Australia: Reforms to employer sponsored visas - what you need to know


  • registered business sponsors
  • employers seeking foreign workers, and
  • prospective visa applicants.


  • significant reforms are being implemented to the temporary and permanent working visas
  • businesses that employ foreign employees under working visas should be aware that some of the changes have immediate effect, and
  • certain occupations previously capable of nomination for a temporary or permanent working visa have been removed.

Reforms have been implemented to both temporary and permanent working visas, with further changes to be rolled out.

Prime Minister Malcolm Turnbull has also foreshadowed changes to citizenship eligibility.

Summary of changes

The renamed Short-Term Skilled Occupations List (STSOL) and Medium and Long-term Strategic Skills List (MLTSSL) take effect from 19 April 2017, with major changes to occupations eligible for sponsorship impacting the Temporary Work (Skilled) (subclass 457) visa (457 visa), the Employer Nomination Scheme (subclass 186) visa (186 visa), the Regional Sponsored Migration Scheme (subclass 187) visa (187 visa), the Skilled Independent (subclass 189) visa (189 visa), Skilled Nominated (subclass 190) visa (190 visa) and the Skilled Regional (Provisional) (subclass 489) visa (489 visa).

The 457 visa will be completely abolished by March 2018, to be replaced with the Temporary Skills Shortage visa (TSS visa). The TSS visa will comprise of the Short-Term Stream which will be granted for up to two years and the Medium-Term Stream which will be granted for up to four years.

Changes to the 186 and 187 visas will be implemented from 1 July 2017, with new English language requirements to be imposed and a lowering of the maximum age requirement for Direct Entry Stream applicants from 50 years to 45 years.

The Department of Immigration and Border Protection (DIBP) will also commence the collection of Tax File Numbers for data matching with the Australian Tax Office to ensure that visa holders are not paid less than their nominated salary. Sponsoring businesses that have been sanctioned for failing to meet their obligations will be publicised by the DIBP.

Strengthened character requirements will also be implemented requiring penal clearance certificates to be obtained for all 457 visa applicants.

These changes are part of the Federal Government's substantial reform package to strengthen integrity by supporting business in addressing genuine skill shortages in their workforces. Businesses that employ foreign employees should be aware that some of the changes have immediate effect.


Changes to the programs were announced on Tuesday, 18 April 2017 by Prime Minister Turnbull, with no forewarning. To assist with understanding the changes, the DIBP has released two fact sheets for businesses and holders of affected visas. Fact Sheet 1 sets out the proposed changes to the 457 visa program and Fact Sheet 2 sets out the proposed changes to the 186 and 187 visa programs.

Current 457 visa holders will not be affected by the changes to the eligible occupations. It is anticipated that 457 visa applicants who have lodged their application on or before 18 April 2017, with an occupation that has been removed from the list will not be accepted for processing by the DIBP. Fact Sheet 1 identifies that nominating businesses and visa applicants 'may be eligible' for refunds of application charges.

The changes to the skilled occupations will affect nominating sponsors for the 186 and 187 visa programs and applicants for the 186, 187, 189, 190 and 489 visas. Fact Sheet 2 does not identify whether it will accept applications lodged prior to 19 April 2017 for visas associated with occupations removed from the list. Taking into account the extensive processing times for these visas (currently around nine months from date of lodgment) there could be considerable impacts on businesses and individuals if current applications are not processed.

The STSOL will be reviewed and updated every six months (based on advice from the Department of Employment), and it is anticipated that the MLTSSL will be reviewed on an annual basis (based on advice from the Department of Education and Training).

Changes to the 457 visa program

The following reforms will come into effect on key dates set out in Fact Sheet 1.

From 19 April 2017

  • applications for 457 visas will continue to be accepted for processing, however positions on the STSOL will only be granted for a maximum of two years, and occupations on the MLTSSL will only be granted for a maximum of four years.

