Red Tape to be Removed for 457 Business Sponsorship Program

By Mark Webster
Thursday, 19 March 2015

The Australian Government has provided a response to the Independent Review into the Integrity of the 457 Visa report.

The Government has accepted almost all of the recommendations in the Report, and we can expect to see some reduction in the red tape associated with sponsorship of workers under the 457 program. The Government has indicated that the majority of changes should be implemented by the end of the 2015-16 program year.

Some of the likely changes include:

Training Benchmarks for 457 Sponsorship

We are likely to see a much simpler training requirement to replace the current training benchmarks which require a certain percentage of payroll to be spent on training of Australian permanent residents or citizens.

The Report suggested a training levy which depends on the size of the employer and the degree to which they use the 457 program.

Establishing an employers' training record currently involves a significant amount of evidence, and this change can be expected to significantly reduce paperwork. Further consultation may be required before the changes are formally announced, and are likely to come into effect in 2016.

English Requirement for 457 Visas

457 applicants currently require a score of at least 5 in each band of IELTS (Vocational English). An average band score of 5 will be accepted, providing the applicant has at least 4.5 in each band.

We are also likely to see the adoption of the Alternative Tests of English which are already being used for other skilled visas.

There is currently an exemption from English language testing if the 457 applicant has studied for 5 years continuously in English medium. This can cause issues if the 457 applicant has taken a break from studies. We are likely to see a change which means that the exemption will require a cumulative period of 5 years of study, rather than requiring continuous study.

These changes will make the English language requirement far less onerous for applicants, and are likely to come into effect in the near future.

Business Sponsorship Validity Periods

Employers must be approved as a business sponsor before they can sponsor staff under the 457 program. Most employers are approved for a period of 3 years, during which they can sponsor staff for 457 visas. If the business has been operating for less than 12 months, the sponsorship approval will be valid for only 12 months under the current rule.

The Report proposes that the validity period for sponsorship approvals be increased to 5 years or 18 months for recently established businesses.

This change will mean employers do not need to renew their sponsorships as often. The changes will only affect sponsorships approved after the changes come into effect, and this is likely to happen in the next 6 months.

Salary Level

The Government has indicated that they support the following changes to the salary level for 457 visas:

The current minimum salary level (TSMIT) be maintained at $53,900 for the next few years
Reviewing the level of TSMIT and whether it should be varied by locality - this could involve accepting a lower minimum salary level for regional positions
The minimum salary for waiver of the market rate salary requirements be reduced from $250,000 to $180,000

Salary level for 457 visas is a politically charged issue - the Government may face opposition in the Senate in implementing the changes to salary level.

Applying for Permanent Residence through ENS and RSMS

Holders of 457 visas who have worked with their sponsoring employer for the last 2 years may be eligible for permanent residence through the Temporary Residence Transition Stream of the Employer Nomination Scheme (ENS) and Regional Sponsored Migration Scheme (RSMS) visas.

However, the employee must have held their 457 for 2 years and also have spent two years with their employer in the same position to be eligible. A change has been proposed allowing employees to qualify providing they have held a 457 for the last 2 years, and worked with their employer for the last 12 months. This would effectively revert to the requirement prior to 2012 and would be much fairer for 457 holders.

Applicants for ENS and RSMS visas must in general be under 50 when they apply. There currently is no age restriction for 457 visas, which means many 457 holders are not eligible for PR even if they stay with their employers for more than 2 years. Immigration will consider revising the age requirement for ENS and RSMS when the applicant holds a 457 visa.

Compliance Strengthened

The Government has indicated that it will strengthen compliance by strengthening employer sponsorship monitoring, cooperating more closely with other agencies such as the ATO, and "naming and shaming" employers who do the wrong thing.

Payments by visa applicants to employers to secure 457 sponsorship will also be outlawed.

Conclusion

We expect to see some changes to the 457 program coming into effect within the next 6 months. We will post details of the changes as they become available.

If you would like assistance in sponsoring overseas employees, please contact us for more information.

If you are a potential visa applicant and would like to discuss obtaining a temporary or permanent work visa, please book a consultation to discuss which options would suit you.