Subclass 457 - Business (Long Stay) - Policy update

Date of effect: Tuesday 24 February 2009

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Benefit to Australia
Nominated Salary

The Subclass 457 visa program is primarily designed to support the Australian economy by providing a mechanism for the temporary entry to Australia of skilled persons to top-up the available domestic workforce and prolong growth in the Australian economy. A key feature of the program is a fast processing outcome when complete applications are submitted and all requirements are met.

A key element that relates to the purpose of the 457 program is that processing of applications under the program should remain cognisant of the prevailing economic conditions. In relation to sponsorship applications, decision makers need to ensure they are satisfied that the Benefit to Australia requirement is met. In relation to nominations and particularly visa applications, a key focus should be given to the nominated salary and its proximity to the average remuneration for that occupation.

Benefit to Australia

For regulation 1.20D(2)(a), decision-makers need to carefully consider the prevailing economic conditions, both globally and locally. A key factor would be that of the relevant Australian employment rate.

Australian employment rate

The prevailing Australian rate of participation in the workforce is an extremely important element when assessing all four elements. During times of growing unemployment, decision-makers should satisfy themselves that there is a benefit to Australia as opposed to a benefit to the business.

If there is information available to the department that suggests the business has been reducing its workforce, a decision-maker should ensure that they are satisfied that any sponsorship application to hire overseas skilled workers is justifiable and that the business has demonstrated a benefit to Australia should the application be approved.

A decision-maker would need to be satisfied that the approval of:

a sponsorship application, or
a visa application sponsored by a previously approved Standard Business Sponsor would directly lead to at least one of the four elements of the Benefit to Australia requirement being met (457.111(2) refers).

When the economy is buoyant with low unemployment, a vigorous assessment of the benefit to Australia requirement should be limited to applications where there are very clear inconsistencies. However, during periods where economic conditions are deteriorating and levels of unemployment rising, the need for the importation of overseas workers to fill positions in the trades and semi skilled areas diminishes. Even during periods of economic turbulence, there will remain shortages in some areas of the Australian workforce, although this is more likely in the higher skilled, professional groupings. In relation to the individual components:

(i) the creation or maintenance of employment for Australian citizens or Australian permanent residents
For regulation 1.20D(2)(a)(i), decision-makers need to be satisfied, based on submissions by the employer, that there will be net job creation or the maintenance of employment for Australian citizens or permanent residents. This would include circumstances where employment may otherwise be lost without the skills provided by the nominated employee. Employment opportunities created overseas for Australians by businesses operating internationally may also be taken into account when assessing this criterion. In situations where the sponsor (or sponsor applicant) is claiming this as a benefit to Australia and the department is aware that the sponsor has recently reduced its workforce, decision-makers would need to be satisfied that the business has demonstrated they meet this requirement.

(ii) expansion of Australian trade in goods or services
First note that, as regulation 1.20D(2)(a)(ii) is framed in terms of 'trade', it includes imports and exports. The contribution here should be to Australian trade. 'Services' includes the provision of intangible goods eg the provision of information, assistance or expertise in the form of work undertaken by a business in Australia. Examples include:

research and development
professional services (for example, financial, engineering, legal, information and communications technology, management, marketing etc.)
education
transportation
strategic personnel service.

The sponsor applicant would need to demonstrate how the sponsorship approval and the sponsorship of individuals under the approval would contribute to an expansion of Australian trade in goods and services. In times of growing unemployment, decision-makers would need to be satisfied that the skills and attributes required for this role could not be found locally. Decision makers would also need to be satisfied that there is potential for expansion of Australian trade in goods and services in the context of the global economic downturn.

(iii) the improvement of Australian business links with international markets

The prevailing economic environment is a significant factor in this as positive business confidence tends to lead to rapid economic growth and global expansion. However during periods of economic turbulence, the sponsor applicant would need to demonstrate how the sponsorship approval and the sponsorship of individuals under the approval would contribute to the improvement of business links with international markets.

The regulation 1.20D(2)(a)(iii) criterion includes those situations where the employer requires an individual with a particular knowledge or understanding of a foreign market or supplies that will contribute to the creation or enhancement of international trade links. Examples include knowledge of its customers, competitors, industries, commercial practices or law, marketing of products, growth strategies. There would generally be very few occupations that sponsors could rely on to claim this benefit, mainly limited to specialist professional occupations.

(iv) competitiveness within sectors of the Australian economy

The sponsor applicant would need to demonstrate how the sponsorship approval and the sponsorship of individuals under the approval would contribute to greater competitiveness within their sector.

For regulation 1.20D(2)(a)(iv), decision-makers should consider how each position to be nominated by the employer will contribute to the business by:

improving its operating efficiency and effectiveness
enhancing its competitiveness, either domestically or internationally
increasing its turnover, profit or efficiency and
adding new or improved products or services in the market.

In times of growing unemployment, decision-makers would need to be satisfied that the skills and attributes required for this role could not be found locally and that the individuals proposed to be sponsored demonstrably have a higher level of skill than can be sourced within Australia.

Nominated salary

There are two key elements that sponsors are required to provide information on in relation to the nominated salary:

Total remuneration package. This should involve details of the total amount the sponsor expects to pay the nominated person over a full year. This would include payments for extra duty, allowances, fringe benefits and any other items that are reportable on the PAYG Payment Summary. Some employers also include an amount for their mandatory superannuation payments, however this is not essential.
Base Salary component. This should involve the base salary component that is included in the total remuneration package. It is the base salary component that sets the basis for extra payments such as overtime, allowances, etc. The base salary may also be used by Industrial Relations agencies in determining whether employee entitlements are being correctly paid.

