Australia: 457 visa update – Part 2: Transitional arrangements for the 457 visa and next steps

Following the Prime Minister's announcement on April 18, 2017 that the 457 visa will be abolished and replaced with a new Temporary Skill Shortage (TSS) visa from March 2018, the Department of Immigration and Border Protection (DIBP) has issued further information on the upcoming changes that will impact the 457 visa programme. Additional legislative and policy changes may also be released in the future.

The 457 visa programme (with some changes) will remain in effect until March 2018 and existing 457 visa holders will not be affected.

We will provide further guidance on the changes to the Employer Sponsored Permanent Residence Programme in a separate update.

A summary of the additional changes and implications for employers is set out below. For more of an overview of these key reforms refer to our previous article.

Changes and impacts
With immediate effect from 19 April 2017 From 1 July 2017 – 31 December 2017 From March 2018
  • The first stage of a number of proposed changes to the skilled occupations list has been implemented
  • The new occupational lists are now referred to as the Short Term Skilled Occupations List (STSOL) and the Medium and Long Term Strategic Skills List (MLTSSL). Employers may nominate occupations from both lists
  • 216 occupations have been removed including for example, Electronics Engineers, Life Scientist, Human Resources Advisor, Market Research Analyst, Public Relations Manager and Procurement Manager
  • Caveats have been introduced to 59 existing occupations including Technical Sales Representative (Not Elsewhere Classified), Marketing Specialist, Management Consultant, Customer Service Manager, Chief Executive/Managing Director, Corporate General Manager, Accountants, Recruitment Consultant, Supply and Distribution Manager
  • These caveats are in the form of 'notes' and are intended 'to ensure that the subclass 457 programme is, as intended, focused on filling 'skilled' vacancies, with less risk of subclass 457 visa holders being hired to complete semi-skilled or low-skilled tasks, at the expense of the Australian workforce'
  • There are three categories of caveats: work experience, regional locations and occupation specific (occupation settings, minimum business turnover, number of employees and base salary)
  • 457 new and/or pending business nominations and visa applications that have nominated occupations which are no longer on the occupations list and which have not addressed the caveats cannot be approved and will be refused unless they are withdrawn
  • Visa validity for applications granted on or after April 19, 2017 will be four years and will only be available to applicants whose occupation is on the MLTSSL
  • For all applicants with an occupation on STSOL, the maximum visa validity will be two years
  • 457 visa holders granted under STSOL cannot access the pathway to permanent residence under 186 Employer Nomination Scheme – Temporary Residence Transition stream but they may apply for the Direct Entry stream
  • 457 visa holders granted under MLTSSL may access the pathway to permanent residence under 186 Employer Nomination Scheme – Temporary Residence Transition stream following three years of employment with the sponsoring business
  • Current 457 visa holders and their family members are not impacted. Family members joining the 457 visa holder in Australia are also not affected
  • The STSOL will be further reviewed based on advice from the Department of Employment and will continue to be reviewed every six months
  • The MLTSSL will be reviewed based on outcomes from the Department of Education and Training
  • English Language exemptions based on salary thresholds will no longer apply; at this stage other English language exemptions will remain
  • Clarifications will be made on the Training Benchmarks
  • Mandatory police/penal clearances will be required for all applicants
  • Data collection and matching with the Australian Tax Office to ensure payment of nominated salary
  • Reporting of sponsors who are sanctioned for failing to meet sponsorship obligations
  • The 457 visa ceases and new TSS visa will commence
  • The two TSS streams will supersede the 457 visa:

Short-Term stream

  • For up to two years validity for temporary skill gaps
  • STSOL will apply
  • English test pass scores of IELTS of 5 with a minimum of 4.5 in each test component or equivalent test
  • Visa renewal once only while onshore

Medium-Term stream

  • For up to four years validity for critical skills
  • MLTSSL will apply
  • Permanent residence pathway after three years with same employer
  • International English Language Testing System score of 5 in each test component, or passing of an equivalent test
  • Visa renewal onshore

General eligibility criteria for both streams

  • Minimum two years relevant work experience
  • Mandatory Labour Market Testing for all occupations with the exception of Australia's international obligations
  • Renewed Australian employee training requirements for sponsorship
  • Introductions of non-discriminatory workforce test
  • Mandatory police/penal clearances
Next steps and considerations for employers
  • Employers with 457 applications on foot should consider withdrawal of existing nominations and/or visa applications which no longer meet the nominated occupation criteria including the caveats
  • Advice should be obtained on the applicant's legal status in Australia and visa options/strategy if the application is withdrawn
  • Employers should plan project timelines in light of visa validity
  • Potential for extended processing times particularly during the implementation and transition stages
  • Potential limitations of the new STSOL and MLTSSL lists may impact high growth start-up companies across various industries including technology and energy where there is a need for world class talent
  • Be prepared for potential changes to the STSOL occupation list every six months which is likely to create uncertainty within the business community as access to certain occupations becomes fluid
  • Be prepared to satisfy new Training Benchmark requirements for sponsorship applications lodged after July 1, 2017
  • Be prepared to provide tax file numbers for your employees for data matching purposes across government agencies
  • Continue to satisfy sponsorship obligations in light of new public reporting of sanctioned sponsors
  • Consider obtaining legal advice on privacy and confidentiality considerations in relation to public reporting and use of tax file numbers
  • Be prepared for more stringent monitoring and site visits to assess compliance with sponsorship obligations
  • Ensure 457 visa holders are paid in line with the nominated salary
  • Make prospective employees aware that they will need to provide a police clearance as part of the application process and factor in processing times which will differ for each country
  • New graduates without two years of relevant work experience will be ineligible for the TSS visa after March 2018

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