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457 Visa Newsflash

Australia Reforms to the Temporary Work (Skilled) (subclass 457) program

457 Visa NewsflashFollowing the recent announcement by the Australian Government regarding the 457 visa reforms, further detail has been released by the Department of Immigration and Citizenship (DIAC) regarding aspects of the 457 program and processing.

The Subclass 457 Temporary Work (Skilled) Visa is designed to enable businesses to sponsor a skilled overseas worker if an appropriately skilled Australian cannot be identified to fill a skilled position. The program aims to ensure that the working conditions of sponsored visa holders are no less favourable than those provided to Australians and that overseas workers are not exploited.

The following measures have been proposed by DIAC, to take effect on 1 July 2013:

Measure Issue Proposed Action
Strengthening the Employer Attestation provision Under the current Regulations, there is no provision for DIAC to exercise any power to take action if a sponsor is found to be discriminating in favour of overseas workers.

Additionally, there are no grounds for DIAC to refuse subsequent Business Sponsorship applications.
Strengthen the current attestation to make it an ongoing binding commitment that requires employers to demonstrate that they do not discriminate in favour of overseas workers. This requirement would apply at the time of approval and for the duration of the sponsorship.

Sanctions will be imposed for non-compliance.
Training Benchmarks There is currently no specific requirement for the sponsor to keep any records to evidence its commitment to training.

Furthermore, a sponsor seeking ongoing approval is not required to demonstrate that they met their commitments to training Australians throughout the term of their previous sponsorship(s).
Strengthen the provisions that relate to training benchmarks, both at approval and post-approval stages, to make them a binding requirement rather than a commitment.

Sanctions will be imposed for non-compliance.
Genuineness criterion There are concerns that the duties of some positions have been modified to appear more skilled than what they actually are, and that the program is being used to secure visas for family members or personal associates, rather than to fulfil a genuine skill shortage. Amend the nomination requirements to ensure:
  • The tasks of the nominated occupation correspond to the tasks of the position
  • The position is genuine
  • The terms and conditions of employment are sufficient to attract a qualified person locally
  • The position fits broadly within the scope of the activities and the scale of the business.
Further assessment to be given to nominations of family members or personal associates of the sponsor.

Introduce provisions for a nomination to be refused where there are integrity concerns.
Amendments to the terms of an approved sponsorship Under the current Regulations, there is no capacity for DIAC to request an explanation for the number of 457 workers an employer intends to sponsor.

This measure would not cap a sponsor's use of the program, but rather limit the terms of a sponsorship to an approved level.
Sponsors will be required to request a certain number of nominations (positions) when applying for a Business Sponsorship. DIAC will have discretion to approve a lesser number, or to refuse the application where the requested number is not justified by the sponsor.

A sponsor may apply to exceed the level of nominations by varying the terms of their sponsorship, or through a new application.
Strengthening assessment of generalist occupations Occupations including Program or Project Administrators (ANZSCO 511112) and Specialist Managers nec (ANZSCO 139999) have been identified as occupations of "integrity" concern in the Subclass 457 program. Impose a requirement to request a skills assessment or limit the use of these occupations to certain industries.
Strengthening the market rate provisions Under the current Regulations, there is the potential for employers to create their own market rate through sourcing just one Australian worker willing to work for a particular wage.

For example, conditions in the domestic labour market could also be undermined in cases where an occupation commands a market salary greater than AUD180,000 and employers reduce their costs by engaging foreign workers willing to work for AUD180,000.
Expand the assessment beyond the particular workplace to that workplaces' regional locality.

Increase the market salary assessment exemption threshold to AUD250,000 to ensure senior executives will continue to be exempt.
Undesirable employment relationships There is no scope to prohibit sponsors from establishing undesirable employment relationships such as on-hire arrangements and independent contractor arrangements (unless in a specified occupation). Tighten the Regulations by:
  • Prohibiting on-hire arrangements that fall outside approved Labour Agreements
  • Preventing sponsors from engaging visa holders under arrangements that resemble independent contracting arrangements.
Strengthening the obligation not to recover certain costs Under the current Regulations, sponsors can circumvent the obligation by requiring the visa applicant to make a pre-payment of costs, and as a result DIAC cannot evidence the act of 'recovery'. Strengthen this Regulation to ensure that sponsors do not pass these costs, in any form, onto a sponsored person.
Preventing potential for misuse of the English language salary exemption When a visa holder transfers sponsors, English-language skills are not re-assessed. For example, a visa holder earning over AU$92,000 who was exempt from evidencing English language is not re-assessed when transferring sponsors, despite the new position offering less than the exemption level of AUD92,000. A new regulation will be introduced at the nomination stage requiring the visa holder to have met the English-language requirement or satisfy the exemption.
Terms of sponsorship amendments for overseas business sponsors and start-up businesses Currently, Overseas Business Sponsorships are granted for a period of three years and there is no option for DIAC to reduce this term to coincide with the genuine purpose of sponsoring foreign workers. Additional terms of sponsorship approval will be introduced:
  • The sponsorship term for an overseas business will be for the term of the project (up to three years) or 12 months, whichever is more
  • The sponsorship term for a start-up business will be 12 months. Start-up businesses would be able to apply for a three-year Business Sponsorship after the completion of their first one-year term
  • The validity of any Subclass 457 visa granted in association with an Overseas Business Sponsor or a start-up business would be limited to the same period.
Mandatory eLodgement of Subclass 457 applications The Subclass 457 program is the only skilled visa program that is not wholly eLodged. The introduction of mandatory eLodgement will require legislative change.
Increase in visa application charge for the Subclass 457 visa This follows the 'user pays' approach previously announced by the government. From 1 July 2013 the visa application charge for the Subclass 457 visa will increase from $455 to $900 per application. At this stage, there has been no advised increase in the application charge for the nomination application.

Deloitte's View

The Australian Government has stated that for genuine users of the 457 program, the proposed changes will not affect their ability to sponsor foreign labour to meet the demands of local business.

Deloitte observes that the changes will provide the Department of Immigration and Citizenship with further discretion to exercise its power in areas where there is non-compliance, particularly with regard to Business Sponsorship obligations. This additional scrutiny and evidentiary requirement has the potential to delay the processing of 457 visa applications, which in turn could affect employers needing to deploy skilled foreign labour in short supply to project locations.

Detailed consultation with your immigration advisers is recommended to inform and equip your business to manage the additional information and documentation required by DIAC as a result of the changes.

Furthermore, the Australian Taxation Office and DIAC have advised that they will be conducting a more targeted approach to reviewing immigration and tax information of visa holders in Australia. The review will include data-matching between the two authorities to identify tax non-compliance. The review could also bring to light instances of possible immigration non-compliance as a result of the findings.

This increased data-matching activity heightens the need for employers to remain aware of their immigration obligations, including the need to retain appropriate records when employing foreign workers.

Contacts

If you have any questions concerning the issues in this GES NewsFlash, please contact one of the GES professionals at our Deloitte offices at the right hand side of this page.

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