The “go-to” guide for hospitality asset transactions: immigration essentials
Written by Corina Chen
When buying or selling a hospitality asset, buyers and sellers must navigate a web of legal and regulatory requirements. One critical area often overlooked is immigration law. Understanding these considerations can ensure compliance and smooth operations during the acquisition or sale process.
This “go-to” guide explores how immigration law intersects with hospitality transactions, with the aim of providing a resource for those navigating the complexities of hospitality asset transactions.
- Overview of immigration law considerations
Due to workforce shortages, the hospitality sector relies on a diverse workforce that includes visa holders, from temporary skilled workers to international students and backpackers.
Below are the primary immigration law considerations when it comes to workforce management:
- Understanding employer sponsorship obligations
Whether you are acquiring or selling a venue that employs visa holders, it is vital to understand your obligations, including:
- For sellers: If the establishment employs staff on employer-sponsored visas, then sellers must ensure they comply with sponsorship obligations up until the sale is finalised. This includes record-keeping, providing accurate employee details, and notifying the Department of Home Affairs (DHA) of any changes to the employment of sponsored employees.
- For buyers: Buyers should conduct due diligence to identify whether the business employs visa holders and understand whether they will inherit any associated sponsorship obligations (to ensure the business remains compliant with any such obligations), if existing sponsorship arrangements need to be transferred, or if they need to apply to become an approved sponsor to continue employing certain visa holders.
- Workforce composition and visa status
The visa status of employees must be reviewed during the due diligence phase, including:
- Visa verification: Buyers need to conduct visa verification checks to confirm the working rights of any employees who hold a visa. This important step provides buyers with an opportunity to ensure they’re aware of (and properly understand) any work limitations of the visaed employees, and mitigates the risk associated with employing individuals without suitable work rights, rostering employees to work beyond the hours allowed by their visa, or unknowingly requiring visa holders to work outside of alignment with their approved roles.
- Transfer of sponsored employees: Employees on sponsored visas may need to transfer their sponsorship to the new owner of the business. This process requires careful planning and communication to avoid disruption to operations or the visa holder’s employment status.
- Future recruitment needs
Buyers should consider their future workforce strategy and whether they will benefit from skilled migration programs, as planning can help in securing the talent necessary for the business to operate successfully.
- Penalties for non-compliance
Non-compliance with immigration laws can result in significant penalties, including fines and restrictions on hiring visa holders in the future, so it’s in the interests of both buyers and sellers to prioritise compliance as part of their transaction checklist.
- Importance for hospitality asset transactions
Immigration considerations shouldn’t be addressed in isolation from the broader transaction. Where a hospitality business relies on visa holders, the workforce can have a direct bearing on transaction timing, due diligence, business continuity, and the transition to new ownership.
Here’s what you need to know to ensure a smooth transition:
- Transaction timing and business continuity
If there are any sponsored employees essential to maintaining operations (e.g. chefs and managers), then immigration planning should form part of the transaction timeline. Depending on the structure of the transaction and the employees’ visa circumstances, steps may need to be taken before or around settlement to minimise disruption and enable sponsored employees to continue working for the business under its new ownership.
- Warranties and disclosures
The immigration compliance history of the business may also be relevant to the transaction. Sellers may be required to provide information or warranties concerning employees’ lawful work rights, compliance with sponsorship obligations, and any pending sponsorship, nomination or visa applications with the DHA.
For buyers, understanding these matters before settlement can help identify potential compliance risks and any action that may be required following completion.
- Employees and the transition to new ownership
The treatment of employees is an important consideration in any hospitality transaction. Where the workforce includes visa holders, additional consideration should be given to whether changes to the employing entity, role, location or other employment arrangements could affect their visa position.
This is particularly important where the business relies on sponsored employees whose continued employment is critical to daily operations.
- Due diligence and workforce risk
For many hospitality businesses, an experienced and stable workforce contributes significantly to operational continuity and goodwill. Where key employees hold temporary visas, due diligence should extend beyond simply confirming their current work rights.
Buyers should understand the composition of the workforce, identify employees whose ongoing employment depends on sponsorship arrangements, and consider whether any immigration steps will be required to retain those employees after settlement.
Considering these issues alongside the broader commercial, licensing and employment aspects of the transaction allows potential workforce risks to be identified and addressed before they affect the acquisition or ongoing operation of the venue.
- What’s next?
Buying or selling a hospitality venue rarely involves a single area of law. Successful transactions often require coordinated advice across immigration, licensing, employment, and commercial matters to manage risk and support a smooth transition.
While immigration law is often viewed as a standalone HR issue, in hospitality transactions it can influence workforce continuity, due diligence, contractual risk allocation, regulatory compliance and ultimately the commercial value of the business itself. Addressing immigration considerations alongside licensing, employment, and commercial issues allows buyers and sellers to approach the transaction holistically rather than resolving workforce issues after settlement.
By being aware of immigration law considerations, you will be empowered to make informed decisions when working with your legal experts on the hospitality asset transaction.
If you are involved in or planning a hospitality asset transaction, then please reach out to the team at Mullins Lawyers for tailored legal advice – we are here to guide you every step of the way to ensure a seamless and compliant process.