Deegan report - Impact on 457 Visa holders

by Mark Webster 3/2/2009


The Department of Immigration instigated a review of the integrity of the 457 visa program, and the final report was completed in October 2008. The report is referred to as the Deegan Report and the recommendations if implemented will have a significant effect on 457 visa holders.


The recommendations in summary are:

  • Introduction of 2 new occupations lists for 457 visas
  • Requiring applicants to undertake skills testing
  • Loosening of English language testing requirements
  • Restrictions on work rights for dependent spouses and children
  • Making it easier for 457 holders to transfer to new sponsors
  • Imposing an 8 year limit on the amount of time a person can hold a 457 visa
  • Possibly allowing onshore General Skilled applications for 457 holders

New Occupations Lists

The report suggests that two new lists of occupations be created to replace the current list of approved occupations for 457 visas:

  • Low risk occupations (drawn from ASCO groups 1-3)
  • High risk occupations (group 4, selected high risk occupations from groups 1-3 such as chefs and nurses)
The list would be drawn up by the Department of Education, Employment and Workplace Relations (DEEWR) in consultation with industry and the Department of Immigration, and would be revised regularly to ensure that occupations in oversupply in Australia are not included.

It is proposed that geographic restrictions apply to the occupations list (eg if carpenters are in oversupply in NSW, employers in NSW may not be able to sponsor in this occupation).

If an employer seeks to sponsor employees in an occupation not on the approved lists, they will need to do so under a labour agreement. Labour agreements are significantly more complex than standard business sponsorship and generally take 6-9 months to negotiate.

Skill Level

The report recommends that the skill level for 457 visas be raised. This will require most applicants to go through a formal assessment process. The process suggested in the report is a workplace assessment by a Registered Training Organisation (RTO). If assessment by an RTO is not possible, then the employer can provide a statutory declaration that the applicant's skills are suitable to work in the occupation.

This suggestion could result in the following difficulties:

  • RTOs charge thousands of dollars to complete a workplace assessment
  • RTOs are not set up to assess the full range of ASCO occupations (mostly trades and ASCO group 3 only)
  • It can take months to arrange a workplace assessment (for an example, look at the VETASSESS waiting times for trade skills assessments)

English Language Ability

Currently, applicants with occupations in group 4 of ASCO must undertake English language testing and obtain a score of at least 4.5 average in the IELTS. The report recommends that the current English language requirement for 457 visas be retained, but with the following changes:
  • Applicants with "low risk" occupations are exempt from English testing
  • The score for writing not be included in calculating the required 4.5 average band score for IELTS
  • Current 457 holders would be exempt from English language testing
  • Minimum salary level for the testing exemption be raised from $77,850 to $100,000
The changes effectively weaken the English language requirement even further, doing nothing to address the vulnerability, OH and S and skills sharing issues raised in the discussion papers issued in relation to the report.

The main issue with English testing is that applicants may need to wait many months to sit for an IELTS test, thus resulting in significant delays. This significant issue has been completely overlooked in the report. Immigration should consider introducing alternative testing arrangements, and evaluate whether the current level and exemptions are effective in addressing concerns.

Work Restriction

The report recommends that 457 holders be allowed to cease work for their original sponsor to look for work with a new employer. They would have 90 days to find a new sponsor, and this search will be facilitated by publishing lists of approved sponsors on the Department of Immigration website. The obligation for the employer to pay the applicant for 28 days after they cease employment would remain.

The main issue with the current 457 system is that it imposes obligations which are inconsistent with labour laws. For instance:

  • The employer must give a notice period to the employee under employment law, but is required under immigration law to continue paying the salary on termination (ie after the notice period expires)
  • If an 457 visa holder applies for a new 457 visa through a new sponsor, they cannot work for the new employer until the 457 visa is granted. However, they must also continue working for the current employer until the 457 visa is granted or they face cancellation. Given that they must in most cases serve a notice period with their current employer, this makes complying with the migration regulations almost impossible
The recommendations do not make it clear what the 457 holder's work rights are during the 90 day period after ceasing employment with the sponsor. Given that the sponsoring employer has significant sponsorship obligations which continue until the 457 holder either leaves Australia or is granted a new visa, this seems to be a quite inequitable arrangement.

8 Year Limit for 457 Holders

The report recommends that applicants should not be able to remain in Australia for more than 8 years on 457 visas and that the temporary nature of the visa be emphasised by renaming it the "Temporary Employment Visa".

Nothing emphasises better the temporary nature of 457 visas than introducing a provision for 457 holders to be kicked out of the country after 8 years! It is more important than ever for 457 holders to look at permanent residence options to ensure they are able to remain in Australia after the expiry of their 457 visa.

Secondary Visa Holders

The report looked at whether it was appropriate for dependents (ie spouses or children) travelling with 457 visa holders should be allowed to work in Australia.

The report suggests that where the 457 is granted under a labour agreement, the work rights would depend on the terms of the labour agreement. This is likely to result in significant confusion as to what work rights will apply to a given applicant, and these could potentially change if an applicant changes sponsor.

The report indicates that if a child turns 21, then they would be considered to be independent unless they are studying full time or are unable to work due to disability. It is not clear what the result of turning 21 would be - does this result in work rights ceasing or the cancellation of the visa?

Onshore Lodgement for Skilled Migration

There is also a recommendation that 457 holders not be required to depart Australia for grant of their permanent visa (presumably this means General Skilled Migration), and that greater weight be given in ENS applications to the length of time spent in Australia on a 457 visa.

Onshore lodgement of general skilled applications for 457 holders would be a welcome development - such applicants currently must depart Australia for visa grant and evidencing. Whilst this is good for business for Air New Zealand (most applicants travel to NZ and we call this the "New Zealand shuffle"), there seems little reason for the existing requirement.


The report has a number of potential benefits for 457 holders, but also several potential traps. Acacia Immigration will be running seminars for 457 visa holders and sponsors in 2009 to explain the likely changes so watch this space for further details.

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