A downturn and the sponsored worker: what the sponsor can do, pay cut, reduced hours, unpaid leave, stand-down, a lower nomination or redundancy, and the order to try them in

MARN 1576536

The floor that does not move with the business

Two sponsorship obligations set the floor. The sponsor must ensure that the sponsored worker's annual earnings are no less than the earnings stated in the approved nomination, for as long as the worker holds the visa on that nomination; and the sponsor must ensure that the worker's terms and conditions are no less favourable than those the sponsor provides to an equivalent Australian worker, for the life of the sponsorship. Neither obligation has a hardship exception, a downturn clause or a consent provision: the nominated earnings were the sponsor's undertaking to the Department in return for the visa, the Department relied on them in approving a position it found genuine at that salary, and the obligations were written so that a sponsored worker, who cannot easily leave, is not the first cost a struggling business cuts. The floor is the nominated figure, not the threshold, so a worker nominated above the threshold has the higher figure as the floor, and the threshold's indexation does not raise it, which the indexation guide covers from the other direction. Everything a sponsor can do in a downturn is done above that floor or by ending the position lawfully; nothing is done beneath it.

The pay cut: a breach from the first day

A reduction in the sponsored worker's salary for the same position and the same hours, to a figure below the nominated earnings, is a breach of the obligation on the day the lower pay begins, whether it is described as temporary, whether the worker signed a variation, whether the business intends to restore it, and whether the Australian colleagues were cut too; a reduction that keeps the worker above the nominated earnings but below what equivalent Australian colleagues are now paid is a breach of the equivalent-terms obligation. The worker's agreement does not cure it, because the obligation is the sponsor's to the Department and not a term the worker can waive, and a worker who agreed under the fear of losing the visa is the worker who later complains to the Department or the Fair Work Ombudsman, with the variation as the evidence. The Department finds pay cuts through the data match with the Tax Office's single touch payroll, which shows the reduction in the quarter it happened, and through the worker's complaint, and the breach is remedied by back-payment of the whole shortfall from the first day, with the sanctions guide describing what follows the finding. The underpayment guide covers the breach from the worker's side, including the protection a worker has from visa cancellation for reporting it.

Reduced hours: nearly a breach

Reduced hours at reduced pay reduce the annual earnings, and the question is simply whether the reduced earnings remain at or above the nominated figure and the threshold; for a worker nominated at a salary well above the floor there may be room to reduce hours to, say, four days and remain above it, and for a worker nominated at or near the floor there is none, and the reduction is a pay cut by another name. Where there is room, the Department has accepted a reduction in hours applied to the sponsored worker on the same terms as to equivalent Australian workers, for a period, with the position unchanged, as consistent with the obligations; a reduction applied to the sponsored worker alone, or for a period so long that the position has in substance become a part-time one, is read against the nomination of a full-time position and against the equivalent-terms obligation, and the part-time guide covers the point at which the arrangement needs a new nomination or cannot be nominated at all. The arithmetic is done before the hours are cut: the reduced annual earnings, excluding superannuation, against the nominated figure, and if they fall below it the lever is not available.

The workforce-wide reduction

A business that reduces pay or hours across its whole workforce, with the Australian employees' agreement or under an enterprise agreement variation, satisfies the equivalent-terms obligation for the sponsored worker by treating them the same, but the nominated earnings obligation still applies on top: the sponsored worker's reduced earnings must remain at or above the nominated figure. So a ten per cent reduction across the business is lawful for the sponsored worker only if their salary was more than ten per cent above the nomination, and a business that applies the reduction to everyone including a worker nominated at the floor has breached for that worker alone. The workforce-wide reduction is therefore a lever for the sponsored worker who was nominated well above the floor, and a trap for the one who was not; the business lists each sponsored worker's nominated earnings beside the proposed reduction and exempts from the reduction the workers it would push below. A sponsored worker exempted from a reduction that the colleagues took is not being treated more favourably in breach of anything; the obligations set a floor, not a ceiling, and nothing prevents paying the sponsored worker more than the colleagues.

