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Changes to the Subclass 457 program

Employer Sponsored Workers

The purpose of the Temporary Work (Skilled) (subclass 457) visa program is to allow employers to fill short to medium term skill shortages by recruiting qualified workers from outside of Australia when they cannot find the same skilled workers locally. 

Mid-way through 2012, the department identified that the subclass 457 program was growing at a record rate and that a significant component of this growth has been in industries and geographical regions that do not appear to be experiencing skills shortages. While most employers are using the subclass 457 appropriately, there is a concern that certain employers in some industries are sourcing their skilled labour needs outside of Australia without first checking the availability of labour locally. While not unlawful, these actions are not in line with the principles of the subclass 457 program.

A number of improvements to the subclass 457 program were introduced on 1 July 2013. These improvements help to ensure that the intent of the subclass 457 program respected by users of the program.

The reforms to the subclass 457 visa program improve the integrity of the program without adversely impacting on businesses who are using the program to fill genuine skill shortages.

A summary of the changes to the Temporary Work (Skilled) (subclass 457) visa program is outlined below.

Ongoing requirement to train Australian citizens and permanent resident workers

Before 1 July 2013 - Businesses wishing to become standard business sponsors had to meet the training requirement by providing evidence of:

  • recent payments by the business to an industry training fund to a value of at least 2 per cent of the payroll, or
  • recent expenditure equivalent to 1 per cent of the payroll in the provision of training to Australian and permanent resident employees in the business. 

The benchmarks required the business to commit to maintaining that level of expenditure in each fiscal year, for their term of approval as a sponsor.

After 1 July 2013 - Meeting the training benchmarks is now an ongoing and enforceable requirement rather than a commitment.  In addition, sponsors will be obligated to maintain records relating to training. This includes start-up businesses (i.e. businesses trading for less than 12 months) who initially provide an auditable training plan. Previous sponsors must also demonstrate that they continued to meet the benchmarks during their sponsorship term when applying for a new sponsorship or varying the terms of their current sponsorship.

Demonstrating a genuine skill need

Before 1 July 2013 - It was not possible to refuse a subclass 457 nomination even where the position was being presented as more skilled than it was in order to be eligible for the program.

After 1 July 2013 - A delegate must now be satisfied that the nominated position is genuine and may refuse the application if:

  • the tasks of the nominated occupation do not correspond to the tasks of an eligible occupation, or
  • the position associated with nominated occupation is not genuine.

Indicating how many workers an employer will sponsor

Before 1 July 2013 - Sponsors were able to sponsor and nominate unlimited subclass 457 visa holders.

After 1 July 2013 - Employers are restricted to sponsoring the number of subclass 457 workers that was approved in their sponsorship application over the term of their sponsorship. They can vary this number by applying for a variation to their sponsorship agreement. A sponsorship agreement will cease either at either when the number of nominations is reached or the time period expires (1, 3 or 6 years). Accredited sponsors will not be required to nominate the number of workers they intend to sponsor.

Skills assessments for generalist occupations

Before 1 July 2013 - Low skilled occupations not eligible to use the program could access it by being presented as a Program and Project Administrator or as a Specialist Manager not elsewhere classified because these are defined in general terms in the Australian and New Zealand Standard Classification of Occupations (ANZSCO).

After 1 July 2013 - The assessment of generalist occupations has now been strengthened. Program and Project Administrator and Specialist Manager not elsewhere classified applicants must undertake a formal skills assessment.

Market salary rate assessment expanded to regional locality

Before 1 July 2013 - A sponsor had to engage subclass 457 visa holders on equivalent terms and conditions that were, or would be, provided to an Australian working in an equivalent role or position.

Where there was an Australian worker employed by the sponsor in an equivalent role, the market salary rate for the nominated position was based on the terms and conditions of that worker.

Where there was no equivalent Australian worker, the employer was required to satisfy the Department that the terms and conditions of employment were appropriate for that position in that location and industry. 

After 1 July 2013 - The market salary rate provisions have now been expanded to apply beyond the particular workplace to that workplace's regional locality.

Where there is no equivalent Australian worker, the employer is still required to satisfy the Department that the terms and conditions of employment are appropriate for that location and industry.

Market salary rate assessment exemption lifted to $250 000

Before 1 July 2013 - The market salary assessment exemption threshold was $180 000.

After 1 July 2013 - The market salary assessment exemption threshold has been increased to $250 000.

Employment must consist of a direct ‘employee-employer' relationship

Before 1 July 2013 - Sponsors were obligated to ensure that the primary sponsored person was engaged only as an 'employee' of the sponsor or an associated entity of the sponsor.

After 1 July 2013 - Employees must now be employed by their sponsor in a direct 'employee-employer' relationship. This prohibits on-hire arrangements that fall outside approved Labour Agreements and prevents sponsors from engaging visa holders under arrangements that resemble independent contracting arrangements.

Sponsors will now be required to keep a record of written contracts of employment with primary sponsored persons.

Sponsors are obligated to pay certain costs

Before 1 July 2013 - Sponsors were obligated not to recover certain costs from a primary or a secondary sponsored person.

After 1 July 2013 - Sponsors will be required to pay certain costs associated with becoming a sponsor and not pass these costs, in any form, onto a sponsored person.

English language requirement must be met when new nomination is lodged

Before 1 July 2013 - To be granted a subclass 457 visa an applicant had to demonstrate that they meet the English language requirement or that they were exempt. One of the exemptions was for applicants whose sponsor indicated that their annual earnings were going to be above a specified threshold (the English Language Salary Exemption Threshold – ELSET). If, after the grant of the visa, that sponsor made a new nomination with a salary lower than the ELSET, the visa holder was not required to demonstrate that they met the English requirement.

