Top 10 Changes to 457 Employer Sponsorship from 1 July 2013

webster By Mark Webster
Wednesday, 03 July 2013

Important changes to the 457 program have come into effect from 1 July 2013 and every employer sponsoring employees should be aware of these.

Many of these changes were previously unannounced and will lead to greater costs and delays to employers seeking to sponsor under the 457 program.

Acacia has produced a list of the top 10 changes to the 457 program that employers need to know about.

1. Increases to Application Fees

Significant increases to application fees apply from 1 July. Some areas of particular note:
  • Additional charges apply for each dependent family member - $900 for a spouse or dependent over 18, and $225 for any children under 18
  • Where applying onshore, a surcharge of $700 may apply for each applicant. Whether this applies depends on which visa is held and whether that visa was applied for onshore

A summary of the new charges is below:

Item Old Fee New Fee Increase
SBS Approval $420 $420 $0
457 Nomination $80 $330 $250
457 Visa $455 $900 $445
457 Dependent (Over 18) $0 $900 $900
457 Dependent (Under 18) $0 $255 $255
Onshore Extension (per applicant) $0 $700 $700
Total $955 $3,505 $2,550

2. English Language Testing

Previously, English language testing for 457s was only required in the case of trade and technician occupations.

From 1 July, all 457 applicants will require English language testing, unless covered by one of the exemptions below:
  • Holders of passports from the UK, Ireland, USA, Canada or NZ
  • Where the salary level is at least $96,400
  • Where the applicant has completed 5 consecutive years of study in English medium at the secondary or higher education level
English language tests must be conducted prior to lodgement of the 457 visa application. The usual test is the IELTS test, and a score of at least 5 in each of the 4 components of IELTS would generally be required.

Existing 457 visa holders will need to meet the English requirement if they are nominated again for a 457 visa - either when extending their 457 with the current employer or transferring to a new employer.

3. Caps on Numbers of Sponsored Employees

Previously, Standard Business Sponsors had no limit on the number of employees they could sponsor for 457 visas.

From 1 July, sponsors will need to justify the number of workers to be sponsored for 457 visas as part of the sponsorship approval process, and a certain number of possible 457 sponsorships will be approved. Once this cap is reached, the employer could apply to have the terms of the sponsorship altered to allow sponsoring of further employees.

4. Limitations on Recently Established Businesses

The usual period of validity of a Standard Business Sponsorship is 3 years. From 1 July, a "recently established business" - ie one which has been in operation for less than 12 months - will be approved as a sponsor for only 12 months. In addition, the 457 visa granted to a startup business will be valid for only 12 months versus the usual 4 years.

5. Skills Assessments Required for More Occupations

Previously, skills assessments were required only for certain trade occupations.

From 1 July, skills assessments are required for two occupations of concern to the Department:

  • Program and Project Administrator
  • Specialist Manager Not Elsewhere Classified

6. Limitations on Hospitality Occupations

Some concern has been expressed about the rise in the number of positions sponsored in the hospitality industry. As a result, there are now limitations on sponsorship of Cooks, Chefs and Cafe/Restaurant managers. Such employees cannot be sponsored to fill positions in fast food or takeaway restaurants.

7. Training Requirement

The training obligation for sponsors will now apply for each 12 month period from the approval of sponsorship. Previously, the obligation was to meet the obligation for each financial year.

Employers need to keep records of training activities to meet the obligation. If an employer does not meet the training benchmark, they may not be approved for an extension or variation of their sponsorship and could face fines or cancellation of their approval.

The training benchmarks remain the same - either 1% of payroll spent on training of Australians in the business, or contribution of 2% of payroll to a training fund.

8. Work Condition 8107

There are a number of changes to the work condition 8107 which applies to 457 visa holders:
  • They must commence work within 90 days of arrival in Australia
  • If they leave employment with the current sponsor, they have 90 days to be sponsored by a new employer before they will be considered in breach of the 8107 condition (increased from the previous 28 days)
  • If required by their occupation, the 457 holder must have the necessary licensing professional membership or registration in Australia

9. Salary Level Increases

Threshold salary levels have increased as of 1 July as follows:

Salary Level Previous Current Increase
TSMIT (Minimum Salary) $51,400 $53,900 5%
English Language Waiver $92,000 $96,400 5%
Market Rate Salary Waiver $180,000 $250,000 39%

10. Other Changes

There are a host of other changes, including:
  • All 457 applications must now be lodged online, with no paper applications possible
  • Greater powers for Fair Work Australia to inspect workplaces for compliance with immigration laws
  • Possibility of refusal of a nomination on the basis that it is "not genuine"
  • In determining market rate salary, reference can be made to employees working in similar businesses in the locality, rather than just the sponsor's workplace
  • Requiring employers to retain employment contracts to demonstrate that they are not engaging in defacto labour hire arrangements
  • Requiring sponsors to pay for the cost of obtaining approval as a business sponsor, rather than having these be paid by the 457 applicant or another person

Conclusion

The impact of the above changes is significant and will prevent many businesses from looking at the 457 program. The changes will make overseas businesses seriously consider setting up in other regional centres, such as Singapore, rather than Australia.

The haste with which these changes have been introduced and the lack of any real consultation is deeply concerning.

But some of the most significant changes are still to come - the introduction of Labour Market Testing for 457 visa applications has passed through Parliament in the form of the Migration Amendment (Temporary Sponsored Visas) Bill 2013. When these changes come into effect is unknown, but they will cause businesses still more cost and delay when sponsoring employees.

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