A letter arrives from a former employee's lawyer, or from the Fair Work Ombudsman. It alleges unpaid overtime across two years of employment. Most businesses treat that as a wage dispute and send it to their employment adviser. Where the employee holds a sponsored visa, it is more than a wage dispute. The same numbers sit inside a nomination the Department approved. They also sit inside the obligations the business accepted as a sponsor.
In short: an underpayment claim opens three files at once. They are the Fair Work claim, the nominated salary and the $79,423 threshold, and the worker's visa. Work on all three from the first week.
Three files, one set of numbers
We see sponsors answer the wage claim well and answer the migration question late. The two regimes read the same payslips and ask different questions. Meeting the award is not the same as meeting the nomination.
The Fair Work Act 2009 sets the floor. A modern award or enterprise agreement fixes rates, loadings, allowances and overtime. Back pay claims can reach back several years. Where employee records are missing, the employer can carry the burden of disproving the alleged hours. Accessorial liability also matters. A person knowingly involved in a contravention can be joined personally, and that includes directors and managers.
The Migration Regulations 1994 add a separate obligation. The sponsor must pay the worker the terms set out in the approved nomination. Those earnings must not fall below the nominated figure or the $79,423 threshold. The terms must also be no less favourable than an Australian doing equivalent work. Separately, the business cannot recover sponsorship costs from the worker. That covers the $330 nomination charge and the levy.
The worker's 482 rests on working for the sponsor, in the nominated occupation, on the approved terms. A pay shortfall raises questions on the worker's side as well as the employer's. The worker may need independent advice about their own position and options. We cannot act for both sides where their interests diverge. Where we see that conflict, we say so at the first meeting and refer the worker out.
Where the shortfall usually sits
In our experience the claim rarely comes from a decision to underpay. It comes from a pay structure that drifted away from the nomination. These are the six patterns we see most often.
| Pattern | Why it becomes a sponsorship problem |
|---|---|
| An annualised salary meant to absorb overtime | The set-off fails in a busy year, so actual earnings drop below the nominated figure |
| Deductions for accommodation, transport or tools | Cash earnings fall, and some deductions are not permitted at all |
| Sponsorship costs charged back to the worker | Recovering the nomination charge or the levy breaches a sponsor obligation directly |
| Salary sacrifice arrangements | The reduced cash component can fall under the nominated salary |
| Hours cut during a quiet period | The nomination was approved on full-time hours and specified earnings |
| Unpaid trials, handover or training time | That time is work, and it also sits outside the recorded roster |
Our note on the 482 salary tests sets out how we draft the pay clause so these gaps do not open.
The first thirty days
Speed helps here, and so does order. The steps below assume a claim has been received but no proceeding has started.
- Days 1 to 3 Preserve records. Suspend any routine deletion, and secure payroll exports, rosters and bank files before anything is overwritten.
- Days 4 to 10 Quantify the shortfall against the award, then separately against the nominated salary. The two figures are often different.
- Days 11 to 15 Stop the practice that caused it. A continuing shortfall is a continuing breach, and it undermines any remediation.
- Days 16 to 21 Take advice on notification. Several changes to a sponsored worker's role or pay are notifiable events with a 28 day window.
- Days 22 to 30 Decide on back payment and record it properly. Pay the arrears, keep the calculation and keep proof the worker received it.
Records are the evidence base for both files. Our note on the payroll file a sponsor keeps sets out what to hold and for how long.
Have you measured the right number?
Have you calculated the shortfall against the nominated salary, or only against the award?
The commercial exposure behind the claim
Our commercial practice is usually drawn in for the second wave of consequences. One claim from one worker rarely stays contained.
Directors come first. Accessorial liability means the board cannot treat this as a payroll matter. Where a director knew the arrangement and let it run, the claim can reach them personally. Insurance is the next question. Many management liability policies exclude wages and entitlements, so the cover people assume they have may not respond.
Then there are the contracts. A payroll bureau or labour hire agreement may carry an indemnity, or may not. Franchise and supply arrangements sometimes make a head entity responsible for a franchisee's conduct. In a sale, a buyer's due diligence will ask about wage compliance and sponsor obligations directly. An unresolved claim affects warranties, and it often affects price. We would rather quantify and remediate before a buyer finds it.
The employment documents deserve a fresh read at the same time. Our note on employment contracts for sponsored staff covers the clauses that align pay with the nomination.
A working checklist
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How we help
The migration practice reviews the nomination against actual earnings and advises on sponsor obligations and notifications. The commercial team handles the director exposure, the insurance position and the contracts behind the payroll. If a claim has landed, contact us before you answer it.
Figures verified against Home Affairs visa pricing as at 1 July 2026. Obligations come from the Fair Work Act 2009 and the Migration Regulations 1994.
Frequently asked questions
Can an underpayment affect our sponsorship approval?
It can. Paying less than the nominated salary may breach a sponsor obligation. The Department can act against an approved sponsor.
We paid the award correctly. Is that enough?
Not always. The nomination sets its own figure, and annual earnings must also clear the $79,423 threshold for the relevant stream.
Does back paying the worker fix the problem?
Back payment helps and it should be documented. It does not erase the earlier breach, so take advice on notification and on the record you keep.
Can a director be sued personally over a sponsored worker's wages?
Yes, potentially. A person knowingly involved in a contravention of the Fair Work Act can be joined to proceedings personally.
Should we review other sponsored staff after one claim?
Yes. A pay structure that failed for one worker usually applies to others. A self-directed review beats an external one.
General information as at 21 September 2026. Not legal advice. Wage claims and sponsor obligations turn on your records and your nomination, so obtain advice before responding to a claim.