Initially portrayed as ‘housekeeping’ amendments, the recent changes impose new administrative and cost burdens on businesses who wish to sponsor temporary skilled labour. Businesses will need to plan, and be more disciplined about record keeping to minimize the impact of these changes.
The minimum income threshold for sponsoring on a 457 has increased 4.8% to $53,900m from $51,400. This change is retrospective, and will affect all nominations currently lodged but not decided. Importantly, this is not simply a minimum salary level for 457 holders. What a 457 applicant is paid must also be a market salary – the same terms and conditions as you would pay an Australian to do that job. It’s important to understand how you justify the market salary for a particular position, and make sure you understand whether 457 holders are being paid correctly.
Application and other fees have increased, with application fees now $900 (up from $455) and nomination fees up to $330 (from $85). There are also new fees for each dependant, and extra fees where a second temporary visa application is made onshore.
At the same time, the government has strengthened provisions to ensure that DIAC charges are paid by the sponsor, rather than the applicant. These changes mean that (particularly for families), 457 application fees are now much closer to permanent residency fees, so options for putting people straight to PR should be considered.
As discussed extensively in the media, new requirements for labour market testing have been introduced, which will require businesses to advertise positions before they can be filled by a 457 holder. These changes have not come into effect yet, but will be implemented by the end of the year, if not sooner. Business will need to record their job advertising and their basis for rejecting candidates.
In the past, sponsors had to show they met the training threshold, by spending 1% of total payroll training Australians, in the 12 months before being approved as sponsors. Alternatively, they can contribute 2% to an industry training fund. They also undertook to continue to meet the threshold while they remain a sponsor. This commitment has now been upgraded to an enforceable obligation. Employers should make sure they are tracking all training expenditure that might count towards to the threshold, to be able to answer any enquiries from DIAC.
English testing has been expanded to all occupations (rather than just trades). That will probably delay applications as applicants book and undertake their tests, so you should take that timeframe into account as part of your planning. This change will also be retrospectively applied to applications lodged but not yet decided.
A new ‘genuineness’ test has been introduced, to ensure that the position associated with the nominated occupation is genuinely required to address skills shortages in Australia. The difficulty with this subjective provision will be applying it properly. Addressing this requirement will probably mean more paperwork is required at the nomination stage.
Sponsors will now need to justify the number of nominations permitted for each sponsorship granted after 1 July. This is a return to the previous system, where there were a limited number of ‘slots’ available under each sponsorship. Start-up businesses will have their sponsorship limited to 12 months and all subclass 457 visa holders sponsored by start-up businesses are limited to an initial 12 month visa. Businesses will need to be able to track their 457 usage accurately to know how many available positions they have at any particular time.
One change which had broad support has been to extend the time period for Subclass 457 holders to find a new sponsor or to depart Australia, if they cease employment with their sponsoring employer. This period of grace is now 90 days, up from 28.
The changes mean that businesses sponsoring skilled people on 457s will need to keep better records for their sponsored staff, and for training for all staff. They will want to plan recruitment better, and also consider whether, in the circumstances, it is better to put someone on a permanent visa. Good planning and record keeping will help minimize the impact of these significant changes. New legislation permits Fair Work Australia inspectors to monitor compliance for 457 visa holders, and good record keeping will minimise your compliance burden.
This bulletin is intended to describe the most important changes in plain English. It is general advice, and does not take into account specific circumstances.