Overhaul of Australian Temporary-Worker-Visa-Program Makes Permanent Visas More Attractive

The Australian Department of Immigration has introduced a number of changes to the 457 temporary worker visa program so far in 2009, and further changes have been announced which amount to a complete overhaul of the 457 visa system. The 457 visa program allows employers to sponsor workers for a visa lasting up to 4 years. Permanent employer sponsored options are unaffected by the changes, making them more attractive than 457 visas in many ways.

The changes have been in response to a number of concerns. Firstly, there is a perception that employers rely too heavily on the 457 program in a time where the unemployment rate in Australia has been rising. Secondly, there have been several examples of employers who have abused the 457 system leading to exploitation of workers.

Minimum Salary Level

There will be an increase in the Minimum Salary Level from 1 July 2009. The changes will result in an increase in the applicable minimum salary of 4.1% for all workers currently on a 457 visa.

The minimum salary levels for workers sponsored after 1 July 2009 will be as follows:

• Non-IT Occupations: $45,221 (currently $43,440)
• IT Occupations: $61,919 (currently $59,480) Benefit to Australia

Since February 2009, the Department of Immigration has been requesting evidence of the benefit to Australia of sponsoring the relevant employee at the nomination and visa application stage of the 457 process. Establishing benefit to Australia has always been a requirement for approval as a business sponsor, albeit one which the Department of Immigration has not actively policed.

Employers are now being asked to provide information on any redundancies which have occurred within the business, evidence of efforts made to recruit local workers and specific benefits of sponsoring each worker. This has introduced significant delays in the application process.

Minimum Salary to be Based on Market Rate

In addition to the above increases in the Minimum Salary Level, the Minister for Immigration has announced that from 1 September 2009 the required salary level will be based on a “market rate”. At this point, there are not many details on how this will be calculated.

However, it is likely that the market rate requirement will only apply where the remuneration package is under $100,000. The following sources of information are likely to be considered in estimating the market rate:

• Salary paid for equivalent positions in the business;
• Rate set by any Collective Agreements in effect
• Australian Bureau of Statistics (ABS) Data

The Department has already taken measures to implement this policy – sponsors have been requested in some cases to provide copies of employment contracts for employees in similar positions to the 457 applicant.

English Language Ability for Trade Applicants

English language testing is required for people being sponsored to work in trade occupations (ie ASCO Group 4). For applications lodged on or after 14 April 2009, the English language requirement has been increased from an IELTS average 4.5 to average 5.0.

In addition, chefs and head chefs are now required to provide evidence of English – these occupations are in ASCO Group 3 and were previously exempt from English language testing.

Workers are still exempt from English language testing if:

• They are to be employed in ASCO Groups 1-3 (ie Managers, Professionals and Associate Professionals) apart from Chefs and Head Chefs; or
• Base salary is $77,850 or higher; or
• They hold a passport from the UK, Ireland, USA, Canada or New Zealand; or
• They have completed certain qualifications taught in English medium

Skills Assessment for Trade Applicants

A formal skills assessment or “job-ready” test is to be progressively introduced from 1 July 2009. To date, there is little detail on what this would involve but is likely to include a workplace-based assessment.

Regional Sponsorship for Semi-Skilled Workers

Employers were previously able to sponsor semi-skilled workers in ASCO Groups 5-7 to fill positions in regional areas. Such positions had to be endorsed by the local Regional Certifying Body.

However, from 15 May 2009 such workers must be sponsored under a labour agreement. Obtaining a labour agreement involves an individual negotiation process for each employer or employer group, and can take 12 months or more.

Upcoming Changes to 457 Program

The above changes have made obtaining 457 visas more challenging for many employers. However, we can expect further changes in the future, including:

• Introduction of more objective criteria for assessment of the Employer’s training record;
• Revision of sponsorship obligations;
• Expanding the requirement for labour agreements to larger 457 visa users;
• Restricting the maximum length of time a person can spend in Australia on a 457 visa to 8 years;
• Making it easier for 457 holders to change employer or move onto permanent visas from within Australia.

Permanent Visas Now More Attractive

The changes have not so far affected the permanent employer sponsored options (ie ENS and RSMS). The permanent options are currently being processed reasonably quickly and may be a better option for employers who are concerned about sponsoring under the 457 program. In particular, the permanent options:

• Do not require employers to show benefit to Australia
• Salary need not be paid at the market rate
• Regional concessions are still available
• English language testing can be waived and is lower for regional positions
• There are no ongoing sponsorship obligations.

For employees, permanent visas are also much more favorable as they give access to Medicare, eligibility for Australian citizenship and make them less vulnerable if they lose their job.