This publication outlines some of the more important considerations to take into account when sponsoring skilled personnel to Australia on a 457 visa, this document also provides strategies for minimising your organisation’s risk and facilitating its compliance with the legal obligations.
Offences under the Migration Act
Anyone who is not an Australian citizen or permanent resident must have a visa to enter and remain in Australia. If they want to work in Australia, they must have a visa that permits them to do so.
From 19 August 2007, it has been a criminal offence under the Migration Act 1958 (Cth) to knowingly or recklessly “allow” someone to work or to “refer” someone for work if that person’s does not hold a valid visa or if the person does not have permission to work. Under legislation implemented in 2013, directors and senior managers can also be personally liable for breaches of employers’ obligations.
Severe penalties apply to individuals and corporations who are convicted of these offences.
Business visitor visas
Business visitor visas (including ETA, eVisitor and subclass 600) are often misused by businesses as de facto work visas or as a means of bypassing the 457 visa requirements.
Business visitor visas are designed for people who want to explore business or employment opportunities, negotiate or review business contracts, or attend trade fairs, conferences or seminars. The conditions of business visitor visas specifically preclude “undertaking work for, or supplying services to, an organisation or other person based in Australia” or activities that involve the sale of goods or services to the general public.
Business visitor visa holders are closely monitored by immigration authorities at each port of entry for compliance with the associated visa conditions. A person who is found not to be a genuine business visitor may be refused entry, have their visa cancelled, and be sent back to their country of origin on the first available flight.
The most appropriate visa for people who are primarily travelling to Australia to undertake skilled work is the 457 visa.
The 457 visa
There are many visas that permit work in Australia however, the Temporary Work – Skilled (subclass 457) visa (“457 visa”) is the visa most commonly used by businesses who are seeking to overcome local skills shortages.
The 457 visa is a temporary residence visa which allows businesses to sponsor overseas workers to Australia to undertake work for a period of up to four years. The 457 visa allows the holder to work only for their sponsoring business (unless exempt) in an occupation for which they have been approved by the Department of Immigration and Border Protection (DIBP).
An overseas organisation that is not established and operating in Australia can use 457 visas to send directors and key personnel to Australia to:
- establish or help establish an Australian business operation, such as a subsidiary, joint venture or agency distributorship; or
- fulfil or help fulfil contractual obligations to a client, such as service level agreements for contractors or subcontractors
All applications for 457 visas, whether on behalf of an Australian or overseas business, must be lodged electronically with DIBP in Australia.
The service standard for processing 457 visas is two to three months after lodgement. In most cases, 457 visas can be finalised within four weeks unless the application lodged is incomplete or subject to further investigation on the basis of bona fides, health or character.
Self sponsorship as a director or officer
A company is a separate legal entity from its owners and officers; therefore a company is able to sponsor a director or officer to Australia on a 457 visa.
An individual carrying on a business activity (as a sole trader) cannot sponsor themselves on a 457 visa. This is because the employment must be on the basis of a contractual obligation between an employer and an employee.
Obtaining a 457 visa
There are three distinct steps to obtaining a 457 visa:
- standard business sponsorship (SBS) approval for the employing organisation;
- nomination approval of the position; and
- Visa approval of the applicant and any accompanying family members.
1. SBS approval stage
Standard business sponsorship approval requires that your organisation, as an employer, is lawfully operating, does not have an adverse business background, and will be the direct employer of all sponsored employees (unless an exemption applies).
Organisations operating in Australia must also have a strong record of, or commitment to, employing local labour and non-discriminatory employment practices. They must also meet certain training benchmarks in respect of training their Australian employees throughout each year of the sponsorship.
Sponsorship approvals are generally valid for three years and the number of nominations (or positions) available under the sponsorship must be “reasonable”.
As an approved sponsor, your organisation will need to comply with sponsorship obligations. These obligations include such things as:
- maintaining the required level of training expenditure on local staff (Australian businesses only);
- cooperating with inspectors appointed under the Migration Act 1958 (Cth);
- directly engaging the 457 visa holder under a written contract of employment;
- continuing to pay the 457 visa holder the market rate;
- keeping certain records and providing certain information to DIBP, when requested;
- notifying DIBP when certain events occur;
- paying the return travel costs of any 457 visa holders, when requested;
- employing the 457 visa holder in the approved occupation;
- not recovering certain costs from 457 visa holders; and
- paying costs for removing 457 visa holders who are non-compliant.
