Penalty Rates Decision – Key Issues for 457 Visa Holders

Requirements, compliance, visa

The Fair Work Commission announced the Penalty Rates Decision on 24 February 2017, implementing reductions to weekend and penalty rates for workers in select Hospitality and Retail sectors.

The penalty rates reductions will affect workers in the following industries:

  • Fast Food
  • General Retail
  • Hospitality
  • Pharmacy
  • Registered and Licensed Clubs
  • Restaurants

Employers should review the new Modern Awards to see how these changes will affect your staff. If your business is impacted by these new Modern Awards, then you must also check whether any changes to the rates of pay for all of your visa holders continue meet the company’s obligations as a sponsor and the employee’s visa conditions.

For example, it is a condition of the 457 visa that the visa holder be paid the guaranteed earnings stated on the visa. If an employer were to implement a wage reduction following the Penalty Rates Decision, which has the effect of reducing a 457 visa holder’s wages below the guaranteed earnings or the Temporary Skilled Migration Income Threshold (TSMIT), then this would be a breach of the sponsor’s obligations.

The Migration Act imposes substantial penalties and sanctions on employers who breach of sponsorship obligations. For sanctions to be imposed, it is sufficient that the breach has occurred, however inadvertent – there is no requirement that the breach be intentional or reckless.

In order to ensure that your business continues to meet its obligations, we recommend that you:

  • screen any pay rate changes for 457 and 400 visa holders.
  • ensure that those visa holders continue to be paid at or above the guaranteed earnings or relevant salary threshold for the particular visa.
  • obtain approval from the Department of Immigration for any reduction in earnings BEFORE the change is implemented
  • report any notifiable events to the  within 28 working days
  • conduct a self-audit to confirm that your business is compliant with its sponsorship obligations.

It is also a good time to conduct visa verification checks on your non-Australian workforce, to confirm ongoing immigration status.

How you can get help

We will continue to evaluate the changes. Contact us on for more information.


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