Agreed unpaid leave

The first real lever is unpaid leave agreed between the sponsor and the worker, in writing, for a defined period. During agreed unpaid leave the employment continues: the worker remains employed in the nominated position, so condition 8607, which requires the worker to work only in the nominated occupation for the sponsor and gives them a period to find a new sponsor if the employment ends, is not engaged and the 180 days do not start; the sponsor's obligation to pay the nominated earnings is read on the position's rate, which is unchanged, rather than on a period in which by agreement no work is done and no pay is due; and the Department has treated workers on agreed unpaid leave as continuing in their sponsor's employ. The period matters: a few months is within what the Department has accepted, and a period so long that the position looks to have ceased, or a pattern of unpaid leave that amounts to a part-time arrangement, invites the question whether the nomination remains genuine and whether the sponsor is using leave to avoid the obligation. The agreement is in writing, states the period and the return date, confirms that the employment and the position continue, and is kept with the sponsorship records; the worker understands that they may not work for anyone else during the leave in the ordinary case, that the leave is unpaid, and that the leave may affect the two years of employment counted for the 186 transition stream, which the leave guide covers along with the worker who spends the leave overseas. The leave guide sets out the writing and the period.

The stand-down and its limits

The Fair Work Act lets an employer stand down an employee without pay during a period in which the employee cannot usefully be employed because of industrial action, a breakdown of machinery or equipment, or a stoppage of work for any cause for which the employer cannot reasonably be held responsible, which has covered natural disasters, government closures and the loss of a site; it does not cover a downturn in orders, the loss of a customer or a fall in revenue, which are the ordinary risks of business for which the employer is responsible, and an employer that stands a worker down for lack of work has not exercised the stand-down power but has breached the contract and, for a sponsored worker, the obligations. Where a genuine stand-down applies, to the sponsored worker as to the Australian workers with them, the employment continues, the Department has accepted the stand-down period as not ending the employment or breaching the earnings obligation during it, and the sponsor records the stand-down, its cause and its period, and reads whether a change of this kind must be notified. A stand-down is a lever for the flood, the fire and the forced closure; for the downturn it does not exist, and the business that needs it uses agreed unpaid leave instead.

A new nomination at a lower salary

A sponsor can lodge a new nomination for the worker's position at a lower salary, and if it is approved the lower figure becomes the nominated earnings from the grant of the visa on it; the limits are that the lower salary must still be at or above the Core Skills Income Threshold in force when the new nomination is lodged, which after indexation is higher than when the first was, and at or above the annual market salary rate for the position now, which the Department reads against the Australian colleagues and the market, so that the room exists only for a worker nominated well above both. The new nomination is read for genuineness, and the Department asks why the same position now pays less: a restructure that lowered the role's pay band across the workforce, evidenced, is one answer, and a business that wants to pay the same job less because it can is not. The nomination carries a new charge and a new training levy, and a new visa application where the Regulations require one, and until the new nomination is approved and the new visa granted the old nomination's earnings remain payable. It is a lever for the business that has genuinely re-graded a role; for most downturns it is not open, and the change of position guide covers when a nomination changes.

Redundancy done properly

Where the position cannot be kept, the sponsor ends it as a redundancy under the Fair Work Act and the contract, with the consultation an award or agreement requires, the notice period or payment in lieu, the redundancy pay the Act provides for the worker's service, the accrued leave, and the redundancy done for the position rather than the person, because a sponsored worker selected for redundancy because they are sponsored has an adverse action claim. The sponsorship obligations then run: the sponsor notifies the Department within 28 days of the employment ending, through the sponsor's account, which starts the worker's 180 days if the sponsor's notification is the Department's first knowledge; pays reasonable and necessary return travel costs for the worker and the family to their home country within 30 days of a written request, where the worker asks for it, which a worker who intends to find another sponsor does not; keeps the records; and recovers nothing, so that no part of the sponsorship, the nomination, the levy or the recruitment is deducted from the final pay. The resignation guide covers the notification and the travel obligation in detail, and the insolvency guide covers the business that is ending altogether.

