the unfair dismissal application

New Zealand "registered, directed and owned" company and traded in New Zealand only

Employed Mr Gardner in New Zealand and paid Mr Gardner in New Zealand dollars into Mr Gardner’s New Zealand bank account

Fair Work Australia:

"The fact that Milka was incorporated in New Zealand means that it is a foreign corporation within the meaning of s51(xx) and therefore, to the extent that it employs employees to perform work in Australia, it is a national system employer as defined in s14 of the Fair Work Act"

20 March 2013 12


Outbound Executives

Scenario

Australian corporation – home country employer

Australian citizen – employee

Foreign corporation – host company

Can the Fair Work Act 2009 (Cth) apply in this scenario?


Australian employer

Australian based employee

Significant Fair Work Act 2009 (Cth) application20 March 2013 13


Outbound Executives (cont.)


The FW Act extends to projects in the EEZ and Continental Shelf

The FW Act also potentially applies to employees of Australian employers overseas:

The FW Act applies to an Australian employer in relation to Australian Based Employees: Regulation 1.5F of the Fair Work Regulations

An Australian Based Employee is an employee who is employed by an Australian Employer (whether the employee is located in Australia or elsewhere)

An Australian Employer is a trading corporation formed within the Commonwealth of Australia

Note: The Act potentially has application to overseas projects, although at this stage this is untested

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Implications?

Minimum rates and conditions under the National Employment Standards and Modern Awards may apply to employees of Australian employers working overseas

See generally the Explanatory Memorandum to Fair Work Bill 2008 (Cth)

Provisions relating to termination

eg unfair dismissal and adverse action

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BUT beware, the devil is in the detail and the FW Act is expressed in broad terms

Ali v Industries Services Training Pty Ltd [2011] FWA 9177

IST is an Australian national system employer

Ali was employed casually by IST whilst in Pakistan whilst waiting for a 457 visa to be granted

When the 457 visa was granted he began working in for IST in Australia

Fair Work Australia:

The time worked overseas by an employee of an Australian national system employer counted towards his period of employment for that employer.

Working overseas did not break the employee's continuity of service for the purposes of attaining the 'minimum employment period' to have access to the unfair dismissal regime

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The Common Law Position (Australia):

Employer/Employee may agree by contract that a particular country’s law is “proper law".

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Under common law a “proper law” clause in an employment contract is effective and will be respected.

But it is different where legislation is concerned

Extraterritorial application of legislation has been considered in a WA context (Parker v Tranfield [2001] WASCA 233 (IAC))

Employer’s business was based in Western Australia

Employee was employed in France as an oil rig surveyor

The location of the physical activities undertaken by the employee was not

“the decisive factor”

Managerial functions relating to supply of labour services conducted out of WA office

Employment Contract negotiated in WA

Found to be a real and substantial connection to WA

The WA Industrial Relations Commission had jurisdiction to deal with unfair dismissal claim.

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Query: The identity of the Employer.

Query: Which law applies to which employees?

Query: Should the project have more favourable laws applying to some employees to attract and retain employees?

Query: The extent to which overseas projects (say in Africa) should use foreign companies to employ labour given that employment by an Australian company may result in the FW Act applying?

20 March 2013 19

Long Service Leave

Scenario

Significant service within a group of companies

Assignment to Australia

Assignment and employment ends in Australia

Long service leave principles

Service with one group company is considered service with another group company

Service is deemed to be continuous

Foreign corporations are included

Overseas service will be considered

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Long Service Leave (cont.)

International Computers (Australia) Pty Limited v Weaving

Weaving commenced with 3 years of service in Victoria

Followed by 1 year of service in Sydney

Followed by 2 years of service in South Africa

Followed by 6 years of service in the UK

Followed by 3 years of service in Sydney

Full Bench of the Industrial Relations Commission of NSW

‘We consider that it is not necessary that all service should be substantially connected with NSW, but that it is essential that, at the time the relevant event occurred, the worker’s service may be fairly said to be NSW service. There is no doubt that at the relevant time in this case the worker’s service had a substantial connection with NSW’

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Rogers v Taubmans Pty Limited

Rogers was employed by various wholly owned subsidiaries of Barlow Ltd which was incorporated in South Africa since 1984

In 1996, Barlow acquired Taubmans, an Australian company

Rogers was assigned to work for Taubmans in Sydney from 1997 to 2000, after which he returned home

Court

Not a substantial connection with NSW

Clear intention of temporary service

Rogers considered himself an ‘expat’

Job offers back in South Africa

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Question: does an employee who started employment with a company overseas before transferring to a subsidiary company in Australia receive credit for his or her overseas service for the purposes of long service leave in Australia?

