Sponsors Eligibility

This information tells you the requirements you must meet to sponsor a skilled worker in your business under the subclass 457 visa program.

The purpose of the sponsorship stage is to confirm that the business wanting to employ the skilled worker:

• is a lawfully operating business
• has no adverse information about it or any of its directors
• meets the department's training requirements (Australian businesses only).

Australian businesses must also demonstrate their commitment to employing local labour and non-discriminatory employment practices.

As an approved sponsor, you can nominate an unlimited number of subclass 457 visa applicants (or visa holders) as long as your sponsorship or labour agreement is valid.

If you are not familiar with the subclass 457 visa process, read the following information pages to understand the sponsor application process. Lodging an incomplete or incorrect sponsorship application could lead to substantial delays.

If you are familiar with the eligibility requirements and employer obligations for the subclass 457 visa, you can go directly to Applying for this visa.

Options for becoming a sponsor

Provided you are an eligible business, there are two ways you can become an approved sponsor.

• Option 1: Apply to be a standard business sponsor
• Option 2: Negotiate a labour agreement.

Each option has requirements that a business must meet to become an approved sponsor.

Option 1: Apply to be a standard business sponsor

The standard business sponsorship arrangement is the most common way to sponsor a skilled worker using the subclass 457 visa program. You must lodge an application to become a standard business sponsor.

You can have only one standard business sponsorship approved at any given time (that is, one sponsorship approval per ABN if your business is in Australia) which is usually valid for three years. You can apply to extend your sponsorship at any time during this three-year period by lodging a variation application.

Provided you are an eligible business, the requirements for approval as a standard business sponsor differ for businesses that are outside and in Australia as follows.

Business in Australia

You must attest to your workforce record. This means you must declare you have a strong record of, or a demonstrated commitment to, both of the following:

• employing local labour
• non-discriminatory work practices.

The attestation is in your sponsorship application form. If you do not make this declaration, you will be unable to sponsor applicants for a subclass 457 visa because you do not meet the requirements to be a sponsor.

You must meet training requirements. You must either:

• meet the training benchmarks if you have traded in Australia for 12 months or more, or
• have an auditable plan to meet the training benchmarks if you have been trading in Australia for less than 12 months.

Business outside Australia

You must be seeking to employ a skilled worker to either:

• establish, or help establish, a business operation in Australia, or
• fulfil obligations for a contract in Australia.

If your business does not yet have an operating base in Australia, you are not required to satisfy the training requirement.

Option 2: Negotiate a labour agreement

A labour agreement is a formal agreement between the Australian Government and an Australian business. You will be required to enter into a labour agreement with the department if:

• you are intending to sponsor overseas workers to work in the meat industry
• you are intending to sponsor overseas workers to work in the on-hire industries
• your company has special requirements that prevent you from sponsoring skilled workers as a standard business sponsor.

Most labour agreements include a requirement to provide training to Australian employees.

When you have a labour agreement in place, you are an approved sponsor for the term of operation of the agreement. You can then nominate skilled workers from outside Australia.

To find out more about the labour agreement process, contact the department by email labour.agreement.section@immi.gov.au.

Be a lawfully operating business

A lawfully operating business

You must be lawfully operating a business to apply to be a sponsor, regardless of whether your business is in or outside Australia. To demonstrate this you must show both of the following:

• your business is legally established
• your business is actually operating.

A business that exists only on paper cannot satisfy this sponsorship requirement. If your business is new, you may still satisfy this requirement if you can provide evidence that your business is in fact operating, even if this has been for only a short period of time.

Australian businesses

Australian businesses can demonstrate that they are legally established by providing evidence of their business registration details, such as Australian Business Number (ABN), Australian Company Number (ACN), Australian Registered Body Number (ARBN) or Australian Stock Exchange (ASX) Code.

To show that your business is operating, you should provide the following documents (as relevant to your situation):

• recent financial reports (profit and loss statements for the most recently concluded financial year)
• company annual report
• business tax returns for the most recently concluded financial year
• Business Activity Statements (BAS).

New businesses can provide:

• a detailed business plan
• contract of sale relating to the purchase of the business
• lease agreement relating to business premises
• contracts to provide services
• evidence of employment of staff
• Business Activity Statements (BAS) for each complete quarter from commencement of operations to date of lodgement
• business bank statements covering the period of operation.

