The Commonwealth Government announced the following measures in its Budget last night, which are significant for employers:

  • As previously announced, the Government will abolish the Temporary Work (Skilled) (subclass 457) visa and replace it with a new Temporary Skill Shortage visa. In the Budget last night, the Government indicated visa application charges will be increased from the current $1,060 per primary 457 visa to $1,150 per primary visa for the short-term stream (allowing entry for up to two years) and $2,400 per primary visa for the medium-term stream (allowing entry for up to four years). The path from temporary business migration visas to employer sponsored permanent residency will become more restricted. The skilled occupation lists have also been revised to focus more sharply on skill shortages. These changes are being implemented in stages between April 2017 and March 2018.
  • From March 2018, businesses that employ foreign workers on certain skilled visas will be required to pay a levy that will provide revenue for a new Skilling Australians Fund. Businesses with turnover of less than $10 million per year will be required to make an upfront payment of $1,200 per visa per year for each employee on a Temporary Skill Shortage visa and make a one-off payment of $3,000 for each employee being sponsored for a permanent Employer Nomination Scheme (subclass 186) visa or a permanent Regional Sponsored Migration Scheme (subclass 187) visa. Businesses with turnover of $10 million or more per year will be required to make an upfront payment of $1,800 per visa year for each employee on a Temporary Skill Shortage visa and make a one-off payment of $5,000 for each employee being sponsored for a permanent Employer Nomination Scheme (subclass 186) visa or a permanent Regional Sponsored Migration Scheme (subclass 187) visa. The levy will replace the current training benchmark financial obligations for employers of workers on Temporary Work (Skilled) (subclass 457) visas, which are being abolished, and permanent Employer Nomination Scheme (subclass 186) Direct Entry stream visas.
  • The Federal Government will no longer be progressing the previously mooted changes in relation to Government-funded Parental Leave Pay. These changes were designed to prevent so-called double dipping and would have removed the obligation on employers to administer payments.
  • Senior executives and directors of banks and other authorised deposit-taking institutions (ADIs) will be required to be registered with Australian Prudential Regulation Authority (APRA). The ADI will have to advise APRA prior to making a senior appointment. Where senior executives have been found not to have met expectations they will no longer be able to be registered or employed in senior roles. APRA will be given stronger powers to remove and to disqualify senior executives and directors. These powers will apply to all institutions regulated by APRA. Persons removed or disqualified under these powers would have to appeal to the Administrative Appeals Tribunal to have a decision reviewed.
  • A new civil penalty regime will be created for senior executives and directors of ADIs who fail to meet standards regarding conducting business with integrity, due skill, care and diligence and acting in a prudent manner. A maximum penalty of $200 million will apply to larger ADIs, and a maximum penalty of $50 million for smaller ADIs. APRA will also be able to impose penalties on ADIs that do not appropriately monitor the suitability of their executives to hold senior positions.

  • Under new remuneration requirements, a minimum of 40 per cent of an ADI executive's variable remuneration – and 60 per cent for certain executives such as the CEO – must be deferred for a minimum period of four years. This will apply to at-risk remuneration components such as bonuses, short-term incentives and long term incentive schemes. APRA will also be given stronger powers to require ADIs to review and adjust their remuneration policies when APRA believes such policies are not appropriate. This will have significant impact on the entitlements of banking executives to receive an annual cash bonus based on short-term performance.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.