This question has not been dealt with conclusively by Australian courts.

It is likely that prior overseas service will not qualify as service for the purposes of the long service leave legislation if the service does not have any substantial connection to the Australian state the employee is now working in.

If the employee works for the overseas company whilst in Australia on a 457 visa before transferring to the subsidiary company, long service leave benefits will begin to accrue when the 457 visa was granted.

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Documentation

Parties

The employee;

The home country employer; and

The host company

Options

Tripartite agreements

Assignment letter and inter company agreement

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Documentation (cont.)

Conditions precedent

Immigration related obligations

Duration of assignment

Compensation

Relocation assistance

Repatriation assistance

Tax assistance

Termination of the assignment (including possible restraints)

Position the employee will return to after repatriation

Governing law

Set-off (double entitlements)20 March 2013 25

Global employee mobility -tax issues

Global employee mobility – tax issues

Balancing Employer & Employee advantages and risks

PE risks / Treaty benefits; Residence

Withholding tax, Superannuation, FBT, Payroll tax, GST

Employee Share/Option Plans (ESOP)

LAFHA

Pre-arrival planning, bonuses, ESOP

Recent rulings, ATO activities

International competitiveness for Financial Centres/Executives, e.g. France, Netherlands

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Global employee mobility – tax issues (cont.)

Relevant for cross border employment arrangements

Very common occurrence as employees are globally mobile

e.g. where either:

employees leave Aust to work for related entity outside Aust; or

employees come to Aust to work for related Australian entity

Mindful of tax consequences for employer and employee in Australia and the other country

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Tax issues for employer:

Does the employer have an obligation to pay tax in the country of employment?

Is there a permanent establishment (PE) for the employer in the country in which the employee is based?

e.g. pursuant to the Aust/NZ DTA there may be PE where:

fixed place of business may be satisfied where foreign employees are present at a customer's premises or home office

place of management, branch, an office, a factory or a workshop

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Building site or a construction, installation or assembly project which lasts for more than 6 months

PE deemed where services performed by an individual present for more than 183 days in any 12 month period and more than 50% of gross revenues attributable to active business activities

PE deemed where substantial equipment is operated for a period exceeding 183 days in any 12 month period

PE not include maintenance of stock for the purpose of storage, display or delivery provided that it is of a preparatory or auxiliary character, etc

PE deemed where a person (other than independent person) acts on behalf of the company to substantially negotiate or conclude contracts

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May be possible to mitigate this PE risk – secondment to local subsidiary?

What are the employers' tax obligations in respect of the employee in the country of employment?

May require registrations for:

withholding tax

superannuation obligations

fringe benefits

payroll tax

workers compensation

GST implications

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Tax issues for foreign employees working in Australia:

What are the employees' tax obligations in the new country of employment?

Generally, foreign employees will only be taxed in Australia on the remuneration received in respect of services performed in Aust

However, relief may be available if there is an applicable double tax agreements

Residence status

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e.g. Aust/NZ DTA

remuneration received by a NZ employee in respect of services performed in Aust shall only be taxed in NZ (ie not in Aust) if:

NZ employee is present in Aust for a period not exceeding 183 days in any 12 month period;

remuneration is paid by or on behalf of NZ company; and

remuneration is neither borne by nor deductible in determining the profits attributable to a PE which NZ company has in Aust

May apply if employee is seconded to Aust company

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International employment law increasingly recognises the distinction between the formal employer and the economic employer.

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FORMAL EMPLOYER

Entity which has the formal legal or contractual relationship with the employee.

ECONOMIC EMPLOYER

Entity controlling the day-to-day activities of the employee and the one that receives the benefits of the employee’s work.

Source: PriceWaterhouseCoopers, ‘International Assignment Perspectives: Critical issues facing the globally mobile workforce’


Double Tax Agreements

Bilateral tax treaties provide an exemption from income tax under certain conditions (double tax agreements, or DTAs)

Australia has entered into taxation agreements with more than 40 countries.

