The end of 457 Visas. Should you be worried?

Subclass 457 Visas will soon be scrapped in favour of a new Temporary Skill Shortage (TSS) Visa. But what’s really changing and how will you – and your business – be affected

The Commonwealth government recently announced the abolishment of subclass 457 Visa. It is being replaced with a new system for employment-related immigration. With this little notice of changes and lots of unanswered questions, this move has left a lot of employers and sponsored staff in uncertain territory.

While the 457 Visa won’t disappear entirely until 2018, many of the government’s changes are already in effect. So, if you are concerned about the impacts it will have on you and your business, keep reading.

The 457 Visa becomes the Temporary Skill Shortage (TSS) Visa

First, if your 457 Visa has been approved before 19 April 2017 it will remain valid. However, new 457 Visa applications have been impacted and after March 2018, you’ll be applying for the new Temporary Skill Shortage (TSS) Visa, a replacement of 457.

The TSS Visa is divided into a Short-Term stream, which provides working rights and temporary residency for up to two years. A Medium-Term stream, provides working rights and temporary residency for up to four years.

The Short-Term stream is designed to help Australian businesses fill skills gaps with foreign workers on a temporary basis, where there’s no suitably skilled Australian worker available. Meanwhile, the Medium-Term stream lets employers address shortages in a narrower range of high skill and critical-need occupations

The criteria employers and Visa applicants need to meet

To be eligible for either stream, applicants and employers must meet certain criteria.

• Work experience – the applicant must have at least two years’ relevant work experience.
• Labour market testing – employers will need to show that they’ve tried to hire an Australian worker first, unless there’s an international obligation that says they don’t need to.
• Minimum market salary rate – employers must pay the Australian market rate and meet the Temporary Skilled Migration Income Threshold requirements.
• Character – penal clearance certificates will be mandatory for every applicant.
• Workforce – employers will need to show they’re not actively discriminating against Australian workers by meeting a non-discriminatory workforce test.
• Training – employers face a stronger obligation to contribute towards training Australian workers, which we’ve now learned from the 2017 budget means employers paying a “foreign worker levy” instead of being obliged to spend 1-2% of payroll on training.

Critical dates

The transition to the TSS won’t be complete for almost a year. In the meantime, the government has released a number of key dates.

19 April 2017

The changes introduced already introduced include:

• Reducing the Occupations Lists (ie those jobs eligible for 457 Visa nomination) from 651 to 435 occupations. Fifty-nine of the remaining occupations now have exclusions or special conditions.
• Changing the name of the Consolidated Sponsored Occupation List (CSOL) to the Short-term Skilled Occupations List (STSOL).
• Changing the name of the Skilled Occupations List (SOL) to the Medium and Long-term Strategic Skills List (MLTSSL).
• The maximum duration of 457 Visas issued for occupations on the STSOL will be reduced to 2 years, rendering those Visa-holders ineligible to apply for PR. 457 Visas issued for occupations on the MLTSSL will still be issued for a maximum of 4 years.

From 1 July 2017

 As of next financial year, the government will:

• Review both the STSOL and MLTSSL
• Require all applicants to complete an English language test, unless they’re coming from the UK, Ireland, Canada, the US, and New Zealand.
• Clarify policy settings around its training benchmark requirement. At the moment there are two requirements, which specify the minimum amount employers who rely on 457 Visas must spend on training workers.
• Start enforcing the rule that every applicant must hold a penal clearance certificate.

Before 31 December 2017

•  By the end of 2017, the government says it will:
•  Begin collecting the TFN of each employer-sponsored migrant, to make sure the ATO’s data matches with the employer’s and that visa holders aren’t being underpaid.
• Start publishing the details of employers who don’t meet their sponsorship obligations.

From March 2018

From March of next year, the 457 Visa will be abolished and replaced with the TSS Visa.

Want to know more?

The scrapping of the 457 Visa changes and changes to Permanent Residency eligibility requirements will affect many Australian employers and their workers – especially in businesses that genuinely struggle to find local talent.

In parallel to these changes, the government is reviewing the permanent residency eligibility criteria. At the moment, 457 Visa holders can apply to become Australian residents after two years. Under the new regime that pushes out to three years.

If you want to know how they directly affect you – or if you want to sponsor an overseas worker – get in touch. We work with registered migration agents to make sure you get the right advice and maximise your chances of a successful outcome.