While employer-sponsored visas are often treated as a standalone migration issue, the legal reality is far more complex. For Australian businesses, especially those scaling quickly or navigating structural change, sponsoring overseas workers engages a range of commercial law considerations that go beyond immigration compliance.
From how employment contracts are drafted, to how sponsorship is handled during business sales and restructures, these arrangements can carry other legal and financial consequences if not planned for properly.
Below are key legal issues businesses should consider as part of a well-rounded sponsorship strategy.
Employment Contracts
For sponsored employees, their visa is usually tied to their specific employer and nominated occupation. This introduces unique contractual risks that need to be addressed upfront.
Employment contracts should clearly outline:
- What happens if the visa is refused, cancelled, or expires.
- Whether the role is conditional on the employee holding a valid visa.
- The employee’s notification obligations if their visa status and/or work rights change.
- How termination provisions interact with ongoing sponsorship obligations.
Where businesses wish to recover costs for recruitment, relocation, or training, clauses must comply with sponsorship obligations (e.g. the prohibition on passing on certain costs to visa holders) and remain enforceable under the Fair Work Act 2009.
Another layer of complexity arises where Department of Home Affairs (DHA) requirements conflict with other areas of law. For example, while a sponsor may be offering a four-year term for a temporary sponsored visa, the Fair Work Act limits the use of fixed-term contracts to two years, including extensions. Employment contracts require careful legal drafting and a practical understanding of how migration obligations align with evolving employment legislation.
Sponsorship Obligations and Corporate Liability
Sponsorship approval carries a range of ongoing obligations: paying market salary rates, maintaining accurate records, notifying the DHA of employment changes, and ensuring terms and conditions are equivalent to those provided to Australian employees.
Failure to meet these obligations can attract civil penalties, or the DHA may serve an infringement notice on an approved work sponsor. In some cases, issues of director liability and corporate governance may also arise – particularly if sponsorship breaches reflect broader internal compliance failures.
For businesses operating under a group structure, it is crucial to clarify which legal entity is most suitable as the sponsor. Where the sponsored employee’s services are utilised across different related entities, clear intercompany agreements and correct sponsorship structuring are essential to ensure compliance.
In 2024, the Australian Government amended the Migration Act 1958 to strengthen protections against migrant worker exploitation and enhance employer compliance. Under the new provisions, employers found to be in breach of sponsorship obligations may be barred from sponsoring further overseas workers for a specified period. Sanctioned sponsors are also published on a publicly accessible register, meaning any employer whose sponsorship has been cancelled or who has been barred is now visible for public view.
Business Sales and Restructures
Where a business is being sold, restructured or merged, the treatment of sponsored employees should be factored into early legal planning. Key considerations include:
- Whether the purchaser seeks to become a Standard Business Sponsorship to transfer any nominated workers.
- The process for transferring nominations and associated costs.
- Timing of compliance notifications to the DHA.
- When a sponsor’s obligations legally cease upon selling the business.
It is also important to address sponsorship and visa-related risks in transaction documents. Share sale and asset sale agreements should include appropriate warranties, indemnities and disclosures regarding visa holders, especially where those employees are integral to business continuity or fulfil contract obligations with third parties.
Dependency on Sponsored Workers and Business Risk
While a high proportion of sponsored workers may prompt scrutiny from the DHA, this should not discourage businesses from pursuing sponsorship where it is essential to business operations. In fact, strategically engaging skilled overseas workers can strengthen project delivery capacity, fill persistent local shortages, allow for training opportunities for the local labour market, and position businesses for growth.
From a commercial law perspective, it is important to:
- Identify whether client or supplier agreements rely on particular skilled personnel.
- Ensure continuity planning is in place should a visa outcome be delayed or declined.
- Clearly communicate employment arrangements with third parties if their work is being delivered by visa holders.
Far from being a liability, sponsored employees are often critical contributors to innovation, service delivery and long-term business performance – especially in sectors such as construction, technology, professional services, and healthcare.
Final Notes
Employer sponsorship isn’t just about meeting migration criteria. It engages various legal obligations that touch on contracts, corporate governance, workforce planning, and business continuity.
Taking a commercially informed approach to sponsorship, from initial structuring through to handling corporate transactions, can prevent downstream disputes and ensure the business is protected at every stage.
At Stone Group Lawyers, our migration and commercial teams work together to provide fully integrated advice. Whether you are sponsoring your first employee or managing a complex restructure involving multiple visa holders, we can guide you through the legal and commercial landscape with confidence.