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Review of the 457 program – changes ahead!

The Australian Government has responded to the Independent Review of the 457 visa program and on the large has accepted almost all of the recommendations.

This means less red tape and a smoother faster processing associated with the sponsorship of foreign workers under the 457 visa program.

The Government has indicated that the majority of changes should be implemented by the end of the 2015-16 program year.

Here are the highlights of Government's response:

Labour market testing

This got a bit of a beating, and rightly so. The Report acknowledged that 'employer-conducted labour market testing is not "fully reliable", and in the Australian context has proven ineffective.' The Report recommended that labour market testing be abolished.

This has been noted by the Government but not necessarily supported.

Top income level exemptions - Currently the salary exemption is $250,000 and the Report recommends alignment with top marginal tax rate of $180,000. The Government has been positive towards this recommendation meaning less burden on the sponsoring company for high value employees.

Salary levels and the TSMIT

The TSMIT will be retained and remains at $53,900 pa with no further increases until it is reviewed within 2 years.

The Government has indicated that there will be concessions for Labour Agreements and Regional areas and has supported the possible acceptance of up to 10% lower than the TSMIT.

Training benchmarks

The training benchmarks may be replaced with an annual training fund contribution based on each 457 visa holder sponsored, with the contributions scaled according to size of business.

English language requirement

Currently the English language requirement for 457 visa applicants is a score of at least 5 in each band of the IELTS. The Report recommended, and the Government accepted, that the English language requirement be amended to an average score of 5.

There'll be concessions to the English language requirement for certain occupations on a case by case basis, or under a Labour Agreement and Regional Migration.

The Government has also supported the adoption of alternative English language tests that have already been introduced in other visa subclasses.

One of the more interesting changes would be the current exemption that requires five years continuous study. A likely change would see this amended to five years cumulative study. This is of greater advantage to applicants who have taken a break in their studies but on the whole has acquired 5 years of study.

Validity periods for Business Sponsors

Standard Business Sponsors should be approved for five years and start-up business sponsors for eighteen months.

There will also be easier simplified process for sponsor renewal.

Employer Nominated Scheme  and Permanent residency

Currently, 457 visa holders need to have held their visa for 2 years and also worked for their employers for 2 years before they are eligible to apply for permanent residency under the Employer Nomination Scheme.

The proposed changes will see that employees must hold their 457 visa for at least 2 years and worked with their employer for the last 12 months. This means a fairer system for 457 visa holders.

Proposed changes also include lifting the age restriction on those 457 visa holders transitioning to the Employer Nomination Scheme or Regional Sponsored Migration Scheme.

The ENS and RSMS have age restrictions requiring applicants to be under 50 in order to apply. However there is no age restrictions on applying for 457 visas. This creates an unfair situation for older 457 visa holders who are ineligible for permanent residency even if they have been with their sponsoring employers for 2 years.

Increased monitoring and information sharing to enhance compliance

The Government will step up its monitoring and compliance program and will see greater collaboration between the department, the Australian Taxation Office, Fair Work Commission and other government agencies.

The Government will also 'name and shame' employers who are found to have breached their obligations.

What does this mean for you?

Most of these recommendations will return the 457 program to its intended operation, which is to allow businesses to quickly respond to skills shortages.

The Review has cut some red tape without impacting the integrity of the program but also calls for increased monitoring and compliance measures.

This will create a better environment both for sponsoring businesses and foreign workers.

Many of the changes proposed also uphold the rights of 457 visa holders to ensure that they are not taken advantage of because of their special situation in Australia.

As a business, you can be assured that things will be quicker going forward with less red tape and as an individual foreign worker, you can be assured that there are measures in place to ensure that you have a better working environment and fairer chance of gaining permanent residency in Australia.

Sources:

Government response to the Independent Review into the integrity of the subclass 457 programme

Robust New Foundations - A Streamlined, Transparent and Responsive System for the 457 Programme (1.4MB PDF)

 

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