The previous 457 visa was the most commonly used temporary visa program for businesses that wished to bring overseas skilled employees to work in Australia, until it was abolished on 18 April 2017.
The 457 visa provided approved employers with alternative hiring options, enabling them to bring in scarce talent from overseas that they could not find in the Australian labor market.
The 457 Visa is going to be replaced with the completely new Temporary Skill Shortage (TSS) Visa by March 2018. A number of further substantive changes is expected to become effective as early as 1 July 2017.
What follows is an overview of what the above changes mean for your business and your overseas sponsored employees.
As at 30 September 2016, there were 172,187 primary and secondary holders of 457 Visa in Australia.
Overview of the Announced Changes
The TSS visa programme will include:
- Short-Term Stream for up to 2 years designed for Australian businesses to fill skill gaps with foreign workers on a temporary basis, where a suitably skilled Australian worker cannot be sourced;and
- Medium-Term Stream for up to 4 years designed to allow employers to source foreign workers to address shortages in a narrower range of high skill and critical need occupations, where a suitably skilled Australian worker cannot be sourced,
both streams aimed to prioritise employment of Australian workers.
The main changes related to the announced abolition of 457 Visa and introduction of the new TSS Visa include in particular the following:
- Reduced number of occupations eligible for the Short-Term Stream of the TSS Visa (on 19 April 2017, 200 occupations were removed entirely, including some technology-related roles and legal professionals among them);
- Medium-Term Stream of the TSS Visa available only for high-level skill shortages;
- From 1 July 2017, the lists of eligible skilled occupations will be further reviewed based on advice from the Department of Employment and the Department of Education and Training;
- Tightened English language proficiency requirements: IELTS (or equivalent test) score of 5, with a minimum of 4.5 in each test component, for Short-Term Stream and a minimum of 5 in each test component for Medium Term Stream;
- From 1 July 2017, the existing English language salary exemption threshold, which exempts applicants whose salary is over $96,400 from the English language requirement, will be removed;
- A new requirement for visa applicants to have at least 2 years’ work experience in their skilled occupation;
- Mandatory labor market testing unless there is an exception arising from an international treaty obligation;
- A market salary rate assessment;
- Possibility for only 1 onshore visa renewal without a pathway to a permanent residency after 2 years under the Short-Term Stream;
- Possibility for visa renewal onshore and a permanent residence pathway after 3 years under the Medium-Term Stream as opposed to the current 2 years before a nominated employee can apply for 186 Visa;
- A strengthened Australian workers training obligation for employers sponsoring foreign skilled workers;
- A requirement to pay a contribution to the Skilling Australians Fund. The contribution will be payable in full at the time the worker is nominated in the amount of $1,200 per year or part-year for small businesses (those with an annual turnover of less than $10 million) and $1,800 per year or part-year for other businesses;
- Collection of Tax File Numbers by the DIBP and matching data with the Australian Taxation Office’s records to ensure that visa holders are not paid less than the salary nominated in their nominations by the employers;
- Mandatory provision of penal clearance certificates, which is a more stringent requirement than the current self-declared check under 457 Visa;
- Tightened eligibility requirements for employer-sponsored permanent skilled visas, including in particular a requirement for visa applicants to have at least three years’ work experience and be under 45 years of age at the time of application.
Concessions for regional Australia will continue to be available. Employers in regional Australia will continue to have access to occupations under the temporary and permanent visas, to reflect their skills needs.
Existing permanent visa concessions for regional Australia, such as waiving the nomination fee and providing age exemptions for certain occupations, will be retained. Consideration will be given to expanding the occupations in regional Australia that are exempt from the age requirement.
The implementation of the above-noted changes has begun immediately and is to be completed by March 2018.
Who is Affected?
Current 457 Visa applicants and holders, prospective applicants, businesses sponsoring skilled migrants and industries relying on the sponsored overseas workers are affected.
Existing 457 visas will continue to remain in effect.
457 visa applicants that had lodged their application on or before 18 April 2017, and whose application had not yet been decided by the DIBP, with an occupation that has been removed from the list of eligible occupations, may be eligible for a refund of their visa application fee.
Nominating businesses for these applications may also be eligible for a refund of related fees.