They prevent double taxation and fiscal evasion, and foster cooperation between Australia and other countries by enforcing their respective tax laws

At this stage, the only African country with a DTA is South Africa, but this is likely to change given the growth of Australian projects in Africa.

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Employee share schemes

General rule – discount given (value of the share/right less the consideration paid) will be taxed at the time the share/right is granted

Deferral of taxing point – where:

genuine risk of forfeiture of the shares/rights at the time they are granted

employee is employed by the company/subsidiary at the time shares/rights are acquired

shares to be acquired must be ordinary shares in the employer/holding company

predominant business of the company is not the acquisition, sale or holding of shares, securities or other investments

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Employee share schemes (cont.)

immediately after employee acquires share/right – employee must not hold a beneficial interest in more than 5% of the shares in the company or be in a position to cast or to control the casting of more than 5% of the maximum number of votes that might be cast at a general meeting

for share schemes (not rights), at least 75% of long term permanent employees must be able to acquire shares

If deferral conditions are satisfied, tax is deferred until the earlier of:

ceasing of employment

7 years from the granting of shares/rights

when forfeiture conditions and restrictions on sale are lifted

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Employee share schemes (cont.)

Genuine risk of forfeiture

eg genuine performance hurdles or where the shares/rights are subject to forfeiture on termination of employment

usually no risk of forfeiture once shares/rights have vested

Reporting requirements

Employers required to provide reports to ATO by 14 August and employee by 14 July, following relevant year end

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Living Away From Home Allowance

(LAFHA) – Recent Changes

Substantial reforms to the LAFHA rules effective from 1 October 2012

Concessional treatment for LAFHA will be limited to employees (other than those working on a fly-in or fly-out basis) who:

maintain a home in Australia (at which they usually reside) for their immediate use and enjoyment at all times while required to live away from home for work;

incur expenses for accommodation and food or drink for a maximum period of 12 months while living away from home; and

have provided their employer with a declaration about living away from home.

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Living Away From Home Allowance

(LAFHA) – Recent Changes

If concession available - taxable value of the LAFHA benefit

provided to the employee will be calculated as the amount of

the fringe benefit reduced by any exempt accommodation

component and any exempt food component.

There are transitional rules which may apply to employees

employed prior to the announcement of these changes on 8

May 2012 at 7.30 pm (AEST).

20 March 2013 40

Recent ATO Rulings – ATO ID 2013/8

Background

Employee is promoted but is required to work over 3,000 km away from their residence

Under their agreement, employer can't require employee to move

Employee can't perform new role from their current residence as the employee is on call and must be there within 2 hours

Employee changes their residence to move near their new role

Employer reimburses employee for removal costs

Section 58B exempts removal costs from FBT where the employee is 'required' to change their residence to perform their duties

20 March 2013 41

Recent ATO Rulings – ATO ID 2013/8

Issue – if an employee changes their residence to be closer to where they work (even though it is not required by their employee), is the employee still 'required' to change their residence in order to perform their duties for section 58(1)(B)(iii) FBT Act?

Decision - Yes. Even though the employer does not require the employee to change their residence, it is considered that the duties of the employee's employment are such that the employee is 'required' to change their residence

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Recent ATO Rulings – TR 2013/1

TR 2013/1 Income tax: the identification of 'employer' for the purposes of the short-term visit exception under the Income from Employment Article, or its equivalent, of Australia's tax treaties.

The 'substance over form' approach

The written contract is essential for the existence of an employment relationship, however the parties cannot deem their relationship to be something it is not.

The written terms of an employment contract must be consistent with the actual behaviour of the parties for the purposes of:

establishing whether the relationship is properly one of employment; and

identifying the employer in respect of the short-term visit exception.

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Recent ATO Rulings – TR 2013/1

The key indicators for identifying the employer:

who has ultimate, or day-to-day, control over the worker?

are the services rendered by the worker an integral part of the business activities carried on by the enterprise?

the terms of engagement – Does the employee have entitlements to leave? Who has obligations to deduct PAYGinstalments, pay superannuation contributions and workers' compensation insurance?

who bears the responsibility or risk for the services of the worker?

The identity of the employer is critical to second condition of the short-term visit exception - the employer must not be a resident of the State in which the employment is exercised.

20 March 2013 44

Immigration

Do you have a Visa? - Laws of the

Land

Immigration laws vary from country to country but the common theme is the balance between global trade and commerce with the protection of national security and the local labour market.

