Employer Obligations to Sponsored Employees When Award Wages Increase

Introduction

Employers sponsoring overseas workers under Australia’s skilled visa programs—such as the Temporary Skill Shortage (TSS) subclass 482 visa or the Employer Nomination Scheme (ENS) subclass 186 visa—must adhere to strict obligations under immigration law, Fair Work legislation, and award conditions. One key compliance area is ensuring employee wages remain lawful and competitive, especially when award wage rates increase after a contract is signed.

This article explains your contractual and legal obligations as an employer when Fair Work Award rates exceed the base salary stated in the employment contract of a sponsored worker.

Understanding the Initial Employment Contract

When a sponsored visa application is lodged, the employment contract outlines:

• The nominated occupation
• The base salary (at or above the Temporary Skilled Migration Income Threshold (TSMIT))
• Other terms like work hours, duties, and benefits

This contract is a mandatory supporting document for the visa and must meet both immigration requirements and applicable industrial instruments (e.g., Modern Awards or Enterprise Agreements).

What Happens When Award Wages Increase?

Award Wages Are Legally Binding Minimums

If the Modern Award covering the employee’s role increases minimum wages—either via an annual Fair Work Commission wage review or industry-specific changes—employers are legally obligated to comply with the updated minimum rates, even if the employment contract states a lower salary.

Sponsorship Obligations Don’t Override Fair Work Compliance

The Department of Home Affairs requires sponsors to ensure conditions are no less favourable than for an Australian worker. If an Award increases the rate of pay, the employer must adjust the sponsored worker’s salary to align with the new Award rate.

Key Employer Obligations

1. Review Wage Compliance Annually (or Sooner)
   Employers should review sponsored employee salaries regularly, particularly:
   • After the Fair Work Commission’s annual wage review
   • If the relevant Modern Award is amended
2. Adjust Salaries to Meet or Exceed Award Minimums
   If the Award wage exceeds the base salary in the employment contract, employers must increase the employee’s pay accordingly. This applies to:
   • Hourly rates
   • Penalty rates
   • Overtime pay
3. Issue a Contract Variation Letter (If Necessary)
   While not always legally required, it is best practice to issue a written contract variation or salary amendment letter to formally document the wage increase.
4. Maintain Payroll Records
   Sponsors must keep accurate records of all wage adjustments, payslips, and correspondence. These are crucial for potential audits by:
   • The Fair Work Ombudsman (FWO)
   • The Department of Home Affairs
5. Avoid Underpayment Risks
   Failing to meet updated Award wages can result in:
   • Breach of sponsorship obligations
   • Civil penalties
   • Potential cancellation of the business’s Standard Business Sponsorship (SBS) approval

Best Practices for Compliance

• Subscribe to Fair Work Updates: Ensure your HR or payroll team is informed of Award changes.
• Consult a Registered Migration Agent or Employment Lawyer: For tailored advice, especially in complex award coverage scenarios.
• Train Payroll Staff: Ensure correct interpretation of Award entitlements for sponsored staff.

Final Thoughts

Sponsoring an overseas employee brings significant responsibilities. Employers must ensure that pay rates remain compliant not only with the immigration contract but also with Australian workplace law—including Award wage increases.

Keeping wage rates aligned with Fair Work changes is not optional—it is a legal requirement and part of maintaining good standing as a lawful sponsor under Australian migration law.

Need help ensuring compliance with award wages and sponsorship laws? Contact  us onadmin@validvisas.com.au or employment law professional today.