Businesses outside Australia

If you are operating a business outside Australia, you must show both of the following:

• the business is legally established under the laws of the country where the business operates
• the business is actively engaged in business activities.

If you don't operate in Australia, you must be able to show that you need a skilled worker to:

• establish, or help establish, a business operation on your behalf in Australia with overseas connections
• fulfil, or help in fulfil, a contractual obligation.

Examples of types of evidence which may be considered include, but are not limited to:

• a company or business expansion plan
• an agreement to enter into a joint venture between you and a party in Australia
• a contract between you and a party in Australia.

Meet training requirements

To use the 457 program to sponsor overseas workers, you must demonstrate your contribution to the training of Australian workers by providing evidence of meeting the training benchmarks. These benchmarks were introduced to ensure that the employment of workers from outside Australia is not seen as an alternative to training Australian workers.

To be approved as a standard business sponsor, you must:

• meet the training benchmarks if you have traded in Australia for 12 months or more, or
• have an auditable plan to meet the training benchmarks if you have been trading in Australia for less than 12 months.

If you negotiate a labour agreement, your business will generally have to meet a similar training requirement as part of the agreement.

What are the training benchmarks and how can you meet them?

If your business has been trading in Australia for more than 12 months, you must show you have contributed to the training of Australians.

You show this by meeting one of two benchmarks. You can choose which benchmark you will meet:

1. recent expenditure to the equivalent of at least 2 per cent of the payroll of the business, in payments allocated to an industry training fund that operates in the same industry as the business
2. recent expenditure to the equivalent of at least 1 per cent of the payroll of the business, in the provision of training to employees of the business who are Australian citizens and Australian permanent residents (your Australian employees).

For the two training benchmarks, A and B, you must also show a commitment by your business to maintain that level of expenditure in each fiscal year for the term of approval as a sponsor.

What is included in 'payroll'?

Payroll is the amount of money an employer pays in wages to their employees in the 12 months immediately before you lodge your application for sponsorship. Payroll expenditure includes any wages, remuneration, salary, commission, bonuses, allowances, superannuation contributions (mandatory or otherwise) or eligible termination payments that are defined as wages in the Act relating to payroll tax in the relevant state or territory.

Payments to contractors or sub-contractors count as payroll if the contractor provides some labour services in fulfilling the requirements of the contract. For example, if your contractor is a bricklayer or a carpenter, any payments you make to them should be included as payroll expenditure.

What is recent expenditure?

For expenditure to qualify as 'recent', it must have occurred in the 12 months immediately before you lodge your application. This applies to both benchmarks.

If you include payments to contractors in your payroll expenditure, you can also count any eligible training expenditure on them towards the benchmarks.

What is an industry training fund?

Industry training funds are statutory authorities responsible for providing funding for training of eligible workers in certain industries, such as construction and mining.

You should contribute to a fund that operates in the same industry as your business. If your industry does not have an eligible training fund, you can contribute to:

• a recognised industry body that provides training opportunities for its members, provided they reserve the funds contributed for training
• a recognised scholarship fund at a university or TAFE college that supports education or training for Australians in the same or a similar industry as your business.

Examples of ways to meet the training benchmarks

You can show you meet the training benchmarks in relation to your Australian employees by:

• paying for a formal course of study for your Australian employees
• funding a scholarship in a formal course of study approved under the Australian Qualifications Framework for your Australian employees
• employing apprentices, trainees or recent graduates on an ongoing basis in numbers proportionate to the size of the business
• employing a person who trains your Australian employees
• paying external providers to deliver training for Australian employees
• providing on-the-job training that is structured with a timeframe and clearly identified increase in the skills at each stage, and demonstrating all of the following:
  • the learning outcomes of the employee at each stage
  • how the progress of the Australian employee will be monitored and assessed
  • how the program will provide additional and enhanced skills
  • the use of qualified trainers to develop the program and set assessments
  • the number of people participating and their skill and occupation.

Expenditure that cannot count towards this benchmark includes training that is:

• delivered on-the-job, other than on the job training which meets the requirements outlined above under the heading 'expenditure that can count towards this benchmark'
• confined to only one or a few aspects of the businesses broader operations, unless the training is in the primary business activity
• only undertaken by persons who are not Australian citizens or permanent residents
• only undertaken by persons who are principals in the business or their family members
• only relating to a very low skill level having regard to the characteristic and size of the business.

