Employment contracts and Visa extensions – Implications for employers managing Visa-dependent workers
In a significant decision handed down by the Fair Work Commission (FWC), the case of Misheck Muza v Costco Wholesale Australia Pty Ltd (2025fwc252.pdf) has clarified the obligations of employers when managing employees whose right to work in Australia is visa-dependent.
The FWC upheld Costco’s decision to summarily dismiss Mr Muza after his visa expired, reinforcing the legal and operational risks employers face when continuing employment without valid work rights
Background
Mr Muza had been employed by Costco since August 2021 in various roles. His employment was terminated on 30 August 2024, after he failed to provide evidence of a renewed visa despite multiple requests. Costco had proactively monitored visa expiry dates and issued a show cause notice when it became clear Mr Muza no longer held a valid visa. Although he later obtained a new visa, it was after the expiry and after working unlawfully for two days.
FWC Findings
The Commission found that:
- Mr Muza’s inaction in renewing his visa in a timely manner was the primary cause of the termination.
- Costco acted reasonably and lawfully in terminating the employment to avoid breaching the Migration Act 1958 (Cth).
- Continuing employment without valid work rights would have breached the employment contract, rendering it void.
Employment considerations
This case reinforces the principle that employers must not employ individuals without valid work rights, regardless of the employee’s tenure or performance.
The FWC confirmed that:
- Summary dismissal is justified where an employee lacks the legal capacity to work.
- Employers are not required to wait indefinitely for visa renewal outcomes.
- The employment contract is automatically frustrated when legal work rights lapse.
Immigration considerations
Under the Migration Act 1958, employers face significant penalties for employing non-citizens without valid visas. This case highlights:
- The importance of proactive visa monitoring.
- The need for clear contractual clauses requiring employees to maintain valid work rights.
- The legal risk of assuming visa renewals will be automatic or retrospective.
8 Key Lessons for Employers
1. Implement a Visa monitoring system
Track visa expiry dates and set reminders for visa renewals well in advance to avoid compliance breaches.
2. Include clear contractual clauses
Employment contracts should explicitly state that initial employment and ongoing employment is conditional on holding and maintaining valid work rights and clearly highlight the ramifications if the employer does not do this.
3. Act Promptly on Visa Expiry
Do not delay action when an employee’s visa expires. Immediate steps are necessary to mitigate legal risk.
4. Procedural fairness
Regardless of the fact that there may be a valid reason to terminate an individual’s employment, the provision of procedural fairness is vital. Provide employees with an opportunity to explain or rectify their situation through such things as a show cause process, give them the opportunity to have a support person and give genuine consideration to their response before making a final decision.
5. Document all communication
Maintain a clear record of all correspondence regarding visa status and employment decisions.
6. Train people leaders
Ensure staff understand the legal implications of employing visa holders and how to identify and manage related risks.
7. Consult advisers early in the process
Seek legal advice when dealing with complex visa or employment scenarios.
8. Avoid Assumptions About Visa Renewals
Require formal documentation and do not rely on verbal assurances or expectations of automatic renewals.
This case serves as a timely reminder for employers to align their HR practices with both employment and immigration requirements. Proactive compliance not only protects the business but also ensures fair and lawful treatment of employees.
Connect with us
For more information or support with your employment and immigration needs, please contact our Mapien team (hello@mapien.com.au) and we will be in touch within 24 hours.