Franchisees charged more as employers under visa scheme

June 2022 – Franchisees have been singled out for special treatment under the new Accredited Employer Work Visa policy being implemented next month – and not in a good way. The new policy will see franchisee-owned businesses being charged $1980 for accreditation under the scheme, versus the $740 charged to non-franchised businesses.

The Accredited Employer Work Visa (AEWV) scheme is aimed at rebalancing New Zealand’s system for employing workers from overseas. It requires New Zealand businesses wishing to employ migrants on visas for up to three years to first register as accredited employers. Those wishing to employ immigrants under the scheme must pay at least the NZ median wage of $27.76 per hour (unless the role is on an exemption ‘green list’) and show that they cannot find suitable New Zealanders first.

The green list for high-skilled, hard-to-fill occupations includes sectors such as construction and engineering, health and social services, ICT, electronics and telecommunications; primary industries and science, agriculture and trades. There are also temporary exemptions to the median wage threshold for certain roles in the construction, infrastructure, tourism, hospitality and care workforce sectors – see list.

Employers wishing to hire people on AEWVs must apply for either Standard accreditation (for up to 5 migrant workers) or High-volume accreditation (6 or more workers). However, franchisees and employers who place migrants with controlling third parties must meet additional requirements, although there is no limit on the number of AEWV workers they can hire.

For franchisees, these additional requirements state that franchisees:

Must have been operating for at least 12 months as a franchisee; and
Must show that at least 15 percent of their workforce are New Zealanders or residents who have 30 hours of work a week

Under the policy, a business is considered a franchisee employer if:

They have purchased the right to use a pre-existing business system created by a third party;
They have a business that uses a brand, trademark, advertising, marketing channels, or a commercial symbol owned by that third party;
That third party business controls certain activities or structures within their business as set out through an agreement, operational guideline or a ‘terms and conditions’ document.

Franchisees and ‘third party’ employers are also required to seek renewal under the scheme after 12 months rather than the 24 months granted to all other employers.

It is these additional conditions that result in franchisees being charged more than twice the standard accreditation fee – a difference MBIE says is because of the higher level of assessment required, which it is obliged by law to pass on to applicants. Read more about the reasons why the MBIE considers franchisee a higher risk at https://franchise.co.nz/articles/3515-why-are-visa-changes-costing-franchisee-employers-more

Resales still an issue

At a recent Franchise Association webinar with representatives of the MBIE, franchisors raised a number of questions about how the scheme would actually work in practice. A long-standing concern about what happens to AEWV employees if a franchise changes hands during the period of their visa from an accredited franchisee to a non-accredited one has been partially answered.

The advice given at the webinar was that the new franchisee would not lose any employees they have, but would not be able to employ any new workers under the AEWV scheme until they have met the 12-month qualification period and received accreditation.

However, if a resale happens to a non-accredited franchisee, and an employee has less than 12 months remaining on their visa, then the employee will have to find another role with an accredited employer ‘or return home’.

More information from MBIE explaining why franchisee businesses are being singled out as higher-risk employers. At the webinar, the MBIE advised that, ‘The Minister will be looking closely at franchisee requirements as part of an early review.’ A review is expected ‘some time in 2023.’