From 1 July 2017

  • a further review of the occupations on the STSOL will be undertaken
  • English language exemptions available to applicants earning over $96,400 will be removed
  • additional training benchmark requirements will be set out in policy documents, which may impact businesses' ability to register as a standard business sponsor, and
  • all 457 visa applicants will be required to provide police clearance certificates (this is currently at case officers' discretion and may cause delays in processing applications).

From March 2018

  • the 457 visa will be abolished - no further applications will be accepted for this type of visa.

Introduction of the TSS visa program

From March 2018, the TSS visa will replace the 457 visa. The TSS visa will comprise of two streams, with the following requirements applicable to both streams:

  • at least two years' relevant work experience (currently none required)
  • labour market testing will be mandatory unless an international obligation applies (currently this is generally not required for Skill Level 1 or 2 occupations)
  • employers must pay the Australian market salary rate and meet the Temporary Skilled Migration Income Threshold requirements (currently workers can be paid below the market salary in some circumstances)
  • penal clearance certificates will be required (currently this is discretionary)
  • a non-discriminatory workforce test to ensure employers are not actively discriminating against Australian workers (currently not required), and
  • strengthened training requirement for employers to contribute towards training Australian workers (details have not yet been released). Currently there are two training benchmarks – a standard business sponsor must either pay at least 2% of its payroll expenditure to an industry training fund related to its business or spend at least 1% of its payroll expenditure on training their Australian citizen or permanent resident employees for each 12 month period of their registration.

Short-Term Stream criteria

  • visas will be granted for up to two years
  • visas can be renewed once onshore
  • no pathway to transitional residence for 186 or 187 visas
  • the STSOL applies, however additional occupations will be available to applicants in regional areas. Interim Guidelines have been released indicating that these occupations will relate primarily to farming, and
  • English language requirements will apply and available exemptions will be reduced.

Medium-Term Stream criteria

  • visas will be granted for up to four years
  • no limitation on renewals
  • transitional residence pathway to 186 and 187 visas available after three years (currently two years)
  • the MLTSSL applies, however additional occupations will be available to applicants in regional areas. Interim Guidelines have been released indicating that these occupations will relate primarily to farming and processing of primary produce, and
  • English language requirements will apply and exemptions will be reduced.

Changes to permanent residency visas

From 19 April 2017, the occupations set out in the MLTSSL will apply to the 186, 187, 189 and 190 visas, and existing and prospective applicants will be affected by the changes to the eligible occupations.

Additional changes will impact on 186 and 187 visas effective from the following key dates (as set out in Fact Sheet 2):

From 1 July 2017

  • changes to English Language requirements will be implemented - it is anticipated that exemptions available may be reduced, and
  • the maximum age for Direct Entry applicants will be reduced from 50 years to 45 years - it is not clear whether existing exemptions will continue to be available.

From March 2018

  • employers will be required to pay the Australian market salary rate and meet the Temporary Skilled Migration Income Threshold (currently workers can be paid below the market salary in some circumstances)
  • Fact Sheet 2 identified that the permanent residence eligibility period will be extended from two to three years - however it is not clear whether this means that the obligation to provide employment will be increased to three years, or if this applies to the Transitional Residence Stream
  • at least three years' relevant work experience will be required for all applicants
  • all applicants must be under the maximum age requirement of 45 at the time of application, and
  • strengthened training requirements will be implemented for employers to contribute towards training Australian workers.

Going forward

It is anticipated that there may be additional changes to the permanent residency pathways on top of those set out in Fact Sheet 2, as well as changes to citizenship eligibility and application processes, based on commentary from Prime Minister Turnbull's speech on 19 April 2017 to the Australian Chamber of Commerce and Industry in Canberra.

It is also anticipated that the exemptions available to the age, English language, skills and salary requirements under the current visa programs will be limited, or may require additional fees to be paid if they cannot be met by an applicant.

The DIBP is currently developing policy guidelines in relation to the above and we will continue to provide updates as more information is forthcoming.

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