Now that employers are paying the costs of temporary work visas, to what extent can they bond their employees for the cost?

Under the new Work Visa Policy, it has been suggested that the costs of obtaining work visas will become the employer’s responsibility.  Specifically in Queenstown, employers are constantly faced with the issue of high staff turnover and if employers are to pay for migrant visas, recruitment process costs will increase dramatically.  This poses the question of whether employers are allowed to reclaim visa application costs from the employees whether deducting costs over time or by requesting an upfront payment in the form of a bond is allowed.

 

There are quite strict wage protection laws in New Zealand.  The general rule is that employers are not allowed to reclaim or deduct costs from employees’ wages.[1]  There are some permissible deductions if it is for a lawful purpose such as tax;[2] however, it is unlikely the purpose of covering visa costs is a permissible one.  Alternatively, requesting an upfront fee from an employee as a form of bond to ensure they stay with a business for a period of time without terminating would likely be considered as a form of premium.[3]  Premiums are strictly prohibited.[4]  A premium is considered a payment to acquire a job which generally relates to recruitment related costs or other expenses.[5] 

 

Visa applications will become incorporated within recruitment costs and it will be difficult to manage these expenses if your business has a high staff turnover.  Ultimately, these changes are to incentivise employers to only hire migrants as a last resort.  Unfortunately this does not assist businesses in Queenstown who heavily rely on the migrant population to fill the vacancies. 

 

Once the new policy is release Immigration New Zealand will further clarify who is responsible for particular costs and the new amounts.

 

 

[1] Wage Protection Act 1983, s 4.

[2] Ibid, s 5(1).

[3] Barmaki v Precious of France Company Ltd [1999] AT11/99, 9.

[4] Wage Protection Act 1983, 12A.

[5] Labour Inspector of the Ministry of Business, Innovation and Employment v Tech 5 Recruitment Ltd [2016] NZEmpC 167, [54].