Business Restructures - Implications for Employer Sponsors
Friday, 04 March 2016
Many businesses often undergo a company restructure without realising the implications this can have on their business sponsorship approval and sponsored employees.
This article explains 4 important immigration implications of business restructures and how to address them.
Examples of Business Restructure
Examples of a business restructure 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
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 - even appointment of new directors
Failure to meet this obligation can result in fines, sponsorship bars and cancellations. If you are reliant on 457 workers, the impact 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 and 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 (8107)
. This condition requires employees to not change employer whilst holding a 457 visa.
We would in general need to get the new operating entity approved as a business sponsor and lodge nominations to transfer any 457 staff to the new entity.
If you change the entity which is paying 457 employees this could have a serious impact on your ability to meet 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 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, this 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 new employer approved as a sponsor and lodge a nomination to transfer the employee to the new entity.
Where possible, Acacia recommends you plan ahead of a company restructure to map the best way forward for your business and sponsored employees. Please contact Josie Marr on 02 9230 0888 if you would like assistance.