Passing Visa Sponsorship Costs to Sponsored Workers: A Complete Legal Guide for Employers

Employers dealing with employer-sponsored visas must understand the strict sponsorship cost rules under Australian migration law. Employers are required to meet their sponsorship obligations to ensure the visa holders' employment conditions remain lawful. Non-compliance with the immigration law can expose a sponsoring employer to potential penalties from the Department of Home Affairs.

Why Sponsorship Cost Compliance Matters

Since employer-sponsored pathways have significant costs, employers should follow sponsorship rules to avoid civil, administrative, and criminal penalties and ensure complete adherence to Australian law.

This article outlines cost-related guidelines and the legal framework governing employer obligations, with a focus on compliant and non-compliant practices under Australian migration law.

Legal Framework Governing Sponsorship Costs in Australia

The legal framework governs the sponsorship charges and helps every approved sponsor meet ongoing sponsorship obligations set under the federal laws. These laws also outline what employers can and cannot charge visa holders, ensuring they fairly meet all legal obligations of sponsorship.

Migration Act 1958 (Cth) — Section 245AR

Under Section 245AR, it is prohibited to ask for, request, or offer benefits in return for support in sponsorship and nomination applications or any sponsorship-related event. Criminal and civil penalties apply to breaches.

Migration Regulations 1994 — Regulation 2.87A

Regulation 2.87A states that employers cannot pass certain costs to a sponsored employee. This applies to overseas workers, sponsored visa holders, and workers seeking permanent residency.

Fair Work Act 2009 — Section 324

Section 324 restricts wage deductions from sponsored employees unless they are authorised in writing or for the employee’s benefit.

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Costs Employers Cannot Recover From Sponsored Workers

Approved sponsors cannot recover, transfer, or attempt to recover fees involved in sponsorship and nomination applications, which include the SAF Levy, nomination fee, and professional service fees from the sponsored visa holders. These rules apply regardless of the job role or employment contracts.

Skilling Australians Fund (SAF) Levy

The Skilling Australians Fund Levy is a mandatory charge that employers must pay. Recovering or attempting to recover the SAF levy from a sponsored employee through indirect means is unlawful.

Legal/Migration Professional Fees Related to Sponsorship or Nomination

Employers must pay all professional service fees associated with sponsorship and nomination applications and cannot seek reimbursement from the visa holder.

Recruitment and Advertising Costs

Any charges typically paid for advertising, candidate sourcing, or recruiting a sponsored employee are the employer’s responsibility.

Compliance and Monitoring Costs

Ongoing compliance obligations, internal audits, record-keeping, and documentation for the Department of Home Affairs are the employer’s responsibility. Employers must not charge foreign workers to meet sponsorship obligations.

Forms of unlawful recovery include:

• Wage deductions
• Reimbursement demands
• Side agreements or “clawback clauses”
• Payments via third-party intermediaries

These actions, regardless of the visa applicant’s consent, are unlawful and violate the employment law and the conditions under the immigration rules and standard business sponsorship.

Costs Visa Applicants Are Allowed to Pay

While employers must cover the costs incurred in sponsorship, applicants can pay the visa application fee (from AU$4,910.00) and other charges.

Permitted Payments

• Visa application fees
• Medical tests and police checks
• English language tests
• Migration agent fees only for the visa application (not sponsorship/nomination)

Penalties for Breaching Sponsorship Cost Rules

Failing to meet employer obligations can result in costly consequences, such as cancellation of standard business sponsorship or an Enforceable Undertaking between the sponsor and the Department of Home Affairs/Australian Border Force.

Civil Penalties

Civil penalties imposed by the courts, up to AU$396,000 for a corporation and $79,200 for an individual, for each failure.

Administrative Actions

• Cancellation of sponsorship approval
• Sponsorship bar
• Publication on the Register of Sanctioned Sponsors

Criminal Penalties for Serious Breaches

Any form of deliberate action taken to recover government fees, charges for sponsorship applications, or nomination fees may lead to prosecution or a term of imprisonment of up to 2 years and/or a fine of up to 360 penalty units, which is currently valued at AU$118,800.