In general all foreign nationals need a Visa to enter another country's territory. Many countries have bi-lateral agreements affording privilege, reciprocal waivers or special access rights to citizens from particular countries. Australia grants special streamlined application procedures, relaxed eligibility criteria and fast track processing to particular nations - mostly APEC, englishspeaking nations and parts of the EU.

Make sure you check the reciprocal arrangements first. They can help you choose the best option for transfer/secondment.

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Choose Wisely

In light of recent national security incidents and terrorist acts, as well as the GFC and the pressure on local labour markets, nations are now applying must stricter entry criteria and are more aggressively auditing and prosecuting unlawful employment.

Don’t risk your company's reputation by getting it wrong on Visas. You can face fines, blacklisting for future applications and damage to your company's relationship with government. In some jurisdictions there are strong criminal penalties for breaches of Visa conditions and false information.

It is often easy to find a quick Visa solution to but if the Visa is not right for the circumstances your company will pay dearly. Use of tourist visas, student visas and work and holiday visas are not a substitute for the appropriate corporate or business Visa.

Short term Visas are often the only way to get a person quickly in country. An urgent negotiation, a major deal, a desperate client. In Australia the types of Visas available for quick trips are not appropriate for long term projects or assignment. Make sure you talk to us first.

20 March 2013 47

The Department of Immigration and

Citizenship

In Australia the Department of Immigration and Citizenship is responsible for the assessment and granting of Visas. They process about 13,000 Visa applications per day. Getting in early and ensuring your documentation is accurate and complete on is the key.

DIAC also monitors compliance, especially Visa sponsors (your company) every 6 to 12 months to make sure foreign nationals are complying with their Visa conditions. Employees who breach their conditions can face severe civil and criminal penalties.

Many Visas can be applied for online (this speeds things up) but the ability to apply online depends on the citizenship of the applicant. In addition Visas granting the same rights often have different names depending on the country the applicant is from so it is vital to make sure you are applying for the right type of Visa and that you (and your family) satisfy all of the criteria.

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The Visas

Australia is facing massive skills shortages especially in the technical and trade occupations. There is great demand by business for skilled workers especially for large-scale infrastructure projects

Managers and Executives are highly sought after, especially in marketing, public relations, ICT and engineering roles

Multinationals continue to transfer skilled managers and executives to Australia to investigate new opportunities and to grow existing business in the relatively stable Australian economy.

The good news is that only about 10% of Secondees to Australia leave the company upon returning home. This is one of the lowest levels of secondee attrition in the world……..however, many choose to stay and become Permanent Residents, even Australian Citizens. (This seems to happen more for my clients with offices in sunny Queensland).

20 March 2013 49

The Visas (cont.)

Business Travel

There are up to 100 different types of Visas available in Australia but for business people there is a limited selection (Less than 5)

Electronic Travel Authority (ETA) subclass 977

A fully electronic visa (no stamp or label in your passport) to facilitate travel by citizens of countries who have been assessed (statistically) as most likely to be 'genuine business visitors' and unlikely to overstay.

An ETA is for short term business purposes only:

attending educational or business related meetings, seminars, conventions, conferences and networking;

informal studies or training.

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The Visas (cont.)

ETA - Conditions

Valid for 12 months (or expiry of Passport if earlier)

May enter Australia and stay for a maximum of 3 months at a time.

No limit on number of entries.

Does not allow work except in exceptional circumstances, if urgent or highly skilled or specialised and no more than 6 weeks.

The criteria for permission to work is extremely tough and just because you or your business provides a very specialised service or unique product offering this is not enough. The threshold is high - Think Astronaut, nobel prize winning, surgeon, super model.

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20 March 2013 52

Andorra Hong Kong Norway

Austria Ireland Portugal

Belgium Italy Republic of San Marino

Brunei Japan Singapore

Canada Liechtenstein South Korea

Denmark Luxemburg Sweden

Finland Malaysia Switzerland

France Malta Taiwan

Germany Monaco United Kingdom

Greece Netherlands United States

Vatican City

The Visas (cont.)

ETA – Eligible Countries

The Visas (cont.)

ETA – Cost

Service Charge of $20 AUD

Time – Less than an hour for online.

Same or next day for airline or travel agent.

The Visa is recorded electronically on the Department of Immigrations' Visa database so all you need to do is present your passport to Immigration upon arrival. (Always worth bringing a print out as well just in case).

