Increased scrutiny on employment of foreign workers: Businesses must strengthen compliance  

The “Shadow Economy Taskforce”, made up of the Australian Taxation Office (ATO), the Fair Work Ombudsman (FWO), and the Department of Home Affairs, is investigating labour-hire providers in the agriculture industry – ensuring they are following compliance standards.

With the ATO, FWO, and Department of Home Affairs teaming up to form the Shadow Economy Taskforce, businesses in the agriculture industry are facing extra scrutiny from these regulators.

“The shadow economy involves activities such as paying workers cash-in-hand to avoid obligations, paying wages below award rates and not paying workers’ other entitlements,” said ATO Assistant Commissioner Tony Goding.

“Businesses that engage in the shadow economy are deliberately undercutting their competitors, gaining an unfair advantage in their industry and stealing from their employees’ futures.”

BDO Migration Services principal lawyer Rebecca Thomson said these recent operations underscore the need for employers to review and reassess their legal obligations and compliance frameworks to ensure that they don’t face the expensive penalties.

“While these inspections focused on systemic issues such as unpaid wages, unremitted superannuation, and unlawful visa engagements, the broader takeaway is clear: businesses are at heightened risk of facing financial penalties, reputational damage, and operational disruptions,” said Thomson.

“Recent cases, including those in South-East Queensland and Sydney, reveal the depth of non-compliance across industries, with businesses now exposed to increased scrutiny.”

“This represents a significant shift towards stricter enforcement, and businesses must be ready for greater oversight on all fronts.”

In terms of the specific compliance measures that the three regulators are really honing in on, superannuation, correct wages, and accurate contracts were top of the list:

• Super guarantee is being paid to eligible employees.

• Employers are correctly withholding tax from payments made to workers and paying those amounts to the ATO.

• Employers are paying workers their correct wages and entitlements, keeping accurate records and issuing lawful pay slips.

• Workers are being correctly engaged as employees or contractors.

• Employers and migrant workers are complying with their responsibilities and obligations under the Migration Act.

The cost of the failure to comply with these regulations can be immense for businesses, especially those in the agriculture industry. Not only is the cost steep, but the reputational damage to a business can have long-term effects – negating customer trust, employee recruitment and retention.

Thomson spoke about an area of the utmost concern for employers, which is visa compliance. According to Thomson, with the added scrutiny from regulators over unlawful visa engagements, the risks for employers who fail to verify the work rights of employees are significant.

“Employers must understand that hiring workers without the appropriate visa entitlements can lead to severe penalties and even criminal charges. Given the increasing frequency of these inspections, businesses must ensure they are fully compliant with immigration laws,” said Thomson.

“Director and executive accountability is also becoming a critical issue. More and more, directors and senior management are being held personally liable for workplace and immigration breaches.”

Overall, Thomson said the message for employers is clear and unequivocal: “Now is the time to review and strengthen compliance practices.”

“From verifying work rights to auditing payroll systems and scrutinising labour hire agreements, businesses must take proactive steps to mitigate the risks of non-compliance. Employers must recognise that compliance is not merely about ticking boxes – it is about fostering a culture that prioritises ethical business practices and respects the law,” said Thomson.

“By taking immediate action to address any compliance gaps, businesses can safeguard their future and contribute to a fairer, more transparent workplace landscape.”