Monitoring and Enforcement by Authorities

The Department of Home Affairs, the Australian Border Force, and other national agencies conduct regular compliance checks to ensure sponsors adhere to their ongoing sponsorship obligations.

How Compliance Is Checked

• Requests for records
• Site visits (announced or unannounced)
• Data sharing with the Fair Work Ombudsman (FWO), ATO, and others

Duration of Monitoring

Sponsors are subject to monitoring for compliance with the sponsor obligations during the tenure and for up to five years after the sponsorship approval ends.

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Book a Consultation‍

If you are interested in getting more information about a visa, get in touch with Australian Migration Lawyers for a consultation.

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Common Misconceptions About Sponsorship Cost Recovery

Employers often misunderstand the costs that can be recovered from visa holders, which leads to unlawful practices.

“Clawback Agreements” and Consent Are Still Unlawful

Clawback agreements, where visa holders repay their employers the sponsorship costs, are unlawful under ‌Australian law, even with the visa holders' consent. It is the employer’s responsibility to cover all business-related expenses.

Using Third-Party Recruitment Firms Does Not Remove Employer Liability

Even when using third-party recruitment agencies, the approved sponsor must still meet the sponsorship requirements and legal obligations. Engaging in discriminatory recruitment practices can lead to non-compliance and negatively impact future requests for employer-sponsored visas.

Best Practice Recommendations for Employers

Employers hiring skilled workers under a business visa, temporary visa, or permanent visa must meet sponsorship obligations and follow these steps to remain fully compliant with the labour agreement.

Practical Steps to Ensure Compliance

• Pay all sponsorship-related costs directly from business accounts
• Maintain complete payment records
• Ensure the employment package complies with the immigration law
• Conduct regular compliance checks
• Maintain proper documentation of business turnover and sponsorship events
• Train HR and finance staff
• Seek professional legal advice before implementing cost-sharing policies

Need Advice on Sponsorship Compliance?

Businesses that sponsor multiple employees often require guidance on sponsorship compliance, especially with navigating the costs involved, complex legalities, and the employer nomination scheme. The team at Australian Migration Lawyers can provide advice regarding compliance with Australian immigration rules and sponsorship obligations.

Frequently Asked Questions

Can an Employer Legally Ask a Sponsored Worker to Repay Sponsorship or Nomination Costs?

No, under the Migration Regulations, an employer cannot ask the sponsored employee to repay the sponsorship or nomination costs.

Is It Unlawful to Deduct the Skilling Australians Fund (SAF) Levy From an Employee’s Wages?

Yes, it is unlawful to deduct the SAF levy from sponsored employees’ wages. The employer must pay these fees in full on their own.

Can Visa Applicants Agree in Writing to Reimburse Sponsorship Costs If They Choose to?

Applicants may cover their own visa application costs and third-party expenses for police checks, English language tests, document translation, health insurance, and medical examinations. Sponsorship and nomination costs cannot be transferred to applicants, regardless of any written agreement.

What Sponsorship-Related Costs Must the Employer Pay and Cannot Recover From the Visa Holder?

• Sponsorship and nomination costs
• Skilling Australians Fund (SAF) levy
• Recruitment and advertising costs
• Professional/legal fees

What Visa-Related Costs Are Applicants Allowed to Pay for Themselves?

Applicants can cover visa application fees and third-party employee costs.

What Are the Penalties for Employers Who Try to Recover Sponsorship Costs?

Employers can face severe penalties for recovering sponsorship costs unlawfully, which include civil fines, criminal charges, and loss of sponsorship approval.

What Should a Sponsored Worker Do If They Are Pressured to Repay Visa Sponsorship Costs?

If a sponsored worker is pressured to repay visa sponsorship costs, they may report the incident to the Department of Home Affairs or the FWO.