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Not on the ETA list?

An ETA (Visitor) (subclass 976) visa is designed for people who are outside Australia and want to visit Australia for holidays, tourism, recreation or for informal study.

Not on the ETA List or…..

Subclass 651 eVisitor

Also an electronic Visa, same conditions and criteria as the ETA – 3 months on each occasion over 12 month period. Generally for Europeans.

No application fee and no need for a travel agent or airline. Individual or their company can apply online themselves.

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The Visas (cont.)

Andorra Ireland Republic of San Marina

Austria Iceland Romania

Belgium Italy Slovakia

Bulgaria Latvia Slovenia

Cyprus Lichenstein Spain

Czech Republic Lithuania Sweden

20 March 2013 55

eVisitor – Eligible Countries

The Visas (cont.)

Something in the longer term?

Character and security check (criminal background), health criteria and intention of visit

If you want a longer term ETA there is a type available for the life of the passport (same conditions 3 months at a time) and same conditions

Who is eligible?

What is the cost?

How long does it take to apply and obtain?

What about my Family?

Dual Nationals (This is especially important for permanent Visas)?

20 March 2013 56

The Visas (cont.)

The Visas (cont.)

>>>>>>>>> ETA APPROVAL 17FEB13/1754

FAMILY NAME Johnson................... AUSTRALIAN GOVT

GIVEN NAMES Joseph James

PASSPORT 45809234.....ISSUED GBR

EXPIRY DATE 17JAN2016

DATE OF BIRTH 12OCT1947 SEX M COB GBR

TYPE OF TRAVEL BUSINESS ETA...............................

ENTRY STATUS 977 ETA BUSINESS (SHORT)...................

AUTHORITY TO ENTER AUSTRALIA VALID TO........

17FEB2014. ..................................

PERIOD OF STAY 03 MTHS.......................

MULTIPLE ENTRY.........EMPLOYMENT PROHIBITED.

ETA APPROVED.

20 March 2013 57

Example ETA

Subclass 456 Business Short and Long Stay

Subclass 456 Business Short and Long Stay

Not eligible for ETA or eVisitor (Higher risk country)?

India, South Africa, People's Republic of China

Written application, same conditions and criteria (Cost $110)

The Stats:

1. 3.5 million visitors annually

2. 2 million ETAs and 500,000 eVisitors

3. 250,000 Business visits

20 March 2013 58

The Visas (cont.)

Subclass 457 Business (Long Stay) Visa

The 457 is the most well known or perhaps 'infamous' (and poorly understand) Visa

The most common and suitable longer term Visa for secondments and transfers (1 day to 4 years)

The 457 is about allowing foreign nationals to work in areas of genuine need (skills shortage) without adversely affecting opportunities for Australians for gainful employment. It is designed to enable employers to address labour shortages by bringing in genuinely skilled workers where they cannot find an appropriately skilled Australian.

The 457 is a temporary Visa that allows businesses to employ overseas workers for up to 4 years in skilled occupations only

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The Visas (cont.)

Subclass 457 Business (Long Stay) Visa (cont.)

Subclass 457 visa holders can:

work in Australia for a period of between one day and 4 years

bring any eligible dependants with them to Australia —dependants can work and study

enter and exit Australia as many times as they like over the Visa period.

Note: in the event of a termination or if there is a change to the duties of the employee, the employer must notify the Department of Immigration and Citizenship within 10 days of the person ceasing employment

20 March 2013 60

The Visas (cont.)


English

Most primary applicants who are sponsored by a standard business sponsor must demonstrate that their level of English proficiency is equivalent to an IELTS test score of at least 5 in each of the 4 test components of speaking, reading, writing and listening

Exemptions:

Passport holders from Canada, New Zealand, the Republic of Ireland, the United Kingdom or the United States of America

The nominated occupation is a highly skilled occupation that is on the gazetted list of English language exempt occupations available on the department’s website: www.immi.gov.au/skilled/skilled-workers/legislative-instruments/

A salary that exceeds the English language requirement exempt amount and the grant of the visa is in the interests of Australia. This amount is currently set a gross base salary of AUD $92,000

The nominated occupation does not need a level of English language proficiency for grant of registration, licence or membership, and the applicant has completed at least 5 years of continuous full time study in a secondary and/or higher education institution where instruction was conducted in English

20 March 2013 61

The Visas (cont.)