After 1 July 2013 - If a subclass 457 visa holder who was previously exempt from the English language requirement because their annual earnings were above the specified threshold, is renominated at a salary level lower than the ELSET, the visa holder will be required to demonstrate that they either meet the English language requirement or that they are otherwise exempt.

Occupation based exemptions to the English language requirement are removed

Before 1 July 2013 - Most occupations were exempt from the English language requirement with the exception of Technicians and Trade Workers.

After 1 July 2013 - Occupation based exemptions have now been removed. Other exemptions will remain unchanged including:

  • a nominated salary that is over the ELSET amount
  • a passport from Canada, United States of American , United Kingdom, Republic of Ireland and New Zealand, or
  • have completed at least 5 consecutive years of full-time study in a secondary and/or higher education institution where the instruction was delivered in English.

Definition of English language now aligned with the Employer Nomination Scheme

Before 1 July 2013 - The subclass 457 program had its own definition of the English language requirement.

After 1 July 2013 - The English language requirement is now aligned with the Employer Nomination Scheme. Occupational English Test score of 'B' in each of the four test components will now also be accepted and the IELTS or OET must have been completed within 3 years prior to the date an application is lodged.

Restricted terms of sponsorship for start-up businesses

Before 1 July 2013 - The terms of sponsorship for start-up businesses were the same as standard business sponsors.     

After 1 July 2013 - The term of sponsorship approval for start-up businesses has been amended to an initial 12 months and all subclass 457 visa holders sponsored by start-up businesses are limited to an initial 12 month visa.

Mandatory electronic lodgement

Before 1 July 2013 - It was possible for all subclass 457 sponsorship, nomination and visa applications to be lodged using paper forms and via the online facility. Sponsorship, nomination and visa applications associated with overseas business sponsors were processed at the nearest overseas post.

After 1 July 2013 - All subclass 457 sponsorship, nomination and visa applications must be lodged using the online facility. Sponsorship, nomination and visa applications associated with overseas business sponsors will now be processed in Australia.

Requiring visa holders to begin work within 90 days of arriving in Australia

Before 1 July 2013 – There was no explicit requirement for a visa holder to commence work with their sponsor. This made it difficult for the Department to cancel visas when work had never commenced.

After 1 July 2013 - It is now a part of condition 8107 that a Subclass 457 visa holder must commence work with their sponsor within 90 days of arriving in Australia.

Requiring mandatory registration, licensing or membership

Before 1 July 2013 – For certain occupations, visa holders are required to obtain any mandatory registration, licence or membership in the state or territory where their position will be located. There was no restriction to a person being granted a Subclass 457 visa prior to obtaining the necessary registration, licence or membership. However, if a visa holder failed to obtain the mandatory registration, licence or membership, it was very difficult for the Department to take action.

After 1 July 2013 - The condition will also be extended to require Subclass 457 visa holders to have sought to obtain within 28 days any mandatory registration, licence or membership for their occupation in the state or territory they are employed.

Extend the period in which a visa holder can seek new sponsored employment

Before 1 July 2013 – Condition 8107 is a visa condition that requires Subclass 457 visa holders only work for their sponsoring employer, in the occupation or position in relation to which the visa was granted; and if the holder ceases employment — the period during which the holder ceases employment must not exceed 28 consecutive days. This time period is to allow Subclass 457 holders to find a new sponsor or to depart Australia. If a visa holder does not comply with their conditions they are liable to have their visa cancelled.

After 1 July 2013 - The time period for Subclass 457 holders to find a new sponsor or to depart Australia, if they cease employment with their sponsoring employer, is extended to 90 consecutive days.

Enshrining the kinds of sponsorship obligations which must be prescribed in the Migration Regulations

Before 1 July 2013 - The sponsorship obligations which a person who is or was an approved sponsor must satisfy are prescribed by the Migration Regulations. There is a note in the Migration Act which lists some examples of sponsorship obligations which might be prescribed by the Migration Regulations. However, there is no guarantee that there will be sponsorship obligations of a particular kind in the Migration Regulations.

After 1 July 2013 - The Migration Act will require the Minister to take all reasonable steps to ensure that certain sponsorship obligations are prescribed by the Migration Regulations; thereby enshrining in the Migration Act the kinds of sponsorship obligations which must be made in the Migration Regulations.

Enhancing the enforcement framework to include enforceable undertakings between the Minister and a sponsor and former approved sponsor

Before 1 July 2013 – The enforcement framework relating to sponsorship of non-citizens seeking entry to Australia for work purposes, includes administrative sanctions (to bar a sponsor or cancel the approval of a person as a sponsor), an infringement notice scheme and a civil penalty scheme.

After 1 July 2013 - Enforceable undertakings will be an additional enforcement option where there has been a failure by an approved sponsor or former approved sponsor to satisfy an applicable sponsorship obligation. An enforceable undertaking is a court-enforceable promise made between the Minister and a sponsor. This option might avoid substantial legal costs associated with litigation in the courts. They are designed to be flexible and secure compensation to restore harm resulting from contraventions of the obligation (eg payment to a worker to compensate for underpayments).

Fair Work Inspectors as Inspectors under the Migration Act and exercise of powers for Migration Act purposes

Before 1 July 2013 – The department currently has 32 active DIAC Inspectors appointed under the Migration Act to monitor compliance with sponsorship obligations.

After 1 July 2013 - The Government's capacity to monitor and investigate compliance with the temporary sponsored work visa program will be expanded by enabling Fair Work Inspectors to exercise powers for the purposes of the Migration Act. Fair Work Inspectors will investigate compliance with the sponsorship obligations to ensure workers are working in their nominated occupation and being paid market salary rates.

The change will also extend powers to both DIAC and Fair Work inspectors to investigate a sponsor's use of other temporary visas.
See: Temporary Work (Skilled) (subclass 457) visa