Subclass 457 – Market Salary Rates
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Background
From 14 September 2009, all sponsors of Subclass 457 visa holders (457 sponsors) will be required to adhere to new Sponsorship Obligations.
For 457 sponsors who are standard business sponsors, the obligation to ensure equivalent terms and conditions of employment will mean that they pay their overseas workers market salary rates. For current Subclass 457 visa holders, transitional arrangements will apply.
Sponsors who are parties to approved labour agreements must pay their overseas workers in accordance with the terms of the labour agreements.
The introduction of market salary rates is part of a wider package of changes to the Subclass 457 visa program designed to ensure that it continues to provide industry with needed skills, while not undermining local training and employment opportunities or exploiting overseas workers.
The move to market salary rates means that sponsored Subclass 457 visa holders will benefit from the same terms and conditions of employment as are provided to an equivalent Australian undertaking equivalent work in the same workplace at the same location.
This package of reforms will address many of the integrity issues associated with the Subclass 457 visa program highlighted by the business-led External Reference Group, the Subclass 457 Integrity Review conducted by Ms Barbara Deegan, and by the Skilled Migration Consultative Panel.
How will market salary rates be assessed?
Market salary rates arrangements mean that Subclass 457 visa holders will benefit from the same terms and conditions of employment as are provided to an equivalent Australian undertaking equivalent work in the same workplace at the same location.
Where there is an equivalent Australian in the workplace, the market salary rate will be determined by the industrial arrangements that apply to this worker.
Examples of these industrial arrangements include: Collective agreement, award, award conditions with over award salary rates, common law contract.
Where there is no Australian performing equivalent work in the same workplace, the employer may demonstrate the market rate by reference to the applicable modern award or collective agreement. In absence of an award of collective agreement the employer is to provide a range of evidence to substantiate the market salary rate. The evidence could include remuneration surveys, published earnings data or evidence of what employees are paid in similar workplaces. The employer will have to satisfy the department that the proposed terms and conditions of employment were appropriate for that location and industry.
The Temporary Skilled Migration Income Threshold – currently $45 220 per annum
The Temporary Skilled Migration Income Threshold (TSMIT) commences on 14 September 2009. The TSMIT is intended to ensure that all Subclass 457 visa holders have sufficient income so that they can independently provide for themselves in Australia.
The TSMIT will also help ensure that Subclass 457 visa holders do not impose undue costs on the Australian community or find themselves in circumstances which may put pressure on them to breach their visa conditions. This is particularly important given these workers do not have access to a range of government support available to Australian citizens and permanent residents.
Subclass 457 nominations and the TSMIT
The TSMIT has no bearing on what the Subclass 457 visa holder should be paid in the workplace. A nomination under the Subclass 457 visa program will be refused in most cases if the market salary rate for the nominated position is below this level of income.
For the purposes of a Subclass 457 nomination it is not possible for a 457 sponsor to inflate a nominated worker's proposed salary in order to pass or meet the TSMIT requirement. It is the market salary rate for the nominated position that is compared to the TSMIT. The claimed intended salary in the nomination should reflect the terms and conditions of employment.
Example: If the market salary rate for an occupation is $39 500 – that is, the market salary rate amount that is paid to equivalent Australian in the employer's workplace – then the nomination would normally be refused, as the salary is below TSMIT. Even if the sponsor decided to offer the nominee a salary of $45 220, then the nomination could still be refused, as it is the market salary rate that the department compares to TSMIT, not the actual salary proposed.
Upper salary threshold for providing evidence of market salary rates
Where the nominated salary is above $180 000 (which equates to the threshold for the top personal income tax rate), Subclass 457 nomination applications are not required to provide evidence that this salary is set according to a market salary rate.
Transitional arrangements for existing visa holders
There are some transitional arrangements for current sponsors and current visa holders. These ensure that sponsors currently paying the existing Minimum Salary Level (MSL) to Subclass 457 visa holders already in Australia have until 1 January 2010 to move to paying market salary rates.
Until this time, sponsors must continue to pay existing visa holders a salary that is not less than the MSL set out in the relevant legislative instrument. This represents a temporary continuation of the existing arrangements as they apply to existing visa holders.
Until 1 January 2010, sponsors must continue to ensure that Subclass 457 visa holders' base rate of pay is not less than the prescribed salary levels, especially where the market salary rate would otherwise be below the MSL. There are five such levels.
- $81 040 for Subclass 457 visa holders who benefit from the English language exemption
- $55 725 for Subclass 457 visa holders working in Information and Communication Technology (ICT) occupations who were granted their visa under certified regional employment arrangements
- $61 920 for all other Subclass 457 visa holders working in ICT occupations
- $40 705 for all other Subclass 457 visa holders who were granted visas under certified regional employment arrangements
- $45 220 for all other Subclass 457 visa holders.
These transitional arrangements no longer apply if an existing Subclass 457 visa holder applies for a new Subclass 457 visa, changes their employer sponsor, or is the subject of a new nomination varying their occupation. The new nomination would be considered against the new requirements, including the TSMIT.
For those whose market salary rates are lower than the present Minimum Salary levels, the transitional arrangements have a safety net requiring sponsors to continue to pay at least the minimum salary level for the duration of the existing visa.
See also:
Subclass 457 – Market Salary Rates Frequently Asked Questions – Sponsors
Subclass 457 – Market Salary Rates Frequently Asked Questions – Visa Holders