Health

High or low risk country

Tuberculosis screening and x-rays, blood tests. Conducted by authorised provider

Age

No age limit but be wary of the 50 year limit for ENS Permanent Residency Pathway

Character and Travel History – Lived in for more than 3 months over past 5 years

Insurance – Private Health Insurance.

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The Visas (cont.)

Subclass 457 Business (Long Stay) Visa (cont.) - Application stages

1. Sponsorship – Approval as a standard business sponsor

2. Position Nomination – Approval of the eligible occupation and position (conditions)

3. Visa Application – Individual applicant meets health, security, language, character requirements

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Sponsorship

Position Nomination

Visa Application

DIAC 21 Day target for

processing and decision. – My fastest

2 days, longest 3.5

months.

The Visas (cont.)

Step 1 - Sponsorship

The purpose of the sponsorship stage is to:

identify the details of the business applying for standard business sponsorship

gain attestation from the employer, where the employer is operating a business in Australia, that the business has a strong record of, or a demonstrated commitment to:

– employing local labour

– non-discriminatory employment practices

assess the employers’ training practices where they are an Australian based business.

to ensure the employer has a strong record of and commitment to training Australians. (Training Benchmark A and B) – The hidden cost.

Sponsorship is valid for 3 years and you can sponsor an unlimited number of workers – no quota.

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Sponsorship

Requirements for approval

To be approved as a standard business sponsor your business must meet the following requirements. These requirements apply to all applicants whether they are individuals ,businesses, in or outside Australia with one exception. The exception is that overseas standard business sponsors are not subject to training requirements and attestation.

you must be lawfully operating a business in or outside Australia

if you are lawfully operating a business in Australia and you have traded for 12 months or more you must meet the prescribed training benchmark

if you are lawfully operating a business in Australia and you have been trading for less than 12 months, you must have an auditable plan to meet the prescribed training benchmark

if you are lawfully operating a business in Australia, you must attest, in writing, that you have a strong record of, or a demonstrated commitment to both of the following:

– employing local labour

– non-discriminatory work practices

if you are lawfully operating a business overseas but not in Australia, you must be seeking to be approved as a standard business sponsor with the intention of sponsoring a person under the subclass 457 visa program to either: establish, or assist in establishing, on your behalf, a business operation in Australia with overseas connections, or fulfil, or assist in fulfilling, your contractual obligation.

there is no adverse information known to the department

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Obligations of Sponsors

Co-operate with inspectors

Equivalent terms and conditions of employment (except where salary in excess of $180,000 AUD). Comply with Fair Work Act.

Travel Costs to leave Australia.

Records.

Costs incurred by Commonwealth to remove unlawful non-citizen.

Notifying and keeping Department informed of prescribed events.

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Step 2 - Nominating the Position

Employer nominates a position

The approved sponsor nominates a skilled worker to fill the position. The skilled worker must be paid the appropriate market salary for the position in Australia. The position must be an eligible occupation (CSOL).

A nomination is valid for up to 12 months unless the sponsorship ceases beforehand.

Demonstrating Market Salary – Salary survey, existing employee contracts.

Compliance with Fair Work Act.

20 March 2013 67

Step 3 – Visa Application

Who can apply for a subclass 457 visa?

You can apply for a subclass 457 visa if you:

have been nominated by an employer to work in Australia under standard business sponsorship and you have been advised by that employer to apply for your visa; or

have been nominated to work in Australia on the basis of a transfer within you company and have been advised by your employer to apply for your visa; or

are a member of the family unit of a primary visa applicant who is seeking to be granted a subclass 457 visa on the basis that they meet the primary visa requirements.

Condition 8107

Condition 8107 requires that as a primary holder of a subclass 457 visa you must:

work in the occupation for which you were nominated

work for the sponsor, or an associated entity of the sponsor, who nominated the

position you are working in, and

not cease employment for a period of more than 28 consecutive days.

A Visa holder is considered to have ceased employment when either they or their employer gives notice of intention to cease employment and the date of the notice of intention to cease employment has passed. (28 days to find another Sponsor).

Condition 8501

Condition 8501 requires subclass 457 visa holders to maintain adequate arrangements for health insurance while in Australia.

