An overhaul of Australia’s temporary worker visa program makes permanent visas more attractive

An overhaul of Australia’s temporary worker visa program makes permanent visas more attractive

An overhaul of Australia’s temporary worker visa program makes permanent visas more attractive

The Australian Department of Immigration has introduced a number of changes to the 457 temporary work visa program so far in 2009, and further changes have been announced that amount to a complete overhaul of the 457 visa system. The 457 visa program allows employers to sponsor workers on a visa for up to Four years. Permanent employer-sponsored options are not affected by the changes, making them in many ways more attractive than 457 visas.

The changes are in response to a number of concerns. First, there is a perception that employers are relying too heavily on the 457 program at a time when Australia’s unemployment rate is rising. Second, there are several examples of employers abusing the 457 system leading to worker exploitation.

Minimum wage level

There will be an increase in the minimum wage level from 1 July 2009. The changes will result in a 4.1% increase in the applicable minimum wage for all workers currently on a 457 visa.

The minimum wage levels for workers sponsored after July 1, 2009 will be as follows:

  • Non-IT occupations: $45,221 (currently $43,440)
  • IT occupations: $61,919 (currently $59,480) Australia benefit

Since February 2009, the Department of Immigration has required evidence of benefit to Australia from sponsoring the relevant employee at the nomination and visa application stage of the 457 process. Establishing benefit to Australia has always been a requirement for approval as a business sponsor, although such which the Department of Immigration did not actively monitor.

Employers are now required to provide information on any redundancies that have occurred in the business, evidence of efforts made to hire local workers and specific benefits of sponsoring each worker. This led to significant delays in the application process.

The minimum wage should be based on the market rate

In addition to the above increases in the minimum wage level, the Immigration Minister has announced that from 1 September 2009 the required wage level will be based on a “market rate”. There are not many details at this stage on how this will be calculated.

However, the market rate requirement is likely to only apply where the remuneration package is below $100,000. The following sources of information are likely to be considered in assessing the market rate:

  • Salary paid for equivalent positions in the business;
  • Rate determined by all applicable collective agreements
  • Australian Bureau of Statistics (ABS) data.

The Department has already taken steps to enforce this policy, in some cases requiring sponsors to provide copies of the employment contracts of employees in similar positions to 457 applicants.

English proficiency for trade candidates

The English language test is required for people who are sponsored to work in commercial occupations (ie ASCO Group 4). For applications submitted on or after 14 April 2009, the English language proficiency requirement has been increased from an IELTS average of 4.5 to an average of 5.0.

In addition, chefs and head chefs are now required to provide evidence of English proficiency – these occupations are in ASCO Group 3 and were previously exempt from English language tests.

Workers are still exempt from English language tests if:

  • They must be employed in ASCO Groups 1-3 (i.e. Managers, Professionals and Associates) with the exception of cooks and head chefs; or
  • Base salary is $77,850 or higher; or
  • They hold a passport from the UK, Ireland, USA, Canada or New Zealand; or
  • They have completed certain qualifications taught in English

Skills Assessment for Trade Candidates

A formal skills assessment or ‘work readiness’ test is due to be phased in from 1 July 2009. To date there are few details of what this will involve, but it is likely to include an on-the-job assessment.

Regional sponsorship for semi-skilled workers

Previously, employers could sponsor semi-skilled workers in ASCO groups 5-7 to fill positions in regional areas. Such positions had to be approved by the local regional certification authority.

However, as of May 15, 2009, these workers must be sponsored under an employment contract. Obtaining an employment contract involves an individual negotiation process for each employer or group of employers and can take 12 months or more.

Upcoming changes to the 457 program

The above changes have made obtaining 457 visas more challenging for many employers. However, we can expect further changes in the future, including:

  • Introducing more objective criteria for evaluating the employer’s internships;
  • Review of Sponsorship Obligations;
  • Expanding the requirement for employment contracts for larger 457 visa users;
  • Limiting the maximum length of time a person can spend in Australia on a 457 visa to 8 years;
  • Making it easier for 457 holders to change employers or switch to permanent visas from Australia.

Permanent visas are now more attractive

The changes so far have not affected permanent employer-sponsored options (ie ENS and RSMS). Permanent options are currently processed relatively quickly and may be a better option for employers concerned about 457 sponsorship. Specifically, permanent options:

  • Do not require employers to demonstrate benefit to Australia
  • The salary need not be paid at market rate
  • There are still regional concessions
  • The English language test can be waived and is lower for regional positions
  • No current sponsorship obligations.

For employees, permanent visas are also much more favorable as they give access to Medicare, the right to Australian citizenship and make them less vulnerable if they lose their jobs.

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