Government announces new employer sponsored visa

Source: Department of Immigration and Border Protection, 18 April 2017

Today the Australian Government has announced a new Temporary Skill Shortage (TSS) work visa to replace the Subclass 457 Temporary Work (Skilled) visa from March 2018.

After the 2014 review into the integrity of the temporary work (skilled) visa (Subclass 457) programme we have been expecting some broad changes to the 457 visa programme. The integrity review panel looked at measures to reduce mis-use and and improve flexibility and responsiveness to economic and business changes.

The 457 visa brand has been tainted by mis-use and exploitation of migrant workers. So it’s no surprise that the Government would introduce a new visa class to implement reforms.

The new visa will have added requirements, including previous work experience, better English language skills and labour market testing. A new training fund will also be established.

Below we summarise the proposed changes and what they mean for visa holders and employers:

The new TSS Visa

According to the DIBP website, the new TSS visa programme will be comprised of a Short-Term stream of up to two years and a Medium-Term stream of up to four years and will support businesses in addressing genuine skill shortages in their workforce and will contain a number of safeguards which prioritise Australian workers.

Key reforms include:

  • Introducing the temporary skill shortage visa with new requirements, including but not limited to:
    • new, more targeted occupation lists which better align with skill needs in the Australian labour market
    • a requirement for visa applicants to have at least two years’ work experience in their skilled occupation
    • a minimum market salary rate which ensures that overseas workers cannot be engaged to undercut Australian workers
    • mandatory labour market testing, unless an international obligation applies,
    • capacity for only one onshore visa renewal under the Short-Term stream
    • capacity for visa renewal onshore and a permanent residence pathway after three years under the Medium-Term stream
    • the permanent residence eligibility period will be extended from two to three years
    • a non-discriminatory workforce test to ensure employers are not actively discriminating against Australian workers
    • strengthened requirement for employers to contribute to training Australian workers
    • the Department of Immigration and Border Protection will collect Tax File Numbers and data will be matched with the Australian Tax Office’s records, and
    • mandatory penal clearance certificates to be provided.
  • Tightening eligibility requirements for employer sponsored permanent skilled visas, including but not limited to:
    • tightened English language requirements
    • a requirement for visa applicants to have at least three years’ work experience
    • applicants must be under the maximum age requirement of 45 at the time of application
    • strengthened requirement for employers to contribute to training Australian workers, and
    • employers must pay the Australian market salary rate and meet the Temporary Skilled Migration Income Threshold1.
  • 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.
  • Significantly condensing the occupation lists used for skilled migration visas, including the subclass 457 visa, from 19 April 2017.

The reforms implement some recommendations from the Independent Review of Integrity in the Subclass 457 programme including addressing the use of the programme by migrants with qualifications but no work experience. The final report of the panel including its recommendations is available here: Robust New Foundations – A Streamlined, Transparent and Responsive System for the 457 Programme (1.4MB PDF).

But some reforms announced contradict the recommendations of the independent panel. There is no evidence that mandatory labour market testing improves jobs for Australians. Indeed, the panel referred to OECD evidence which confirms that employer-conducted labour market testing is not “fully reliable”, and in the Australian context has proven ineffective to protect jobs for Australian workers.

Removing the ability for many migrants to become permanent residents after spending a period of time in Australia and limiting work visas to only 2 years at a time could make it harder for employers to attract international talent.

What does this mean for employers and employees

We expect that following this announcement, the Government will provide a draft bill to legislate the specific reforms to the employer sponsored work visa programme. In the meantime, employers should continue to use the current 457 visa program as usual for new sponsorships.

For new work visa applications, employers can continue to use the 457 visa programme and grandfathering arrangements will need to be put in place for existing 457 visa holders.

From March 2018, the new TSS visa will replace the 457 visa. Watch this space, we are analysing the changes and will share more details shortly.

The Government has indicated that there will be changes to the list of eligible occupations for sponsorship under the 457 visa programme, to be implemented on 19 April 2017. Please refer to our related article on changes to the skill lists.

We will continue to monitor the reforms and provide further updates in due course.

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