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Example Visa Grant – Extract

Visa Transaction Reference Number (TRN): EG23568791

Visa Application ID: 0760454319

Client ID: 75804275026

Name of Approved Visa Holder: James Johnson

Passport Number: 4157833464

Visa validity period: 07 February 2013 - 07 February 2017

Name of Sponsor: ACME INDUSTRIES PTY LTD

Sponsorship/Agreement Application ID: 130951745

This email refers to your application for a Temporary Business Entry (Class UC) visa. You have indicated on your application that you wish to be considered for the grant of a Temporary Work (Skilled) (Subclass 457) visa

DECISION

I am pleased to advise that James Johnson has been granted a Temporary Business Entry (Class UC) Work (Skilled) (Subclass 457) visa. This visa allows you to travel to, enter and remain in Australia and is valid until the date specified above

VISA GRANT NUMBER

The visa grant number is 70545826586176. This is the unique number assigned to the visa. Please keep this visa grant number with you for the life of your visa, as you may be asked for it.

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Subclass 457 Business (Long Stay) Visa Costs

1% gross payroll on Training (demonstrated investment in training for Australians) or 2% paid to Industry training Fund (each and every year for the 4 years).

Sponsorship Application Charge $420

Nomination Charge $85

Visa Application Charge $455

Return Travel.

ENS – $$$

Documents – Financial statements, training plans, contracts, Annual Reports, employment contracts, CV's, Qualifications, Marriage Certificates, Passports……..Extensive material required, takes time to obtain – translation and certification

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The Visas (cont.)

Proposed changes to 457 Visas?

Other – Intra company transfers

Streamlined processing arrangements are in place to help executives, managers and specialists on intra-company transfer (employees of an international business transferred to Australia to work in a branch or subsidiary of the business). These arrangements also assist intra-company transfers between Asia Pacific Economic Co-operation (APEC) economies.

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Brunei India Papua New Guinea United States

Canada Japan Peru Vietnam

Chile Korea Philippines Indonesia

China Malaysia Russia

Chinese Tapei Mexico Singapore

Hong Kong New Zealand Thailand

The Visas (cont.)

Other – ENS Permanent Transfer and Residency

For this visa, you should already have:

An Australian employer

A highly skilled employee

An eligible occupation (These are different occupations from the CSOL – higher skills and more limited)

Same process – Sponsorship, Nomination and Visa

Offer of 3 years, age limit 50

Can apply for ENS after holding 457 for 2 years or can offer ENS initially

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The Visas (cont.)

The Tricky Bit – Setting it Up

Method 1: Secondment

Continues to be employed by home country except where modified by terms and duties in host country. (Intra-company transfer letter)

Host pays Parent/Home company. (Be careful re permanent establishment issues)

Most common arrangement

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Home Company or Parent

Local Company (Subsidiary/Host)

Secondee

Method 2: Transfer

Home company terminates employment

Host company employs individual on a new contract – host jurisdiction only

Be wary of entitlements and termination requirements vs benefits of fresh start and a clearer employment relationship

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Transfer through

termination and rehire

The Tricky Bit – Setting it Up (cont.)

Method 3: Dual Employment

Employee of both Companies. Executive with multiple titles and reporting responsibilities

Services benefit both entities. Tax challenges. Clear duties and time allocation required

Less common. Possibility of some favourable tax outcomes

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Employee


Method 4: Use of Global Employment Companies

Expatriate GEC

GEC as employer – seconds to Host. Uniformity of conditions for pool of expatriates

Often used to address permanent establishment. Set up in employer friendly jurisdictions

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Global Employment

Company

Secondment

Transfer and rehire


Case Study 1 – Regional Manager

Regional Asia Pacific Manager responsible for operations in multiple countries. Australian subsidiary based in Sydney.

Long Stay ETA for meetings, networking and negotiations. (Remember strict no work condition)

457 Visa if going to live and work in Australia - 38 hour week. Must have valid leave to depart. Remember 'genuine intention'.

ENS if permanently based, or back to back 457 Visa.

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Case Study 2 – Project Work

Project Work – 2 month project in Perth for new customer – specialist project manager. Company/provider has no presence in Australia.

457 Visa only.

Cannot use a 457 Visa for fly in fly out.

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Checklist

The best laid plans………….

Use our Checklist to make sure your company is prepared.

No one wants to receive a call from the Airport……."I'm stuck at Immigration."

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Final comments

Inbound executives

Outbound executives

Long service leave

Documentation

Tax issues

Visas

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QUESTIONS?