Immigration Alert - March 2017

New measures to prevent non-compliant employers from hiring migrant workers

Combatting migrant exploitation has been a top priority for New Zealand’s Minister of Immigration, Hon. Michael Woodhouse. In fact, measures to combat migrant exploitation are the cornerstone of the Immigration Amendment Act 2015.

The recent media release, Clampdown on rogue employers, sends a strong message that migrant exploitation (e.g. paying migrants less than the minimum wage or making migrants work excessive hours) will not be tolerated in New Zealand.

Migrant workers have the same employment rights as all other workers in New Zealand. The Ministry of Business, Innovation & Employment (MBIE) recognises that migrant workers are a particularly vulnerable section of the workforce as they are less likely to be aware of their rights and entitlements than New Zealand workers. They may also be fearful of the implications for their immigration status if they make complaints.

On 23 February 2017, the Minister for Immigration and Workplace Relations and Safety, Hon. Michael Woodhouse, announced that Immigration New Zealand (INZ) will implement new measures to restrict access to migrant labour by employers who breach immigration and employment law.

With effect from 1 April 2017, employers that have incurred a penalty for breaching employment standards will be "stood down" from recruiting migrant workers for between 6 months to 2 years, depending on the severity of the breach.

This is a reminder that access to the international labour market is a privilege (not a right). Employers who abuse this privilege by exploiting migrants or failing to comply with employment law forfeit this privilege, at least for a period.

"It is simply unacceptable that those employers who exploit migrant workers are still able to recruit from the international labour market and disadvantage those employers who do the right thing," Mr Woodhouse says.

INZ and the Labour Inspectorate are working through the details required for implementation. The Labour Inspectorate will provide a list of non-compliant employers to INZ and INZ will publish guidelines and criteria to ensure that stand-down periods are applied fairly, consistently, and transparently.

Impact on employers

The new measures apply to all employers intending to recruit migrant labour including employers who:

• support work visa applications and resident visa applications based on employment
• apply for approvals in principle (AIPs) or employer accreditation, and
• participate in the Recognised Seasonal Employer (RSE) scheme.

There will be no negative impact on compliant employers. In fact, compliant employers could have a competitive advantage due to their ability to potentially hire (from a larger pool of) skilled migrant workers, creating an added incentive for employers to continue to comply with all of their employment obligations.

What kind of employment breaches could result in this stand-down period?

Employment standards-related penalties that could result in this stand-down period include:

• formal infringement notices issued by the Labour Inspectorate (following a Labour Inspectorate investigation)
• penalties issued by the Employment Relations Authority (ERA) or the Employment Court, including penalties as a result of private actions taken by employees either through the ERA or the Employment Court,
• banning orders issued by the Employment Court.

It might be comforting for employers to note that the intention here is not to restrict access to migrant labour for minor and inadvertent breaches e.g. those who have entered into an enforceable agreement with the Labour Inspectorate, those who have mostly adequate wage and time records and demonstrate a desire to comply. The threshold is set at formal infringement notices and more severe breaches.

How will the duration of the stand-down period be determined?

The stand-down period will be proportionate to the seriousness of the breach. For example, when a penalty is issued to a company:

• A 6-month stand down will apply for a penalty up to and including $1,000
• A 12-month stand-down will apply for penalties >$1,000 but <$20,000
• An 18-month stand-down will apply for penalties of >$20,000 but <$50,000
• A 24-month stand down will apply for penalties>$50,000

Impact on migrant employees

Migrant employees will not be disadvantaged from an immigration perspective as they will be able to work out the duration of their work visa. However, they will not be granted further work visas to work for a non-compliant employer who has been stood down from hiring migrant workers for as long as the stand-down period is in place. 

Naturally, there is some concern that these measures could end up disadvantaging migrant workers e.g. an employer is found to be non-compliant and the migrant worker's application for a further work visa (for the same employer) is declined through no fault of their own. In an ideal market, if there is an ongoing skill shortage requiring migrant workers in a particular area, the migrant would be able to secure employment, and potentially a visa, with a compliant employer.

However, in practice, this may not always happen and the individual will be required to leave New Zealand. This could result in a permanent skill loss to the economy as the individual may not want to return to New Zealand again due to the disruption and the costs involved with migrating.

With respect to skill shortages, the New Zealand immigration framework is designed to provide temporary work visas to those individuals who can fill short term skill shortages while providing longer term work and residence visas to individuals who can fill longer term skill shortages. If migrant workers coming to the end of their visas are unable to secure further work offers then, from an immigration perspective, they should not be able to obtain a work visa and the system has worked.

It will be interesting to see how these rules will be implemented and what the level of communication is like with current visa holders who could be impacted. We hope that affected individuals are notified in good time, giving them an opportunity to test the market and explore other work options. Furthermore, if employers are penalised close to the expiry date of an employee's visa and there was an expectation of ongoing employment, some discretion to issue short term visas enabling the migrant to remain for a period to search for employment would seem sensible.

What about local (New Zealander) workers?

Local workers are protected by the existing employment standards regulatory and penalty regime. When the breach is particularly serious, a banning order can be placed on employers and this can prevent them from employing anyone (local or otherwise) for a period of up to 10 years.

Conclusion

We await with interest further detailed operational instructions on how the stand-down periods will be enforced. We generally support the approach outlined above and consider that the goal - to incentivise compliant employers and to maintain the integrity of our immigration system - is fair and sensible.

Let’s talk

To discuss any of the above, please contact the PwC Immigration Team.