In short: Sponsorship obligations bind the company, but directors carry the duty to make sure the company meets them. A board should know every sponsored salary still clears $79,423. It should also know that no cost is recovered from staff and changes are notified.
The company signs, the board answers
A sponsorship approval names a company. The obligations that follow it bind that company. Yet we rarely see a sponsorship problem that did not start with a decision in a boardroom.
A cost-cutting round trims a sponsored salary. A restructure moves staff to a new entity. A manager agrees to a training repayment clause. Each is an ordinary business call. Each can also put the sponsorship at risk.
Directors do not become sponsors personally. However, their general duties under the Corporations Act 2001 reach every obligation the company takes on. Sponsorship is simply one more obligation with real consequences.
Where the general duties meet sponsorship
| Duty | Source | What it looks like for a sponsor |
|---|---|---|
| Care and diligence | Corporations Act, section 180 | Understanding the obligations well enough to ask whether the company is meeting them |
| Good faith, proper purpose | Corporations Act, section 181 | Not structuring pay or duties to sidestep a nomination |
| No improper use of position | Corporations Act, section 182 | Not pressuring a visa holder by pointing to their dependence on the job |
| Accessorial liability | Fair Work Act 2009, section 550 | Personal exposure where a director is knowingly involved in an underpayment |
The last row is the one directors feel. An underpayment claim against a sponsor is rarely just a wage dispute. It can also be a breach of the obligation to pay the nominated salary. A director knowingly involved in the contravention can face personal proceedings.
Adverse information follows the person
When a business applies for sponsorship, the Department asks about adverse information. That question covers the business and the people who run it. Workplace breaches, unpaid tax debts and earlier sponsorship sanctions all count.
This is where the commercial and migration risks join up. A director who sat on the board of a sanctioned sponsor carries that history. A later company they run may face closer scrutiny when it applies. We check director histories before a first application for exactly this reason.
Has any current director been involved with a company that breached workplace, tax or sponsorship obligations?
What each director should be able to answer
You sign the contracts and approve the pay changes. You should know which staff are sponsored, their nominated occupations and their nominated salaries. Any change to duties, hours or pay for those staff should cross your desk before it takes effect. You should also know who lodges notifications, and by when.
You are not running payroll, but care and diligence still applies. Ask for a sponsorship item in the compliance report. Ask whether any salary sits near the threshold after indexation. Ask whether any monitoring request has arrived. A board that never asks cannot rely on silence as comfort.
Some founders hold a temporary visa while directing a company that sponsors others. Your own visa conditions and your duties as a director run side by side. Decisions about staff you sponsor must still stand on their own merits. We separate those questions in the company documents, so each decision can be explained on its own.
The board-level controls we recommend
Most sponsorship breaches we review were not deliberate. They came from a decision made without the obligation in view. Board controls close that gap. Your browser will remember what you tick.
The minutes matter more than they look. If a decision is later questioned, that record matters. It shows the board asked the right question.
The decisions that need a pause
Four board decisions carry sponsorship consequences often enough to warrant a standing rule. Each should go to the migration team before the resolution, not after it.
- Pay freezes and cuts A sponsored salary must not fall below the nominated amount, or below $79,423 for the Core Skills stream.
- Role redesign Duties drifting outside the nominated occupation can breach the obligation to keep the worker in that role.
- Redundancies A genuine redundancy is possible, but notification timing is short. Our note on making a sponsored worker redundant covers both regimes.
- Restructures and sales Moving staff to a new entity usually means that entity needs its own approval and fresh nominations at $330 each.
What if the company becomes insolvent?
Insolvency adds a second layer of director duties, including the duty to prevent insolvent trading. Sponsorship obligations do not pause while the company is in difficulty. Wages for sponsored staff still need to meet the nominated salary. If an administrator or liquidator is appointed, the notification obligation still has to be met. We advise directors early in that position, because the commercial and migration choices narrow quickly.
How we work with boards
Our commercial practice advises directors on their duties and on board process. The migration team holds the sponsorship file. We brief boards together, because the risk sits between the two.
A board review usually starts with the sponsored staff register and the contracts behind it. The obligations themselves are set out in our note on becoming a standard business sponsor. If your board has not looked at sponsorship recently, speak to us before the next pay review.
Frequently asked questions
Are directors personally bound by sponsorship obligations?
No. The obligations bind the approved sponsor, which is the company. Directors carry general duties to make sure the company meets its obligations.
Can a director be personally liable for underpaying a sponsored worker?
Yes, potentially. Under the Fair Work Act, a person knowingly involved in a contravention can face proceedings personally.
Does a director's past matter to a new sponsorship application?
It can. The Department considers adverse information about the business and the people who run it, including earlier breaches.
What should a non-executive director ask about sponsorship?
Ask which staff are sponsored and whether salaries still clear the threshold. Then ask who handles notifications and whether monitoring has started.
Should sponsorship appear in board minutes?
Yes, for any restructure, sale, redundancy or pay change. A record that the board considered the risk supports care and diligence.
Figures verified against Home Affairs visa pricing as at 1 July 2026. Director duties are drawn from the Corporations Act 2001 and the Fair Work Act 2009.
General information as at 17 September 2026. Not legal advice. Director and sponsorship obligations turn on your own facts, so obtain advice before a board decision affects sponsored staff.