Australia: August Immigration Update - 457 delays and training benchmark changes

Last Updated: 3 September 2017
Article by Jackson Taylor

The last 6 months has been a period of rapid change and disruption in Australian immigration, in particular for the Subclass 457 Temporary Work visa. Changes to the 457 program continue as the Department implements further alterations in preparation for the introduction of the new Temporary Skill Shortage visa from March 2018.

These changes raise a number of concerns in both implementation and policy for businesses as well as current and future visa holders. In particular, changes to the broader sponsored visa program such as alterations to training requirements and flow on to employer sponsored permanent residency will require businesses to consider their immigration strategy.

457 Processing time blow out

The 457 program experienced major changes in April 2017 when the government announced its abolition from March 2018. However, another round of changes were made on 1 July 2017, including a further overhaul of eligible occupations, major changes to the 'caveat' system, minor amendments to the English requirements, skills assessments and implementation of a new sponsor accreditation framework.

Implementation of the changes appears to be causing major delays in processing. Timeframes have increased to 4 months for 75 percent of applications and 9 months for 90 per cent of applications. Longer delays appear to be related to the processing of nominations for caveated occupations.

At the same time, system changes have enabled the Department to prioritise 'nomination transfer' applications, where an existing 457 visa holder moves employers or changes roles, as well as 457 applications for accredited sponsors. These applications are generally being processed in under 2 weeks.

Assessment of caveated occupations

In April 2017, the Department introduced the concept of 'caveats' to occupations for employer sponsored visas. Caveats are additional criteria that must be met for an occupation to be eligible for sponsorship. For example, an Accountant role must be in a business with a turnover of $1 million or more to meet the caveat, and a Corporate General Manager position must be remunerated at $65,000 or more.

The July 2017 changes further amended the caveat system, adding new caveats, and refining existing caveats.

The Department has previously announced that they are working through the caveats, occupation by occupation, to make assessments. This approach appears to be causing significant delays in a number of occupations as the Department implements internal training and processes to manage caveat affected occupations.

July Training Benchmark System

The Training Benchmark system was amended 1 July to restrict the eligible types of training, in both Training Benchmark A (payment to industry training fund) or Training Benchmark B (internal training).

The changes reduce the number of eligible training bodies which can accept training donations to exclude private RTOs and restrict internal training to limited forms of professional training conducted by internal trainers.

Implementation of the training requirement has been problematic, with the legislation being poorly drafted, and ambiguity about whether training obligations are prospective or retrospective. The Department has gone to some lengths to clarify, however, the value of implementing these change 9 months before the expected abolition of the Benchmark system is unclear.

Proposed SAF - action needed

From March 2018, the Training Benchmark system will be abolished in favour of the 'Skilling Australia Fund' ('SAF'). The SAF will apply to employers seeking to sponsor staff on the new Temporary Skill Shortage visa or for permanent residency through the Employer Nomination Scheme 186 visa or Regional Skilled Migration Scheme 187 visa.

The government has announced the SAF will be used to provide ongoing funding for vocational education and training in Australia. The fund will be composed of contributions made by businesses sponsoring 457 visa applicants. The government expects that funding of occupations in demand, occupations which rely heavily on skilled migration, apprenticeships and regional areas will be prioritised.

Training costs must be paid in full, up front, at the time of the 457 Nomination. Charges are payable based on the period of sponsorship with two thresholds ($1,200 per year for small businesses, $1,800 for larger businesses). Refunds are only payable where the Nomination is refused. This may result in significant financial burden for employers where the employment relationship ends prior to the expected period.

Employers must be aware that the change is likely to result in a significant increase in costs. Employers will no longer be able to claim internal training to meet the training requirement - only payment of the SAF Levy will be deemed to meet the requirement. The system will effectively add an additional layer of cost on top of existing internal training.

While the legislation to enable this change remains to be approved it is highly likely that, if implemented in its current form, the new SAF will be a major drag on businesses. We expect that the SAF will drive businesses to think outside the '457 box', with shorter-term or alternative temporary visas and permanent Skilled visas being the likely solution to increasing costs in the employer sponsored domain.

New bill: sanctions and ATO

Meanwhile, a new bill has been introduced to Parliament to enable the Department to release details of sanctions against Business Sponsors and to obtain Tax File information about 457, and future TSS, visa holders.

These reforms will add significant risk to the sponsorship process for organisations. To date, sanctions against employers found to have breached their obligations were confidential. Given the significant media attention around the 457 visa there is a real risk of reputational harm to businesses whose details are disclosed under this system. Employers should look carefully at internal immigration compliance systems to ensure the business meets all relevant obligations under immigration laws.

For visa holders, the proposed provision of ATO data to the Department may add increased security against underpayments and other forms of employer wrongdoing. The proposed regulations would enable the Department to match ATO data against remuneration provided to DIBP in the nomination and visa application.

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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Jackson Taylor
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