Businesses that do not yet have an operating base in Australia do not need to meet the training benchmarks.

You must provide evidence of expenditure relating to the training benchmarks when you submit your sponsorship application. Not providing evidence can cause a significant delay in processing your application.

Expenditure on apprentices and trainees

Apprenticeships and traineeships are, by definition, training positions. You can count 100 per cent of the salary provided to an apprentice or trainee towards training benchmark B if:

• they are employed under a formal agreement (known as a Training Contract)
• the Training Contract has been lodged with the relevant state or territory government authority.

Expenditure on graduates who are part of a formal training program

One hundred per cent of a graduate's salary can be counted towards training benchmark B if the graduate's position is part of a formal, structured graduate program of up to two years, or if it is part of a professional year following their graduation. The occupation in which the graduate is working must be relevant or related to the subject of their recently completed qualification.

Expenditure on graduates who are not part of a formal training program

Graduate positions that are not part of a formal, structured graduate program are considered differently because they are already fully qualified for their positions and they can already perform all their duties:

• you can count only the expenditure that is for the formal training aspects of the graduate position towards training benchmark B
• you cannot count the total salary of these graduates because graduate positions are not, in themselves, considered to be wholly training positions.

A recent graduate is someone who has completed their higher education studies within the 24 months immediately before you lodge your application to become a standard business sponsor.

Training provided by a franchise head office for franchisees

For training provided to employees of franchisees to be counted towards training benchmark B, you must:

• submit quantifiable evidence of structured training provided to your employees (for example, session plans, learning objectives)
• make a commitment to continue to provide training to your employees
• quantify the actual expenditure on training.

If the franchise head office provides the training, you must provide documents that show exactly what percentage of the franchise fee is attributed to training. An estimate of the training component will not be accepted; neither will the entire franchise fee.

What needs to be included in an auditable plan?

An auditable plan must clearly identify how the applicant intends to meet one of the training benchmarks. An auditable plan must relate to the immediate future (within the next 12 months), clearly articulate the forecast payroll for the next 12 months, the intended expenditure towards training benchmark A or training benchmark B, and show a clear intent to implement the plan.

An auditable plan to meet training benchmark B must clearly articulate the type and duration of training, and the estimated cost of delivering the training.

No adverse information

The department may take into account the existence of 'adverse information' whenever it is making particular decisions about sponsors. The information on this page answers the following questions about adverse information:

• What is adverse information?
• When is adverse information relevant?
• What does the department do with adverse information?

What is adverse information?

Adverse information includes a conviction, finding of non-compliance, administrative action, investigation, legal proceedings or insolvency. Adverse information includes information that a business, or a person associated with the business:

• has become insolvent within the meaning of subsections 5(2) and (3) of the Bankruptcy Act 1966 and section 95A of the Corporations Act 2001
• in relation to a Commonwealth, state or territory law:
  • has been found guilty by a court of an offence
  • has been found to have acted in contravention of the law by a competent authority
  • has been the subject of administrative action (including being issued with a warning) by a competent authority
  • is under investigation, subject to disciplinary action or subject to legal proceedings.

When is adverse information relevant?

The adverse information test is applied whenever you or a skilled worker lodges any application in relation to a subclass 457 visa.

Adverse information is relevant to a person's suitability as an approved sponsor when it is:

• clearly relevant to the suitability of the business or person as an approved sponsor
• current (the information must relate to something that happened in the previous three years)
• known to the department.

There are limits to the extent of adverse information that is relevant to the person or business's suitability as an approved sponsor. For example, the Commonwealth, state or territory law mentioned above must relate to one or more of the following matters:

• discrimination
• immigration
• industrial relations
• occupational health and safety
• people smuggling and related offences
• slavery, sexual servitude and deceptive recruiting
• taxation
• terrorism
• trafficking in persons and debt bondage.

For example, information that a company has received a fine for having an unregistered vehicle on a public road is most unlikely to meet the relevance test. On the other hand information that the managing director of a company was being investigated for people trafficking offences would clearly be relevant.

What does the department do with adverse information?

When the department becomes aware of adverse information, it can:

• disregard it if it is reasonable to do so
• refuse an application to sponsor or nominate a skilled worker, or refuse their visa application
• cancel a sponsorship or impose administrative sanctions if the business is already an approved sponsor.