Australia: Significant changes to sponsoring employee visas

Last Updated: 24 September 2013
Article by Rola Hijwel

Under the Temporary Work (Skilled) (Subclass 457) Visa Program

Comprehensive changes were passed by the Australian Parliament to introduce new and tougher standards for the Temporary Work (Skilled) (subclass 457) visa program, with most measures effective as of 1 July 2013.

The subclass 457 visa program is widely used across all industries and business sizes, enabling the employment of skilled workers for up to 4 years. The Subclass 457 visa program consists of three steps. Firstly, the employer is required to obtain standard business sponsorship status. Secondly, the nomination of the role which needs to be filled is ascertained and finally the subclass 457 visa application is completed, pertaining to the employee and how they meet the skills and experience nominated.

The purpose of the visa program is to address the genuine skills shortage in Australia, providing a pathway for businesses to fill a skilled position where they have not been able to find an appropriately skilled Australian citizen or permanent resident for the role. The employer is required to ensure that the working conditions of the sponsored employee are no less favourable than those provided to Australians, and that the overseas worker(s) are not exploited.

At the end of the 2011-2012 fiscal year, a new record of 68,313 subclass 457 visas were granted.1 With the increasing use of the visa program and the current economic landscape, the Government sought to review the program and pass measures to ensure the central principals of the Temporary Work (Skilled) (subclass 457) visa program were strengthened. Importantly, the Department of Immigration and Citizenship was provided with the capacity to identify and prevent employer practices that are not in keeping with the fundamental tenets of the subclass 457 visa through increased compliance program and monitoring mechanisms.

Changes to the Subclass 457 Visa Program, as at 1 July 2013

Changes have been introduced to the requirements of each component of the visa program, extending to the compliance and monitoring of the business sponsorship obligations, which provide stronger enforcement provisions. Brief summaries of the significant changes are outlined below.

Mandatory Skills Assessment for Generalist occupations

Certain nominated occupations have been identified, such as Program and Project Administrators and Specialist Managers, as occupations that were used inappropriately in the past to nominate less qualified workers for these positions. Due to the general nature of the occupation classification requirements, employers were previously able to use these generic occupation classifications as an alternative.

As a result, in order to nominate these occupations, a formal skills assessment is now mandatory as a component of the visa application. This measure is aimed at preventing these generic occupations being used at times of genuine skills shortages.

Mandatory English Language Requirement

Occupation-based exemptions for English language requirements have been removed. Therefore all visa applicants are required to complete an English Language Test for the purpose of a visa application.

Exemptions, however, do remain for the following applicants:

  • where the visa holder will be remunerated above a specified threshold (the English Language Salary Exemption Threshold), currently set at $96,400; or
  • for holders of a passport from Canada, United States of America, United Kingdom, Republic of Ireland or New Zealand; or
  • where the visa holder has completed at least 5 consecutive years of full-time study in a secondary or higher education institution where lectures have been delivered in English.

This will have an impact on the leadtime to lodge a visa application, as applicants will be required to undertake a language test in the event that they are not exempt.

Commencement of Work on Arrival

Amendments to the visa condition 8107 has imposed that subclass 457 visa holders are required to commence work with their sponsoring business within 90 days of arrival in Australia. This will assist the Department of Immigration and Citizenship with its task of monitoring visa cancellations in instances where the visa holder has not commenced work with their employer.

Enforceable Sponsorship Undertakings

Sponsorship undertakings have been strengthened so as to enhance compliance enforcement mechanisms. Undertakings will now be court enforceable between the Minister of Immigration and Citizenship and the sponsor. This measure will reinforce the existing administrative sanctions, infringement notices and civil penalties. This is designed to provide a direct and cost efficient method of ensuring that sponsors are held accountable for any contraventions of their obligations.

Enforceable ongoing Training obligation

Prior to the 1 July 2013 amendments, sponsoring businesses were only required to commit to maintain a certain level of expenditure in training. As at 1 July 2013, sponsoring businesses are now required to demonstrate ongoing compliance with their training obligations through retaining all training records.

This is a tougher requirement and the onus is on sponsoring businesses to demonstrate compliance, as they are no longer merely required to commit to comply, but are required to accomplish and meet the required training protocols.

Monitoring Power Through the Fair Work Inspectors

Greater access to enforcement recourses has been legislated so as to allow the use of Fair Work inspectors in conjunction with immigration compliance officers to monitor and investigate immigration compliance matters under the subclass 457 visa program.

Ensuring employees have the correct visa to work, are undertaking the nominated role and are receiving the appropriate remuneration according to their visa application, monitoring provides for a larger force of inspectors that are able to enforce sponsorship obligations and employment conditions.

Extension of Grace Period After Termination of Employment

The period allowed for a Subclass 457 visa holder after the termination of employment with their current sponsor, has been extended from 28 consecutive days to 90 consecutive days. Employers need to be aware of this change and ensure they maintain accurate records upon termination, in line with their obligations.

Labour Market Testing

In addition to the changes implemented as of 1 July 2013, a significant change to come into effect over the next 4-6 months, will be the requirement on sponsors to demonstrate that they are unable to recruit a qualified and experienced Australian worker to fill the nominated position under the visa program and are forced to look abroad, unless an exemption applies.

The purpose of labour market testing is to ensure that the 457 visa program is only addressing genuine skills shortages and is not having an impact on employment opportunities for Australian residents or citizens.

Sponsors will be required to demonstrate that they have made all efforts to find a suitably qualified and experienced Australian for the nominated position within six months before submitting a nomination application. The nature of evidence of a compliance search could range from research released in the previous four months relating to labour market trends for the nominated role, to expenditure on recruitment efforts, such as advisements in the local market.

Where a sponsor or an associated entity has retrenched Australian citizens or permanent residents within four months leading up to the nomination, the sponsor must show that its recruitment attempts are following the downsizing and provide information with respect to all workforce reductions in the nominated occupation in the previous four months.

The Minister for Immigration and Citizenship will have the authority to exempt certain occupations from the labour market testing requirements, whereas other occupations will still be required to comply with Australia's commitments under international trade agreements.

Another possible exemption may extend to specific nominated occupations which feature a designated qualification level and require a certain number of relevant years of experience. Details relating to this exemption will be released closer to the implementation of the labour market testing requirement.

With this increasing focus on compliance and enforcement it is vital for sponsors to have in place a system to ensure they are meeting, recording and tracking their on-going sponsorship obligations, especially considering that the punitive penalties are high for both the business and individuals.


1 Ministerial advisory council on skilled migration (macsm), Discussion paper - Strengthening the integrity of the subclass 457 program, presented 14 January 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.

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