On 23 December 2015, The Minister for Immigration and Border
Protection, Peter Dutton MP, announced an "Expert review of
the 457 temporary skilled migration threshold
What is the TSMIT?
The TSMIT was implemented in September 2009 as part of a raft of
reforms to the Subclass 457 visa programme. The basic premise of
the TSMIT is that 457 visa holders should be provided with terms
and conditions of employment which are no less favourable than
those provided to an Australian employee performing equivalent
work. The TSMIT is currently $53,900 and has remained at this level
since 1 July 2013. Before 2013, the TSMIT was indexed each year in
accordance with the Australian average weekly earnings as reported
by the Australian Bureau of Statistics.
Common misconceptions about the TSMIT
Many people assume the TSMIT is used as a minimum salary level
to pay foreign workers; however, it is more than this. Employers
sponsoring a 457 visa holder must demonstrate that an equivalent
Australian employee is being paid or would be paid over the TSMIT,
a concept referred to as the market rate. If the market rate is
below the TSMIT (i.e. an Australian would not ordinarily be paid at
least $53,900) a sponsoring employer cannot nominate this role to
be filled by a 457 visa holder. While practically it serves as a
minimum salary level for a potential 457 visa nominee, it also acts
as a monetary indicator that a position is of a sufficient skill
level for the 457 programme.
The TSMIT also recognises that a 457 visa holder will have
access to the same monetary safeguards of the Australian welfare
system as an Australian permanent resident or citizen. The
reasoning being that if a 457 visa holder has reasonable means of
support, they are less likely to breach their visa conditions and
are less vulnerable to mistreatment or exploitation.
Why have the Review?
A report by the 457 integrity review recognised that the TSMIT
plays an important part of the 457 visa programme. It provides an
actual dollar amount that ensures ease of compliance and it aligns
with the perception of the 457 visa programme that it is aimed at
skilled and experienced workers. The report recommended the TSMIT
level as set on 1 July 2013 be frozen at $53,900 and then reviewed
in two years. On 21 October 2015, the Government announced this
review would be brought forward as part of an agreement with the
Opposition to ensure the safe passage of legislation with respect
to the signing of the China Australia Free Trade Agreement. The key
issues to be considered in the review, amongst others, are:
Whether a variable TSMIT should be
implemented to accommodate certain circumstances (i.e. occupation
based variation, geographical location of position, number of
family members included on the 457 visa);
If a variable TSMIT be introduced,
should these variations operate as an increase or decrease of the
What evidence should be considered
when determining the level of the TSMIT; and,
Whether and how to index the
The Independent Review also recognised concerns from regional
areas that the "one size fits all" approach of the TSMIT
can deter businesses in regional areas from accessing the 457 visa
programme to fill genuine skills shortages in those areas. These
concerns were noted for the review and will be taken into
consideration when recommending any changes to the TSMIT.
Ramifications for Business
Should the TSMIT be increased, this may hamper the ability of
business to sponsor some positions in the future for a 457 visa
where the market rate is below the new TSMIT. However, the review
may recommend more flexibility in the application of the TSMIT,
especially as it relates to regional areas.
Fragomen will make submissions to the review on behalf of our
clients and will continue to provide updates throughout the review
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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Recent amendments to the Migration Act and regulations, along with the imminent commencement of the new federal safety net under the Fair Work Act, highlight a number of issues for consideration by employers in documenting terms and conditions of employment for foreign nationals engaged to work in Australia under Subclass 457- Business (Long Stay) visas.
If you employ 457 visa holders in your business, you should ensure that you are meeting your sponsorship requirements.
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