Australia: Minimum Salary Level Changes – Effective 1 August 2008

Last Updated: 11 September 2008
Article by Catherine Dunlop

The Minimum Salary Level (MSL) which must be paid by sponsors to employees holding 457 visas was increased on 1 August 2008.

Failure to pay the appropriate MSL correctly will be considered a breach of sponsorship obligations which may result in severe penalties.

Employers who sponsor 457 visa holders need to meet a number of obligations, including paying at least the MSL or industrial instrument i.e. award or collective agreement minimum rate (whichever is the higher).

The new MSL that applies from 1 August 2008 differs for those employees who were the holders of a 457 visa prior to 1 August 2008 and those whose 457 visas which must be paid by sponsors to employees holding 457 visas was increased on 1 August 2008.are granted from 1 August 2008 onwards.

Employees granted a 457 visa prior to 1 August 2008

The MSL for all employees granted a 457 visa prior to 1 August 2008 will increase by 3.8%.

Effective 1 August 2008, MSL increases apply retrospectively, meaning that sponsors will be required to pay any new MSL rates to all existing sponsored visa holders who may have been approved on the basis of a lower MSL.

Prior to 1 August 2008, MSL increases applied only to employees who were granted 457 visas after the promulgation of a new MSL.

Sponsors should check the visa approval notification for all 457 visa employees for the date of visa approval which determines the 'MSL Instrument Period of Effect' in the table to the right:

MSL Instrument Period of Effect

MSL Occupation Category

MSL prior to 1 August 2008

MSL from1 August 2008

11 /02/2004 to 08/04/2005







Regionally certified

Industrial Instrument

Industrial Instrument

09/04/2005 to 02/05/2006








Regionally certified

Industrial Instrument

Industrial Instrument

03/05/2006 to 30/06/2006







Regionally certified

Industrial Instrument

Industrial Instrument

01/07/2006 to 31/07/2008







Regionally certified (non-ICT)



Regionally certified (ICT)



English language exemption (from 10/09/2007 only)



Employees granted a 457 visa on or after 1 August 2008

The MSL that applies to employees granted a 457 visa on or after 1 August 2008 is:

  • $77,850 where the E nglish language exemption is claimed;
  • $59,480 for Information and Communication Technology (ICT) employees;
  • $43,440 for non-ICT employees;
  • $53,530 for ICT employees approved to work under a regional concession; and
  • $39,100 for non-ICT employees approved to work under a regional concession.

How must the MSL be paid?

From 1 August 2008 the MSL in all cases is based on a 38 hour week. An employee cannot be paid for less than 38 hours. Where an employee works in excess of 38 hours, the employee must be paid at least the equivalent hourly rate for every hour.

The MSL must be paid weekly, fortnightly or monthly, and therefore the equivalent MSL for hours worked in excess of 38 hours must also be paid weekly, fortnightly or monthly. Sponsors cannot 'average out' the MSL on an annual basis.

The MSL is the salary component (sometimes referred to as the 'cash' component) excluding superannuation, any allowances (such as Living Away from Home Allowance), bonuses or salary packaged items or deductions, other than:

  • Pay As You Go (PAYG) tax withholding amounts; and
  • amounts that are 100% tax deductible for the sponsored worker or otherwise exempt from Fringe Benefits Tax (FBT).

What Sponsors can do to ensure compliance with obligations

Sponsors need to check that the salary paid to 457 visa holders is in accordance with the above MSL rates, and is paid on a weekly, fortnightly or monthly basis in accordance with the number of actual hours worked in that period.

Sponsors may need to implement a system of recording actual hours worked for 457 employees to avoid possible breaches of the MSL obligation.

When does a Sponsor's obligations cease?

In general, under the Migration Regulations 1994, a sponsor's obligations towards a sponsored employee remain in effect until the earliest of the following circumstances occurs:

  • at the end of 28 days after the sponsor notifies the Department of Immigration and Citizenship (DIAC) that the sponsored employee has ceased to be employed with them; or
  • if the sponsored employee's visa has ceased, when the sponsored employee leaves Australia; or
  • if the sponsored employee's visa has ceased, when the sponsored employee is granted a new visa.

When does a Sponsor's obligation cease in regards to MSL?

DIAC policy guidelines provide that sponsorship obligations in regard to MSL remain enforceable against a sponsor until either:

  • the sponsored employee's 457 visa ceases; or
  • the sponsor is no longer approved as a sponsor for that particular employee because the earliest of one of the above circumstances has taken place.

i.e, the applicant has left Australia, been granted a new visa, or 28 days have passed since the DIAC was notified that the employee has ceased employment.

Termination of employment and MSL

Under DIAC policy guidelines if a sponsor terminates the employment of a visa holder, the sponsorship obligations in respect of that person will continue to apply until the end of 28 days after the sponsor notifies DIAC that the sponsored employee is no longer employed.

During this 28 day period, a sponsor will be required to continue paying the sponsored employee the relevant MSL.

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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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