The worker’s 180 days, and what the sponsor does for them

A redundancy does not end the worker's visa. Condition 8607 gives a 482 holder whose employment with the sponsor ends a period, 180 days from the cessation in the ordinary case and no more than a set total across the visa, in which to find a new sponsor who lodges a nomination, to apply for another visa, or to leave Australia, and in which the worker may not work for anyone else until a new nomination is approved; a worker who finds a new sponsor within the period keeps the visa and transfers to the new nomination, and a worker who does not is in breach when the period ends and the Department can cancel. The 180-day guide is the worker's reading. The sponsor's part is small and decisive: tell the worker the redundancy is coming as early as the consultation allows, so the search starts before the clock does; give a reference and a statement of the position, the salary and the dates, which the next sponsor's nomination will need; do not obstruct the new nomination or delay the notification to keep the worker in limbo; and tell the worker in writing that the return travel obligation exists if they want it, so they can choose. A sponsor that intends to re-hire when the downturn ends reads whether a period of agreed unpaid leave serves both parties better than a redundancy and a new nomination, since a worker made redundant and re-nominated by the same sponsor months later is nominated again from the start, with a new levy, and read for genuineness.

The order to try things in

The levers run in an order that costs the least and keeps the most. First, the workforce-wide measures that leave the sponsored worker above the floor, which cost nothing in compliance: a reduction or a hours cut applied to everyone, with each sponsored worker's nominated earnings checked and the ones it would push below exempted. Second, agreed unpaid leave for a defined period, for the sponsored worker who agrees to it, in writing, which keeps the position, the visa and the 186 clock largely intact and costs the sponsor the worker's absence. Third, where the role has genuinely been re-graded across the business and there is room above the threshold and the market, a new nomination at the lower salary, with its charge and levy. Fourth, where the position is gone, redundancy done properly, with the notification, the reference and the travel obligation, and the worker given the longest possible run at the 180 days. The pay cut and the unilateral hours cut are not on the list because they are breaches, and the stand-down is on it only for the stoppage the law recognises. A sponsor that works down the list and documents each step has a record that the Department reads as a sponsor managing a downturn lawfully; a sponsor that cut the pay in month one has a record of a breach.

What is said to the worker, and when

The sponsored worker is told early and in writing. The business's position, in general terms; the measures being taken across the workforce; the fact that the worker's nominated earnings cannot be reduced and will not be; the options the sponsor is asking the worker to consider, unpaid leave for a period and its consequences for pay, for working elsewhere and for the 186, with time to take advice before agreeing; and, where redundancy is coming, the consultation the award requires, the likely date, the reference and the position statement, the return travel obligation and the 180 days. Nothing is said that suggests the worker's visa depends on agreeing to a reduction, because it does not and because the suggestion is coercion, which since 2024 has been an offence in its own right where it induces a breach of a visa condition; nothing is deducted or offset; and the worker is pointed to independent advice, which the sponsor does not pay for and does not choose. A worker treated this way in a downturn stays, returns from leave, or leaves with a reference and a good word, and the Department, when it reads the file at the next nomination, reads the same.

The downturn checklist

1. List each sponsored worker’s nominated earnings and current base excluding superannuation; that is the floor for each.
2. Do not cut pay or hours below the floor or below equivalent Australian colleagues, with or without the worker’s consent.
3. Apply workforce-wide measures only to sponsored workers they leave above the floor; exempt the rest.
4. Offer agreed unpaid leave for a defined period, in writing, with the return date, and give the worker time to take advice.
5. Use a stand-down only for a stoppage the employer cannot control; a downturn is not one.
6. Consider a new nomination at a lower salary only where the threshold and market rate leave room and the re-grading is real.
7. If the position is gone, run the redundancy under the Fair Work Act, notify the Department within 28 days, offer the return travel, give the reference, and recover nothing.
8. Tell the worker early and in writing at every step, and say nothing that ties the visa to agreeing.

General information only, current at October 2026; not advice on your own case. The sponsorship obligations in Division 2.19 of the Migration Regulations 1994, including the obligations to ensure equivalent terms and conditions and annual earnings no less than nominated, to notify within 28 days and to pay return travel costs, condition 8607 in Schedule 8, the nomination criteria in regulation 2.72 and the income thresholds as indexed, the Department’s published policy on unpaid leave, reduced hours and stand-downs for sponsored workers, the stand-down, redundancy and general protections provisions of the Fair Work Act 2009, and the coercion offences introduced by the Migration Amendment (Strengthening Employer Compliance) Act 2024, all as in force at the date above; employment law advice is taken on the Fair Work aspects. Outcomes depend on the Department’s assessment of each application; no registered migration agent can guarantee a result (Code of Conduct, Migration Agents Regulations). Keshab Chapagain, MARN 1576536.