A year after she announced an independent review to be performed on the 457 visa subclass (see our blog from March 27, 2014), Assistant Minister for Immigration and Border Protection, Michaelia Cash, has confirmed that the majority of the conclusions of that review are supported by the government.
The review panel’s objective was to determine if the current structure of the Subclass 457 Visa scheme was working as intended, addressing skill shortages that cannot be met by the Australian labor market, while preventing misuse of the program, and proposing amendments to the program where required. The panel published a report on their findings in September 2014: ROBUST NEW FOUNDATIONS A Streamlined, Transparent and Responsive System for the 457 Programme.
The report contained 22 main recommendations and the Assistant Minister has now confirmed which of these are in principle supported. Implementation of some of the supported recommendations has already started, but full details, including exact implementation dates, are not yet available. Other changes, if not requiring further consultation with stakeholders, are expected to be rolled out later this year, most within the coming 6 months.
This Global Brief will discuss those upcoming changes with the most direct impact on employers or employees.
Currently Standard Business Sponsorships are issued for a period of 3 years, or for 12 months for start-up businesses. Based on the recommendation by the review panel these periods will be extended to 5 years and 18 months, respectively. Note that these longer SBS validities only apply to new and renewal applications; they do not apply retroactively, so any SBS already issued will remain valid for the original issuance period.
Based on the review panel’s finding that some 457 visa holders had paid their employer to continue the sponsorship of their visa, the government will make it unlawful to receive payment for sponsoring a 457 applicant. Violation will result in a strong penalty.
Currently employers need to meet one of two defined training benchmarks in order to obtain and maintain a Standard Business Sponsorship, which is required to be able to sponsor foreign nationals under the 457 visa program. The training benchmarks dictate that at least 1% of a business’ payroll is spent on training Australian nationals, or 2% is contributed to an industry training fund. Following the panel’s advice the government has announced that these training benchmarks will be replaced by an annual contribution to a training fund managed by the Department of Industry, the amount based on the number of sponsored 457 visas and the size of the sponsoring entity. Further details on how this new training benchmark will be implemented still need to be decided, based on further consultations with stakeholders.
Temporary Skilled Migration Income Threshold
In order to be eligible for sponsorship under a 457 visa, the market rate salary for a position (not the actual proposed salary to a foreign employee) needs to meet the Temporary Skilled Migration Income Threshold (TSMIT). The TSMIT is currently set at AUS$ 53,900. In line with the review panel’s recommendation, the TSMIT at this time will not be abolished, but will undergo its own review and be retained at its current level until the review has been concluded. Among other things, the review will include examination if the TSMIT is set at the appropriate level, if it should apply to all applications, or if, for example, a variable region-based level would be more appropriate.
Market Salary Rate
In addition to the position’s market rate salary to meet or be above the TSMIT, the sponsoring company needs to show that the actual salary the 457 holder will be paid is at market rate or above. However, there is an exemption to this requirement for 457 visa holders earning at least AUS$ 250,000. The review panel advised to amend this threshold to be equal to the income level above which the top marginal tax rate is paid (currently at AUS$ 180,000). The DIBP is following this recommendation and will be lowering the threshold to this amount, as it was up to July 2013.
English Language Requirement
The English language requirement to qualify for a 457 visa will be amended. Once implemented (date as of yet unknown), applicants will need to have an average test score of 5 across the 4 competencies (reading, writing, speaking and listening), with a minimum score of 4.5 on each. Currently a minimum score of 5 on each competency is required.
In addition, the exemption to the language test requirement for people having completed 5 years of continuous study in English will be amended to 5 years of cumulative study. However, the government decided not to follow the panel’s recommendation to extend the nationality based exemptions to nationals of other countries.
Lastly. additional accepted English language test providers are expected to be announced next month.
In response to the recommendation on this subject, the government has confirmed that 457 visa fees will be reviewed as part of the Joint Review of Border Fees, Charges and Taxes.
As we already reported in October (see our blog from October 22, 2014), the government has announced they will be looking at ways to streamline the application process for low risk applicants, while refocusing on compliance and monitoring of activities of higher risk applicants.
Labor Market Testing
The government has decided not to follow the review panel’s recommendation to abolish the requirement for Labor Market Testing, even though the panel concluded that “employer-conducted labor market testing is not “fully reliable”, and in the Australian context has proven ineffective”. However, the Department of Immigration and Border Protection will be looking at ways to reduce the burden to employers and red tape in the process.
ACTION ITEMS FOR EMPLOYERS
The announced changes for the most part affect the sponsoring entity, and overall can be considered positive developments. However, employers are reminded that many details of the announced changes are not yet known, including exact implementation dates.
Whether or not the proposed changes to the training expenditure requirement are positive depends very much on the company’s own training policy. Companies without a well-developed training plan for their employees might welcome the change, while other companies, who are intrinsically committed to providing training to their employees, might consider it unfair for them having to pay into a training fund in addition to the training they will continue to provide to their employees. However, since the government is planning to further consult with stakeholders, this concern might be properly addressed before implementation of the new requirement. While awaiting the outcome of the consultations, Pro-Link GLOBAL advises sponsors at this time to continue their training expenditures as before, since it is unknown yet at this time if the new training expenditure requirement, in finalized form, will only apply to new and renewal applications, or also to current SBS holders.
Pro-Link GLOBAL will monitor the implementation of all changes and will advise their clients on a case by case basis regarding how these changes will affect them.
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Caveat Lector | Warning to Reader
This is provided as informational only and does not substitute for actual legal advice based on the specific circumstances of a matter. Readers are reminded that Immigration laws are fluid and can change a moment’s notice without any warning. Please reach out to your local Pro-Link GLOBAL specialist should you require any additional clarification. This alert was prepared by Pro-Link GLOBAL’s Knowledge Management team. Pro-Link GLOBAL worked with PLG| KGNM Australia, Relocations Australia Pty Ltd to provide you this update.
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