Changes to the permanent employer sponsored program
Reforms to the permanent employer sponsored migration program will improve the program’s ability to meet Australia’s economic needs and simplify the pathway for 457 visa holders to permanent residence.
The reforms, effective 1 July, are designed to help the Australian Government respond swiftly to labour market demands, while ensuring that limited program places go to those who will make the greatest contribution to Australia.
A new visa structure will be introduced, which comprises two new visas replacing the current employer sponsored visa classes and subclasses. (http://www.immi.gov.au/skilled/skilled-workers/_pdf/skilled-migration-diagrams.pdf)
The new visa structure includes the Employer Nomination Scheme (ENS) and the Regional Sponsored Migration Scheme (RSMS).
The ENS allows Australian employers to sponsor skilled foreign workers to address skill shortages in their business located throughout Australia. The RSMS is designed to support employers in regional, remote or low population growth areas, to recruit the skilled workers they need to manage and grow their operations where they cannot be filled locally.
Within each of these visas are three streams:
- Temporary Residence Transition stream for subclass 457 visa holders who have worked for their employer for two years and the employer wants to offer them a permanent position in that occupation.
- Direct Entry stream for ENS and RSMS applicants who are untested in the Australian workforce and are not catered for in the Temporary Residence Transition or Agreements streams. Within this stream the range of occupations has broadened to include ANZSCO skill levels 1–3 occupations.
- Agreements stream for applicants who are sponsored by an employer through a labour agreement or regional migration agreement.
An employer or visa applicant will need to meet the requirements of the particular stream.
Simplifying the pathway to permanent residence
The permanent employer sponsored program reforms will see the implementation of a streamlined pathway to permanent residence for subclass 457 visa holders under the new Temporary Residence Transition stream.
The transition to permanent residence will be simpler and fast-tracked for applicants who hold a 457 visa and have worked for the same employer for a continuous period of two years on a full-time basis. Their English language ability will not be further scrutinised if they have previously completed tests for their 457 visa application, registration or licensing. However, if the applicant has not completed an International English Language Test System (IELTS) test, they may be required to meet the English language capability assessment—with a minimum of IELTS 5 in all modules (or equivalent).
For applicants who do not meet the Temporary Residence Transition stream, then the Direct Entry or Agreements streams are options available for consideration.
The Direct Entry stream is a more rigorous application process for applicants who have not been tested or proven in the Australian labour market. The minimum standard will be set higher for skills assessments and English language skills with a required IELTS rating of 6. In recognition of the value of extensive work experience, applicants up to 50 years of age can apply.
The Agreements stream will continue to allow employers to recruit a specified number of semi-skilled or highly skilled workers under a labour agreement negotiated by the employer with the government. The skills, age and English language requirements for workers under labour agreements will continue to be negotiated according to the needs of Australian employers.
There will be opportunity for exemptions approved by the minister for age, skills and English language ability. Exemptions will be based on a person’s nominated occupation, salary or the time they have been employed with their nominator.
For more information on the changes see the Frequently Asked Questions on the department’s website at www.immi.gov.au/skilled/.
Open Q&A on the 457 program
We’re always trying new ways of communicating with the public about our migration programs. So this week our 457 policy team is opening up the migration blog to any questions you have about the 457 visa and temporary skilled migration to Australia.
While we can’t provide advice about individual cases, any other questions about the program no matter how specific or broad are welcome.
Here are some examples to stimulate ideas:
- Why do we have temporary migration to Australia?
- How do market rates work?
- What happens if I get fired while on a 457 visa?
- Why do I need to get health insurance while on a 457 visa?
We are looking forward to your questions.
Protecting overseas workers from exploitation – update on sponsor monitoring activities
Australian workplace laws apply universally to all. In addition to these workplace protections, temporary overseas workers have an additional protective framework embodied in the Migration Legislation Amendment (Worker Protection) Act 2008 (the Worker Protection Act) sponsorship obligations.
The vast majority of sponsors are compliant; however, there is a comparatively small number of sponsors who inadvertently fail their sponsorship obligations, and even fewer who are recklessly unscrupulous.
In addition to sponsor monitoring officers, the Department of Immigration and Citizenship (DIAC) also has a highly trained, dedicated inspectorate of 38 officers who maintain a keen eye on sponsors of temporary overseas workers in order to protect them from exploitation. An inspector’s role is to gather information, investigate and assess matters relating to a sponsor’s compliance with their sponsorship obligations under the Worker Protection Act.
DIAC has commenced monitoring on 1398 sponsors; issued breach notices to 270; officially warned 188; and sanctioned 75, which means to 29 February this financial year, we have barred or cancelled sponsorship to a not insignificant number of employers doing the wrong thing.