Failure to meet one or more of the obligations can result in a range of penalties, including warning notices, financial penalties, barring the sponsor from accessing further nominations or visas, or cancelling the sponsorship.
2. Nomination application stage
At the nomination stage, your organisation will need to meet the following key requirements:
- The nominated position must relate to an occupation on DIBP’s Consolidated Sponsored Occupations List (CSOL). This list is updated regularly by DIBP.
- The nominated position must relate to a “genuine” position required to address a skills shortage in Australia. For some positions, the business may also need to provide evidence of “labour market testing”, by demonstrating attempts to advertise the position locally and recruit Australian citizens/permanent residents for the role.
- If the nominee’s annual earnings are less than AU$250,000, the nominee must be paid at the “market rate” for an Australian performing that role in the same location.
The requirement regarding the payment of market rates aims to ensure parity with Australian working conditions and the Fair Work Act 2009 (Cth).
If your organisation has an Australian citizen or permanent resident already performing the same job role in the same location as the nominee, their remuneration will be the benchmark “market rate” and your organisation must pay the nominee at least the same amount.
If there is no equivalent employee in the workplace, then you should refer to any relevant awards, agreements or salary surveys which apply to that position to demonstrate that the proposed salary represents the “market rate”.
The nominee must also be paid above the minimum salary level (the Temporary Skilled Migration Income Threshold) that applies at the time of nomination.
3. Visa application stage
At the visa application stage, your organisation’s proposed employee will be assessed to ensure that they have:
- the appropriate level of English language ability; and
- the necessary skills and qualifications to do the job.
Proposed employees and their accompanying family members must also satisfy standard health and character requirements.
English language ability
All 457 visa applicants coming to Australia must demonstrate ‘Vocational English’ (defined as a score of 5 or above on an IELTS test) unless one of the following exemptions applies:
- the annual earnings for the nominated position are over $96,400; or
- the applicant has completed at least five consecutive years of full time study in a secondary and/or higher education institution where the language of instruction was English (where English proficiency is not a requirement of registration/licensing in the occupation).
Applicants who hold a passport from New Zealand, United Kingdom, United States of America, Ireland or Canada are presumed to meet the English requirement.
Skills and qualifications
Applicants must demonstrate they have the skills, qualifications and employment background that the Minister considers necessary to perform the tasks of the nominated occupation.
Most 457 occupations require at least a diploma or a degree qualification, or three to five years of relevant work experience in lieu of formal qualifications. Professional registration or licensing may also be required.
Applicants for particular occupations applying from certain countries may need to undergo a formal skills-assessment.
Primary 457 visa holders have a condition placed on their visa permitting them to work only for their sponsoring employer (or for an “associated” entity of the Australian sponsor in certain circumstances). The term “associated” is defined to have the same meaning given to the term “associated entities” under s 50AAA of the Corporations Act 2001 (Cth).
Primary 457 visa holders must commence work within 90 days after the arrival in Australia. Also, they must depart Australia, be nominated by another sponsor or obtain another visa to remain in Australia within 90 days of ceasing employment with the sponsor.
If it is mandatory to hold a licence, registration or membership in order to perform an occupation in Australia, the primary 457 visa holder must hold that licence, registration or membership.
Primary 457 visa holders cannot undertake secondary work or work for themselves and they cannot change employer or occupation without first obtaining approval from DIBP.
457 holders who are appointed to an ‘exempt’ occupation, such as a general manager or medical professional, may work as an independent contractor of the sponsor and for multiple employers unrelated to the sponsor.
All 457 holders are required to make adequate arrangements for health insurance while they are in Australia. Any accompanying family members will have unrestricted work and study rights in Australia.
DIBP has the ability to monitor 457 holders’ compliance with the visa conditions through information obtained from the employer, health insurer or other authorities. The legal responsibility for complying with visa conditions and the consequences of failing to do so rests with the employee. Failure to comply with these conditions may result in visa cancellation and other sanctions.
Please note that there are a number of other temporary and permanent visas allowing the holders to work, study or set up a business in Australia.