Australia: Significant changes to the subclass 457 visa scheme as of 1 July 2013

Important changes to the 457 program have come into effect as of 1 July 2013 and every employer sponsoring employees should be aware of these reforms.

The impact of the changes which are outlined below, are significant and will change the way businesses have used this program in the past.

For applications lodged prior to 1 July 2013 that have not been decided upon:

Nomination applications that have been lodged prior to the new changes to legislation, but have not yet been decided upon, will not be exempt from having to satisfy some of the new requirements as outlined below.

Significant increases to application fees as of the 1 July 2013

Additional charges apply for each dependent family member; $900 for a spouse or dependent over 18 and $225 for any children under 18.

Where applying onshore, a surcharge of $700 may apply for each applicant. Whether this applies depends on which visa is held and whether that visa was applied for onshore.

Standard Business Sponsorship

Sponsorship Cap

Previously, Standard Business Sponsors were able to sponsor an unlimited number of employees for 457 visas.

From 1 July, sponsors are required to justify the number of workers to be sponsored for 457 visas as part of the sponsorship approval process. The Department of Immigration will decide how many workers the sponsor will be able to sponsor. Once this cap is reached, the employer must apply to have the terms of the sponsorship altered to allow sponsoring of further employees.

Newly Established Businesses
Previously the Standard Business Sponsorship validity period lasted for 3 years, and businesses were able to sponsor subclass 457 visa holders for up to 4 years.

From 1 July 2013, newly established businesses which have been in operation for less than 12 months will be approved as a sponsor for only 12 months. The 457 visa granted to a start-up business will be valid for only 12 months.

Sponsorship Training Requirements

The training obligation for sponsors will now apply for each 12 month period from the approval of sponsorship (Previously sponsors were required to satisfy the obligation each financial year).

Employers need to keep records of training activities to meet the obligation. If an employer does not meet the training benchmark, they may not be approved for an extension or variation of their sponsorship and could face fines or cancellation of their approval.

The training benchmarks remain the same - either 1% of payroll spent on recent training of Australians in the business, or contribution of 2% of payroll to a training fund.

Nomination

Threshold salary levels have increased as of 1 July as follows:

For applications lodged prior to 1 July 2013 that have not been decided upon:

Case officers are currently requesting new documentation (i.e contracts and new market salary data) with respect to meeting the new increased TSMIT of $53,900.

For applications lodged prior to 1 July 2013 that have not been decided upon:

Case officers are currently requesting evidence demonstrating that the position associated with the nominated occupation is genuine.

Hospitality Occupations

Due to the rise in the number of positions sponsored in the hospitality industry, the government has now established limitations on sponsorship of Cooks, Chefs and Cafe/Restaurant Managers. Such nominees cannot be sponsored to fill positions in fast food or takeaway restaurants.

Visa Applicants

English Language Requirements

Previously, English language testing for 457 applicants was only required for licensing and registration purposes or for trade and technician occupations.

From 1 July, all 457 applicants will be required to demonstrate their English language ability, unless they fall under one of the exemptions listed below:

• Holders of valid passports from the UK, Ireland, USA, Canada or NZ;
• Base Salary is at least $96,400; or
• The applicant has completed 5 consecutive years of study where the classes were taught in English (secondary or higher education level).

English language tests must be conducted prior to lodgement of the 457 visa application. The usual test is the International English Language Testing systems (IELTS) test, and a score of 5 in each of the 4 components of IELTS is required.

Existing 457 visa holders will need to meet the English requirement if they are nominated again for a 457 visa - either when extending their 457 with the current employer or transferring to a new employer.

Skills Assessments

Previously, skills assessments were required only for certain trade occupations.

From 1 July, skills assessments are required for two occupations of concern to the Department:

• Program and Project Administrator; &
• Specialist Manager Not Elsewhere Classified.

Work Condition 8107

There are a number of changes to the work condition 8107 which applies to 457 visa holders:

• They must commence work within 90 days of arrival in Australia;
• If they leave employment with the current sponsor, they have 90 days to be sponsored by a new employer before they will be considered in breach of the 8107 condition (increased from the previous 28 days); &
• If required by their occupation, the 457 holder must have the necessary licensing professional membership or registration in Australia.

Further Changes

There are also a host of additional changes including:

• All 457 applications must be lodged electronically online;
• Greater powers for Fair Work Australia to inspect workplaces for compliance;
• Requiring sponsors to pay for the cost of obtaining approval as a business sponsor, rather than having these be paid by the 457 applicant or another person;
• Possibility of refusal of a nomination on the basis that it is "not genuine"; &
• Requiring employers to retain employment contracts to demonstrate that they are not engaging in de facto labour hire arrangements.

The most significant changes are still to come, particularly the introduction of Labour Market Testing for 457 visa applications which has passed through Parliament in the form of the Migration Amendment (Temporary Sponsored Visas) Bill 2013.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.