In addition to administrative sanctions, we also have the power to serve infringements and take civil action; already in the last eight months we have issued 37 infringements to a value of more than $186 000, and filed two applications in the Federal Magistrates Court against sponsors for failing their obligations to their visa holders. Other cases are pending.
During the monitoring process, we also work collaboratively with other agencies. For example, if we uncover issues that fall within the responsibility of the Fair Work Ombudsman (FWO), we either collaborate with, or refer cases to their inspectors for full investigation to ensure compliance with workplace laws. DIAC and the FWO are also working together to help visa holders understand their legal rights when working in Australia. In December we jointly released a fact sheet about workplace rights, specifically for overseas temporary workers. It is available at http://www.immi.gov.au/skilled/skilled-workers/_pdf/457-your-rights-work.pdf
Proposed changes to Living Away From Home Allowance (LAFHA) benefits for Subclass 457 visa holders
In November 2011, the government announced reforms to the Fringe Benefits Tax (FBT) treatment of Living Away From Home Allowance (LAFHA) benefits to commence on 1 July 2012.
LAFHA is commonly used by employers to compensate employees for additional costs incurred when they are required to live and work away from their usual place of residence. This can include accommodation and food costs.
Under the current tax system, the provision of LAFHA can increase the take-home pay of employees, including subclass 457 visa holders. The Australian Government has concerns that LAFHA concessions are being exploited by some employers.
The Department of Immigration and Citizenship has received a number of enquiries about how these changes will impact subclass 457 visa holders.
From the department’s perspective, if an employer committed to pay a subclass 457 visa holder LAFHA, it is expected this payment will continue. The only difference will be how the Australian Taxation Office (ATO) views such payments.
For example, if a sponsor committed to pay a subclass 457 visa holder a base salary of $75 000 plus a $10 000 LAFHA, the department expects the employee will continue to be paid a total of $85 000.
If a sponsor is unable to pay the amount equivalent to the LAFHA they may be failing their sponsorship obligations.
A sponsor may decide to lodge a new nomination application to amend the salary offered to the 457 visa holder. However, the sponsor must demonstrate that the new salary continues to be the market salary rate.
Click here for further information on the Australian Tax Office’s LAFHA requirements.
Ideas for a labour agreement for the tourism industry
The Department is working together with other government agencies to try to help address the shortage of workers in the Australian tourism and hospitality sectors. On 24 January 2012, we released a discussion paper asking for feedback on ideas for a template labour agreement that might meet the needs of Australian employers in these industries where standard immigration products like the 457 program aren’t an option.
Tourism injects about $35 billion a year into the Australian economy but is looking at a shortfall of about 36 000 workers in jobs including experienced waiters, chefs, bar attendants and hotel managers.
A labour agreement is a formal contract between the Australian Government and an employer which provides flexible immigration solutions underpinned by strong integrity measures. Where a number of employers in the same industry are seeking to sponsor workers in the same occupations, we can look at developing an “industry template” labour agreement for all employers in that industry, provided that they meet a series of important requirements. These include a commitment to the employment and training of Australians, paying market salary rates above the temporary skilled migration income threshold (TSMIT) and being able to demonstrate that there is a genuine need to employ overseas workers, having first exhausted all options to recruit Australians.
Before we can develop a template labour agreement, we ask for broad stakeholder input through consultations and discussion papers.
This discussion paper floats a range of questions to see what Australian employers in the tourism and hospitality sectors are really needing in terms of assistance in meeting their skilled and semi-skilled worker needs. We are asking for input on a range of topics including occupations, salaries, qualifications, English language ability, training, and risk mitigation.
There is a media release about this at: Minister for Immigration and Citizenship
You can view the discussion paper here: Tourism Labour Agreement Discussion Paper
There is an article about it in the Financial Review at: The Pub with no Aussies
The discussion paper is open for comment until 16 March 2012.
The 457 visa program – 2010/11 Year in Review
There were 48 075 primary subclass 457 visas granted in Australia in 2010-11
This post was written by Laura, a graduate who recently completed a stint in the Temporary Skilled Migration Section in the Labour Market Branch.
At the Labour Market Branch, we closely monitor the trends that occur in the programs we deliver. The end of the program year is a good time to share our thoughts on the trends of 2010-11. Below, we review the year in the 457 program.
Overall, 2010-11 saw an increase in demand for the program – up from last year when the global financial crisis led to a softening in the demand in the labour market and a corresponding decline in 457 visa grants. The program is on track for an even larger increase in the coming year as the need for skilled labour in Australia increases in line with the growing economy and increased demand, particularly in the resource sector.
