Australia Immigration: 14 September Legislation Changes Overhaul the Temporary Business Entry ProgramNew business sponsorship obligations in place from 14 September 2021
New business sponsorship obligations were introduced on 14 September 2009, following the implementation of the Migration Legislation Amendment (Worker Protection) Act 2008. These obligations are now legislated under the Migration Act 1958 and apply to all business sponsors of existing and future Subclass 457 visa holders.
The new, legislated business sponsorship obligations can be accessed via the Australian Government, Department of Immigration and Citizenship (the DIAC).
The DIAC can take action against business sponsors that fail to comply with the business sponsorship obligations. Current sanctions can be found online.
Requirement to provide "equivalent terms and conditions" and pay at "market salary rates" Business sponsors must provide equivalent terms and conditions of employment to 457 visa holders as those provided (or that would be provided) to Australian employees performing equivalent work in the same location. This includes paying salaries at the market rate for Australian employees for the same hours of work, and providing equal leave entitlements.
Important points about market salary rates include:
- Business sponsors must provide evidence of the "equivalent terms and conditions" at time of nomination application. Evidence required would depend on whether or not there is an Australian employee within the organization performing an equivalent role. Examples of evidence might include a copy of the enterprise agreement, industry award agreement, copies of payslips and contracts of Australian employees, ABS earnings data or remuneration survey data from reputable industry bodies or professional associations.
- The base rate of pay for future 457 nomination and visa applications must be above the newly-introduced temporary skilled migration income threshold (TSMIT). The TSMIT is currently gazetted at $45,220 and will be indexed annually.
- Nominated occupations for which the market salary rate is below the TSMIT will be refused, e.g. where the industrial award that covers Australian employees is below $45,220.
- A base salary below the TSMIT is acceptable in certain circumstances where the 457 visa holder/applicant's "guaranteed earnings" are equal to or greater than the TSMIT. Guaranteed earnings can include the agreed monetary value of non- monetary benefits that are salary sacrificed, such as LAFHA and packaged motor vehicles.
- The market salary rate and TSMIT assessment do not apply to high-income earners, i.e. 457 visa holders/applicants on salary packages above $180,000. We note that this figure can include the agreed monetary value of nonmonetary benefits, e.g. packaged motor vehicles.
- Business sponsors have until 1 January 2022 to start paying market rate salaries for employees whose 457 visas were granted before 14 September 2009. During this time, the minimum salary level (MSL) must be met.
- Business sponsors must increase the pay of 457 visa holders when they increase that of an Australian citizen or permanent resident working in the same occupation in response to a rise in the market salary rate for that occupation.
- The DIAC's monitoring capacity of the obligation to pay market rate salaries has been enhanced due to increased cooperation and information sharing between the ATO and the DIAC.Changes to health costs
Before 14 September 2009, business sponsors were required to meet health care costs incurred by 457 visa holders who were treated in public hospitals as public patients. Business sponsors will continue to have this responsibility for 457 visa holders whose visas were granted before 14 September 2009, but will not be required to meet health care costs for 457 visa holders who are granted a visa after 14 September 2009.
From 14 September 2009, all primary and dependent 457 visa holders will be required to maintain adequate health insurance or Medicare coverage for their full stay in Australia. This will be enforced via a mandatory visa condition (8501). Health insurance providers will be given the authority to notify the DIAC when a 457 visa holder ceases to hold health insurance coverage. Subclass 457 visa holders who let their health insurance or Medicare coverage lapse may have their visas cancelled.
At the time of application, primary and dependent 457 visa applicants must provide the DIAC with evidence that they have made adequate health insurance arrangements. Health insurance providers will be required to complete a letter that confirms the insurance meets the minimum standards. Evidence of enrolment in Medicare in Australia under a Reciprocal Health Care Agreement (RHCA) would meet this requirement in certain circumstances.Changes to business sponsorship applications
All business sponsorship applications approved after 14 September 2021 will be valid for three years. There is also a provision for varying the terms of approval, such as extending the term of the business sponsorship or increasing the number of nominations permitted.
Applicants for business sponsorship will be required to meet revised training benchmarks devised by the Department of Education, Employment and Workplace Relations (DEEWR). These have not yet been confirmed.
Employers that seek to nominate applicants for certain other categories of temporary residence, such as occupational trainee visas, must now be specifically approved as sponsors for these visa categories.Changes to work limitation condition 8107
The new work limitation condition (8107) applies to all existing and future 457 visas. Under this condition, 457 visa holders are able to change employer or occupation without the need for a new visa application (providing their previous visa is valid and certain criteria are met). Before changing employer or occupation, however, a new nomination application must be lodged and approved under the appropriate business sponsor and occupation, unless the sponsored person is an exempted visa holder.
Changes to the 'leave without pay' requirements permit approved leave of up to 12 months providing certain criteria are met. The new legislation also specifies the maximum period for which a 457 visa holder can cease employment as 28 days.
A new nomination application must be lodged when a 457 visa holder changes occupations with the same business sponsor. This includes promotions and demotions into different occupations for a period of more than two months.
Additional changes to nomination and visa applications
- Removal of regional concessions.
- New Subclass 457 and Subclass 442 occupational trainee occupations list.
- Nomination applications must identify the primary visa applicant.
- Changes to English language requirements.
- Where a new nomination application is lodged for a current 457 visa holder, all secondary 457 visa holders must be listed on the application form to ensure that on approval, the business sponsorship undertakings for dependent family members are all transferred to the new employer.
- Skills assessment will be required as part of the visa application process for some occupations and may also be requested by the DIAC in certain other circumstances.
- There will be greater scrutiny of the skill level of 457 visa applicants in relation to the nominated occupation.
Sponsors will be required to certify that the nominated applicant holds skills and qualifications commensurate with the skills and qualifications of the relevant occupation under the Australian Standard Classification of Occupations (ASCO), and that the duties of the nominated occupation will include a significant majority of the duties described in the relevant ASCO.
The changes to the 457 visa program will have a significant impact for business sponsors. We encourage you to conduct a comprehensive review of your 457 population to identify any immigration, taxation or remuneration issues that may arise as a result of the changes. Ensuring you have strong supporting processes and systems in place for your temporary business entrants will be vital to ensuring your and their compliance with the new legislation.