Summary of Changes to 457 Program for Sponsors

webster By Mark Webster
Tuesday, 20 August 2013

A number of changes to the 457 program came into effect on 1 July 2013.

Below is a summary of the most important changes and how they affect 457 business sponsors.

Training Obligation

Sponsors need to meet the training benchmark for each 12 month period from sponsorship approval. Previously the training obligation needed to be met for each financial year (ie 1 July to 30 June).

The training benchmark itself remains unchanged (1% of payroll spent on training of Australian permanent residents or citizens in the business, or 2% of payroll paid into a training fund).

In addition, employers are now required to keep records of their training activities. We will need to show that the training requirement has been met for renewal of your Standard Business Sponsorship and this may require providing 3 years of training records. When applying for permanent Employer Nomination Scheme visas, we also need to demonstrate that the training requirement has been met for the sponsorship period.

Recommendation: it may be a good idea to review training expenditure over the period of your Standard Business Sponsorship to ensure that the training obligation has been met. If not, additional expenditure on training may be required.

English Language Testing

English testing is now required by default for all 457 applicants. Many applicants will need to sit the IELTS test of English language ability and score at least 5 in each band.

Exceptions apply for:

  • holders of UK, US, Canada, Ireland and NZ passports
  • where the base salary is at least $96,400
  • if the worker has completed at least 5 years of consecutive study in the English medium at a secondary or higher education level.

Recommendation: the English requirement should be discussed with applicants well ahead of applying for the 457 visa, and allowance made for the additional time and cost for testing if required.

Increase in fees

From 1 September, Department of Immigration application fees were increased significantly. These are as follows:
  • $1,035: main applicant
  • $1,035: each dependent aged 18 or over
  • $260: each child under 18
  • $700: for each applicant if extending onshore (Subsequent Temporary Entry Fee)

The $700 onshore extension fee applies where the applicant holds a visa which has been granted onshore, and lodges an onshore application for a 457 visa. As an illustration, the fee will apply in the following scenario:

  • Applicant travels to Australia on a Working Holiday Visa
  • Obtains a 2nd Working Holiday Visa by undertaking regional work
  • Applies onshore for a 457 visa

Recommendation: allow for additional application fee costs, particularly if the applicant has a spouse and dependent children. You can estimate fees using our Department of Immigration fee calculator.

Caps on sponsorship of workers

Prior to 1 July, there was no limit to the number of employees an employer could sponsor for 457 visas.

From 1 July, Standard Business Sponsors (SBS) will have a cap on the number of employees they can sponsor. The business must justify the number of employees they intend to sponsor in the sponsorship application process. The Department of Immigration may propose a lower number if they feel the number requested is not justified.

Once the cap is reached, the sponsor must apply for further places by lodging a sponsorship variation.

Recommendation: the effect of this change will not be felt until the SBS is renewed. It is likely that 457 holders will only be able to make up a certain percentage of the total workforce (eg 30%).

Minimum Salary level Increase

The TSMIT Minimum Salary has increased by 5% from $51,400 to $53,900.

This change applies to new 457 visa applications and where a 457 visa is being transferred from another employer by lodging a nomination. It also applies to applications which had been lodged by not decided by 1 July 2013.

The increase does not affect existing 457 visa holders otherwise. However, employers do need to ensure that 457 holders continue to be paid the market rate for their role.

Recommendation: allow for the increased minimum salary level when making new 457 applications or nominations. Review salary levels for existing 457 visa holders to ensure that they are being paid the market rate.

Startup Businesses

Businesses which have been in operation for less than 12 months do not need to show evidence of training expenditure, and can instead rely on providing an auditable training plan when meeting the training obligation.

However, sponsorship and 457 validity period will be only 12 months versus the usual 3 or 4 years in this case.

Recommendation: startup businesses should allow for the shorter approval periods when planning their staffing requirements. Renewal of the sponsorship and associated 457 visas will result in additional costs.

Skills assessment required for more occupations

Skills assessments are now required for the occupations of Program and Project Administrator and Specialist Manager Not Elsewhere Classified.

The skills assessment is conducted by VETASSESS and may take 3 months or more. Employees will need to show that they have a formal qualification (degree level for Specialist Manager or diploma level for Program/Project Administrator) and work experience in the specific occupation.

The cost of VETASSESS skills assessment is $693 for most applicants.

Recommendation: the occupations should only be used where the applicant has specific work experience in the occupation, plus the necessary formal qualifications. Allow for the additional cost and time for skills assessment.

Overseas Business Sponsors

From 1 July, all 457 applications are lodged online and processed in Australia. Applications from overseas business will no longer be sent to Australian consulates or embassies for processing.

457 applicants sponsored by overseas businesses are no longer required to be overseas at date of application.

This will make the application process for overseas businesses much more straightforward and is likely to result in faster processing.

Change to Condition 8107

Changes to work condition 8107 mean that workers now have 90 days to commence employment with their sponsoring company and 90 days to obtain new employment in the event that employment ceases.

This is an increase from the previous 28 days and allows workers additional time in Australia if employment ceases.

Recommendation: ensure that employees commence employment within 90 days of approval of their 457 visa.

Conclusion

There are many detail changes to the 457 program from 1 July 2013.

Employers should review their current 457 sponsorship processes to ensure that they reflect the changes in law.

Feel free to contact us if you would like advice on how the 1 July changes affect your business.

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