The 457 visa
The 457 visa was introduced in 1996. It allows skilled people to temporarily work in Australia if an approved employer sponsors them. They can work from one day to four years.
Since its beginnings, the program has undergone considerable change, yet it has continued to be responsive to the labour market, as seen in our previous post about how the 457 program creates employment in the Australian labour market. Through boom times, program usage has increased significantly, demonstrating the important role it has come to play in supporting the growing Australian economy.
Demand for the program declined in 2009-10, following the global economic downturn. This is not surprising, given that trends of the 457 program usually reflect other trends that happen in the Australian labour market.
If unemployment in Australia is high, employer demand for 457 visas declines. When there are more Australians available to fill skilled vacancies, it makes sense that employers don’t have as great a need for overseas workers. The decline demonstrates the way the program automatically responds to the trends in the labour market.
The 2010-2011 program year
We have seen a different trend in the last 457 program year. The recovering economy and resources boom are just some of the reasons why employers have relied more heavily on 457 workers in 2010-11.
In the past year, the number of people applying for a primary 457 visa rose 39.7 per cent and the number of primary visas granted increased 38.2 per cent. From a policy perspective, this shows the program has responded quickly to demand from employers.
Location and positions
The acute skills shortages in the mining sector have partly driven many of the trends for jobs and locations this year.
The majority of applications lodged were for jobs in New South Wales and Victoria, which has been the case for a number of years. However, there was a 64 per cent increase in the number of applications lodged for positions in Western Australia, where much of the work from the mining boom exists.
The expansion of mining projects also explains much of the the increase in demand for workers in trade and technician occupations, which rose 65.4 per cent in 2010-11. In particular, there was a 74.7 per cent increase in the number of visas granted for workers in the construction industry.
Individual occupation breakdowns tell a similar story. The number of electrical engineering technicians rose 248.9 per cent from the previous year and the number of drillers rose 152.0 per cent. The steep increase in 457 visas granted to skilled workers in mining occupations in the past year shows just how quickly the program can respond to the needs of industry.
As well as responding to temporary labour needs, each year the program responds to industries that have significant skills shortages. For example, the demand for 457 health professionals is always strong, and the highest number of 457 visas granted in the last year was for people working in health care and social assistance.
Salary
The average amount a 457 worker is paid often mirrors their skills and expertise and the demand for their occupation in Australia. It’s not surprising that skilled workers employed in mining had the highest salaries of any industry in 2010-11, given that they are often highly trained people and there is a shortage of the skills they have in Australia.
457 salaries increased again overall in 2010-11, continuing their steep upward trend from 2009 when program reforms changed the requirements for paying 457 workers. Rather than setting bottom limits on the salaries of 457 workers, the program has moved to a fairer system of market salary rates. This means that workers are given conditions “no less favourable” than Australian workers performing the same work. This prevents employers from using the program to undercut local wages.
The continued rise in average 457 worker salaries says to us that these reforms are working the way they should be.
Sponsors
There were 11 290 Australian and overseas employers who were approved to sponsor 457 workers in 2010-11. There were 18 530 active sponsors at 30 June 2011, with the vast majority of these identifying as small to medium businesses.
Countries
People from the United Kingdom were granted the highest number of 457 visas in the last year. Citizens from India came in second and the United States made up the third largest group. 2010-11 saw a significant increase in the number of Irish people applying for 457 visas, with a 60.9% rise from the previous year.
The top fifteen countries using the 457 program have been fairly consistent over the past two years and make up 84.4 per cent of 457 visas granted this year.
Processing
457 processing times were at historically low levels in the past year. The median processing time was 23 calendar days (30 per cent lower than 2006-07) which is well below our published service standards of between 2-3 months.
Even the 10 per cent of applications that took the longest to process came in at an average of 70 days. While this is still not ideal, it’s down from 83 days in the previous year.
Processing times are something we will continue to strive to improve in 2011-12.
The Year Ahead
Overall, the main trend for the 2010-11 year was growth. If current employment conditions continue and businesses struggle to find sufficient skilled Australian workers, the 457 program will bridge the gap and offer employers access to skilled workers in the coming year.
The current shape of the program makes it a quick and effective tool for businesses to access skilled workers, while at the same time ensuring that the training and employment of Australians is the first priority for business.
For more details on the 2010-11 program year, see this report containing State-based 457 data on the main DIAC website.
Checks and balances – Monitoring 457 employer sponsors
As the 457 program rapidly grew over the period 2003-2007, concerns mounted over the exploitation of overseas workers and the undermining of local wages and conditions. Australian newspapers frequently splashed stories about unscrupulous sponsors abusing the 457 visa program and exploiting their visa holders. The vast majority of these cases involved trades’ level 457 visa holders with little or no English languages skills, and who often lacked the technical skills they claimed.
