Operation Flint highlights growing payroll and immigration compliance risks for agribusiness

Payroll, tax and immigration regulators are joining forces. Is your business prepared?

Recent enforcement activity in Griffith, NSW should serve as a warning to all employers operating within the horticulture and agricultural sectors.

Under ‘Operation Flint’, the Australian Taxation Office (ATO), Fair Work Ombudsman (FWO) and Australian Border Force (ABF) conducted coordinated investigations across more than 15 farms following allegations of worker underpayment, false reporting of business income and expenses, migrant worker exploitation, and unlawful immigration assistance. The operation was conducted as part of broader Shadow Economy Taskforce activities aimed at protecting vulnerable workers and identifying non-compliant businesses.

The investigations focused on unlawful practices across the Riverina food bowl, including wage underpayments, tax and superannuation non-compliance, PAYG withholding failures, inaccurate payslips, non-lodgement and incorrect business reporting. They also examined potential Migration Act breaches, including migrant worker exploitation and unlawful immigration assistance.

While such compliance activity has historically focused on isolated employment or immigration issues, regulators are increasingly adopting a whole-of-government approach, using sophisticated data matching and information sharing arrangements to identify non-compliance across multiple regulatory frameworks. As a result, a payroll issue can quickly escalate into payroll compliance, tax, superannuation, and immigration compliance investigations.

Why the horticulture sector is under scrutiny

Agricultural and horticultural businesses commonly face a combination of risk factors that make them a focus for regulators, including:

• Reliance on seasonal and contingent labour
• Use of labour hire providers and subcontracting arrangements
• Employment of temporary visa holders
• High workforce turnover
• Complex award coverage and classification requirements
• Variable working hours driven by seasonal demand.

The Griffith investigations targeted worker underpayment, migrant worker exploitation and improper labour arrangements. Regulators have reiterated that outsourcing labour does not outsource employer responsibility. Businesses remain accountable for ensuring workers receive their lawful entitlements, regardless of labour supply arrangements.

The wage theft landscape has changed

From 1 January 2025, intentional wage theft became a federal criminal offence. Employers who deliberately underpay workers may face significant financial penalties and, in some circumstances, imprisonment.

 Common causes of underpayments identified by BDO include:

• Incorrect award interpretation or employee classification
• Inadequate payroll systems and controls
• Failure to keep pace with annual award changes
• Reliance on global payroll systems not configured for Australian requirements
• Poor record keeping
• Insufficient payroll governance and review processes.

In labour-intensive industries such as horticulture, these risks are magnified where piece rates, casual work arrangements, seasonal employment and varying award provisions apply.

Immigration compliance is not just a HR issue

The Department of Home Affairs has increased its compliance focus in sectors that engage migrant workers, with The Department of Home Affairs, the FWO and the ATO increasingly sharing data and conducting coordinated compliance activities. Businesses that employ vulnerable workers, have previously been reported, or operate in higher-risk industries may face scrutiny. 

For employers sponsoring overseas workers, compliance obligations extend well beyond ensuring visa validity.

Approved sponsors must comply with specific sponsorship obligations, including:

• Ensuring sponsored employees receive at least the Annual Market Salary Rate and guaranteed earnings specified in the nomination
• Maintaining accurate employment records
• Meeting prescribed notification obligations
• Ensuring equivalent terms and conditions of employment
• Cooperating with compliance monitoring requests from the Department. 

Where payroll issues result in underpayments of sponsored workers, employers may also expose themselves to sponsorship breaches and sanctions.

Four areas employers should review

Given the increasing collaboration between regulators, agricultural employers should consider undertaking proactive reviews of the following areas:

1. Payroll compliance review

Implement regular payroll compliance audits and testing procedures to assess employee classifications, pay rates, allowances, overtime, award coverage, and other key payroll settings. Periodic reviews can help identify and address issues early, reducing the risk of employee claims, regulatory investigations and remediation programs.

2. Immigration compliance

Implement systems to:

• Verify work rights through the Visa Entitlement Verification Online (VEVO) system
• Monitor visa expiry dates and conditions
• Maintain sponsorship compliance records
• Review sponsored worker remuneration against approved nomination details
• Conduct periodic immigration compliance audits.

3. Governance and reporting

Ensure HR, payroll, finance and operational teams are working collaboratively. Increasingly, compliance failures occur where information sits in different parts of the business and issues are not identified holistically. BDO recommends cross-functional collaboration and regular compliance reviews to mitigate risk. 

4. Labour hire and contractor arrangements

Ensure appropriate due diligence is conducted on labour suppliers and contractors. Businesses should understand the workers being supplied, their work rights and the arrangements under which they are engaged.

How BDO can help

BDO's employment taxes and migration services teams can assist with:

• Payroll and award compliance reviews
• Immigration compliance audits
• Preparation and lodgement of employer sponsored nomination and visa applications
• Sponsorship obligation reviews
• VEVO and work rights verification processes
• Remediation strategies where non-compliance is identified.

Early intervention can significantly reduce regulatory exposure and help protect your workforce, reputation and operations.