At nomination stage, the requirement is simply that a nominated salary is provided and that it is at least the Minimum Salary Level.

Minimum Salary Level (MSL)

The MSL is, by definition, a minimum requirement. It effectively operates as a floor salary. While there are occupation groups where the average remuneration is below the MSL, the effect of the MSL is that if employers wish to access the Subclass 457 program they must comply with the relevant MSL and pay above the average remuneration for that occupation.

Assessing remuneration levels in nominations

A key consideration is that the Subclass 457 program is a skilled worker program designed to top-up the Australian economy, not a guest worker program. The salaries paid under the program should reflect this skilled focus. Where the total remuneration package nominated by the sponsor is over AUD100 000, for occupations in ASCO 1 and ASCO 2, no further assessment will be necessary in relation to the nominated salary. For other applications, consideration should be given as to whether the nominated level of remuneration reflects the average remuneration for the occupation grouping. While the key requirement for the level of remuneration occurs at visa application stage, decision makers should obtain, where possible, information from the sponsor during the assessment of the nomination to avoid unnecessary delays at the visa processing stage while the information is being sought.

There are a number of indicators of average remuneration that would be acceptable, however in all cases the MSL applies as a minimum standard, even in situations where the expected remuneration level for the occupation is lower:

Relevant collective agreement
The most effective demonstration of the average remuneration within the sponsor’s business is where the sponsor has a registered Collective Agreement (CA) that specifies remuneration details for the actual occupation nominated. A CA that did not reflect remuneration details for the nominated salary should not be accepted as evidence of average remuneration. The employer would have to provide the agreement number which can be verified, if required, through the Workplace Authority website.
See: http://www.workplaceauthority.gov.au/

Relevant industrial award
Where an employer provides remuneration on the basis of an industrial award, it would be open to a decision maker to accept this where:

the sponsor provides evidence that every worker in their employment performing the nominated occupation is paid in accordance with the industrial award; and
the sponsor is able to provide details of the industrial award.

The employer would have to provide the code number for the relevant award, which can generally be verified, if required, through the Workplace Authority website.
See: http://www.workplaceauthority.gov.au/

Equivalent positions within the sponsoring business
In the absence of satisfactory information on a relevant CA or industrial award, sponsors may provide details on the remuneration paid for equivalent positions within the organisation.

Australian Bureau of Statistics (ABS) data
The ABS has data available based on the Employee Earnings and Hours Survey. In the absence of information from the sponsor on a relevant industrial instrument that applies to all the workers performing the nominated occupation within their business, the ABS data provides a useful benchmark for the remuneration level proposed by the sponsor against expected remuneration levels for the occupation in the wider Australian economy.

Assessing remuneration levels in visa applications
In relation to the assessment of remuneration levels, decision makers should consider at least the same elements at visa application stage as mentioned above at the nomination stage.

If a 'change of circumstances' advice is received from a sponsor after the visa has been granted that lowers the level of remuneration, consideration would need to be given as to whether the circumstances that led to the approval still exist. The same considerations should be applied in these situations, which may lead to consideration of cancellation of the visa.

Additionally there are specific visa application requirements that are relevant and must be considered:

The applicant has personal attributes and an employment background that are relevant to, and consistent with, the nature of the activity to be performed (457.223(4)(d), and
In addition to the normal assessment conducted in relation to 457.223(4)(d), a relevant guide as to whether the applicant has the skills for the nominated occupation is the level of remuneration. For example, senior management positions within Australia generally attract six digit salaries or better and visa applications received that showed a lower salary should raise concerns that:

the applicant does not possess the pre-requisite skills for the position; or
the level of remuneration is potentially designed to provide an artificial commercial benefit to the sponsor by lowering their salaries costs; or
the level of remuneration is potentially designed to avoid taxation obligations for the visa holder and/or the sponsor.

Where the level of remuneration proposed for the visa applicant is a concern, clarification should be sought from the sponsor. Additional information that could be requested include: an explanation of the basis for the salary package; details of remuneration provided to other employees of the organisation performing similar roles, details of remuneration for employees in surrounding levels within the organisations hierarchy (that is remuneration levels by organisation structure, particularly for managerial or professional positions); or a formal skills assessment could be requested, if available (also relates to 457.223(4)(e)).

The applicant demonstrates, if so required by the Minister, that he or she has the skills necessary to perform the activity (457.223(4)(e)
Factors that a decision maker should consider when determining the need for a skills assessment include, but are not limited to:

the nominated salary is significantly below the expected remuneration for the occupation grouping
the applicant is seeking an exemption from the English language requirement on salary and the expected remuneration for that occupation appears to be significantly lower than the nominated salary.

For a standard business sponsor — the Minister is satisfied that the position to be filled by the applicant has not been created only for the purposes of securing the entry of the applicant to Australia (457.223(4)(h)
This requirement is only applicable in cases where the visa applicant is outside Australia. It is important to note that decision makers should not assess this too narrowly. This requirement does not necessarily relate to the actual person that has lodged the application (or had lodged on their behalf), but to any visa applicant for the nominated position. Decision-makers must be satisfied that the position has not been created only for the purpose of securing the entry to Australia of an applicant.

Generally, officers may assume, without further enquiry, that applicants satisfy this criterion. However, there are a range of situations where further consideration is required, including, but not limited to:

the visa applicant is related to the sponsor; or
the visa applicant does not appear to have the qualifications or employment background for the nominated position: or
the position was unrelated to the activities of the business; or
the applicant is seeking an exemption from the English language requirement on salary and the expected remuneration for that occupation appears to be significantly lower than the nominated salary
the nominated salary is below the expected remuneration for the occupation and the sponsor has not sought to fill the position from within Australia before seeking to sponsor a worker from outside Australia.