To focus sponsors on their responsibilities to their overseas workers, and to strengthen the integrity of the program, in September 2009 the Government brought in the Worker Protection Act 2008. The essential message the legislation embodies is this – sponsors must ensure that overseas workers have the same terms and conditions for the same job in the same workplace as Australian workers. There must be no exploitation and no excuses for underpaying overseas workers.
The legislation also provides decision makers here in the department with additional powers and options for taking action against sponsors found to be failing their obligations. Be assured that when sponsors inadvertently, recklessly or sometimes systematically abuse and/or exploit their visa holders and the program, we can and do take action.
How do we do this?
To assess whether our 18 500 active sponsors are satisfying their obligations, we monitor sponsors. Sometimes we commence monitoring on the basis of an allegation, and sometimes we may instigate a sector-based campaign, but generally, we adopt a risk based approach to initiating monitoring. We’ve got a dedicated network of officers around the country, including 27 inspectors who have enhanced monitoring powers – this means that they can require documents from sponsors, and if those documents are not supplied, we can initiate civil action against the sponsor. Our officers talk to sponsors, gather information, and analyse the information to assess whether a sponsor is meeting their obligations.
During the monitoring process, we also work collaboratively with other agencies. For example, if we uncover issues that fall within the responsibility of the Fair Work Ombudsman, we refer specific matters for their attention. Similarly we refer matters to work place safety agencies, and the Australian Tax Office as required.
If through monitoring, a sponsor is found to be failing their obligations, a decision maker can bar or cancel a sponsor from the program, infringe the sponsor and/or take legal action against the sponsor.
How many sponsors have you sanctioned?
In 2010-2011, the department sanctioned 137 sponsors, and warned 453 sponsors. The majority of these sanctions have been applied as a result of sponsors failing to provide equivalent terms and conditions of employment as they would to an Australian or permanent resident employee. Additionally, in the last 18 months, we have issued 12 infringements to 12 sponsors, and are considering civil action against a few sponsors at the moment for serious failures of their sponsorship obligations. Watch this space!
What are the department’s future plans in the area of monitoring?
We intend to sharpen our focus on campaign based monitoring in the coming months, commencing work in particular industry sectors. We will also be looking at sponsors other than 457 sponsors, to assess whether those sponsors are satisfying their sponsorship obligations.
How the 457 program creates employment in the Australian labour market
One concern that we hear from time to time is that the 457 program is being used to take jobs from Australians. We understand why people are concerned about this – of course Australian businesses should be hiring and training Australians first.
The 457 program is designed to ensure businesses hire locally first. Not only do we believe the program is meeting this goal, but in the process, overseas workers are stimulating growth in areas with labour shortages, leading to more employment opportunities elsewhere in the economy.
Below is a graph that shows the rate of lodgements for 457 visas compared with the ANZ job advertisement index.
The x-axis is a simple time line from January 2003 to the current period. The y-axis shows the change of both job advertisements and visa applications since January 2003. This index tells us that in January 2006, there were about double the amount of applicants and advertisements than in January 2003.
What are the important messages we can take from this? The data clearly shows that despite some small variations along the way, as job vacancies in Australia grow, and there are not enough skilled Australian workers to fill the positions, businesses will look to overseas workers to fill the vacancies. Importantly, the opposite is also demonstrated. As job growth slows, the use of overseas workers also slows.
An interesting sidenote is the ‘spike’ in visa applications which does not correlate to the job advertisements. This happened due to the introduction of an English language requirement for the 457 program. Despite this blip, business as usual established itself over the longer-term.
Another graph, showing the correlation between the unemployment rate and visa applications of 457 workers, also shows how the program acts to employ Australians before overseas workers.
This graph is a little bit more complicated but tells the same story. The x-axis is still showing the time period from January 2003 to the current period. However the y-axis now shows two indexes. The left side is again a base rate of visa applications but the right side shows an inversed unemployment rate.
When unemployment is low (and fewer Australians are available in the labour market) businesses start to look overseas to fill vacancies. That is, businesses employ overseas workers when they struggle to find Australians to perform the work.
So why do businesses employ Australians before overseas workers? Simple – cost. It is cheaper to employ local labour. There are no overseas recruitment costs, no immigration fees and no obligation to provide travel costs to overseas workers. Plus the additional time spent on HR matters can be significant.
The 457 program helps to address labour shortages, ensuring they do not constrain business activity and jeopardise Australian jobs. Rather than taking jobs from Australians, the program is an important cog in economic growth and the creation of jobs for Australians.
