As Australia continues to train its workers with the technical skills to remain globally competitive, the country will need to supplement its workforce with these skills to fill the gaps in the short-term.

The Turnbull Government has decided to abolish the Temporary Work (Skilled) Visa (subclass 457) and replace it with the Temporary Skills Shortage Visa (TSS). Under the 457 regime, employers must sponsor a skilled migrant and satisfy certain criteria to be accepted as sponsors, including training requirements. If the Department of Immigration and Border Protection granted the employer sponsorship status, they could then pick from a list of occupations and begin recruiting migrant workers.

The Government aims to tighten the regime by:

  • limiting the number of occupations available;
  • increasing English-language proficiency requirements; and
  • introducing a genuine temporary entrant requirement.

We unpack these key changes below and explain how it could affect your business.

Please note: Although the changes will not impact current 457 visa holders, they will affect their pathway to permanent resident visas.

Change 1: The Occupation Lists

216 occupations have been removed from the pool, and others have been restricted (for instance, to regional areas only). These changes are in place now.

The list is split so as to feed into the two new visa streams for TSS applicants.

New Skilled Occupations List Old Skilled Occupations List
Short-term Skilled Occupations List Consolidated Sponsored Occupation List
Medium and Long-term Strategic Skills List Skills Occupations List

Change 2: Occupation List Revision and Training

From July 2017, both lists will undergo revision to mirror Australian workplace standards. These revisions will recur at set intervals for each list.

List Review Frequency Department Reviewing the List
Short-term Skilled Occupations List Every six months Department of Employment
Medium and Long-term Strategic Skills List Annually Department of Education and Training as part of its skilled occupations list review.

In future, all applicants must meet the language proficiency requirements and obtain criminal clearance certificates. Applications must provide these certificates as part of their eligibility criteria.

Change 3: Salary Investigations

The Government is set to collect the tax file numbers for all current 457 visa holders to ensure that employers are compensating workers appropriately.

Employers should note they are required to pay market rate for international labour. Importantly, the Fair Work Act 2009 (Cth) protections will continue to apply to visa holders.

Change 4: New TSS Visa

The TSS Visa will formally replace the 457 Visa in March 2018. The TSS introduces two new streams for visa applicants:

  1. Short-term stream: up to two years; and
  2. Medium-term stream: up to four years.

Aside from the length of stay, the key differences between the streams are:

  • type of skilled occupation; and
  • pathway to permanent residency.
Stream Purpose English Language Proficiency Renewal Pathway to Permanent Residency
Short-term stream Fill skill gaps on a temporary basis. These include broader and less technical occupations An IELTS or equivalent score of 5 (at least 4.5 scored in each component). Renewed onshore. No
Medium-term stream Fill gaps in more specialised and technical areas. IELTS or equivalent score of 5 in each component and overall. Renewed onshore. Yes after three years.

New TSS applicants will need two years work experience in their chosen occupation to be eligible for either stream and must be under 45 years of age.

Employers must also make a contribution to the Skilling Australians Fund in full at the time of nominating the worker. This will be a payment of either:

  • $1,300 per year for a small business (i.e. less than $10 million annual turnover); and
  • $1,800 for other businesses.

Additional information on this fund is due for release as the Government rolls out the changes.

Employers will also be subject to workforce testing. This will involve investigations to ensure they are not actively discriminating against Australian workers.

  1. The Temporary Skills Shortage Visa will replace the 457 visa from March 2018.
  2. There are now 216 fewer occupations for which you can obtain a skilled working visa.
  3. The TSS ushers in two new visa streams — a short-term and medium-term option. Only the medium-term stream offers applicants a pathway to permanent residency after three years.
  4. Applicants can renew their visa onshore under both streams. For short-term visa applicants, this is only a once off.
  5. Employers will be required to pay into the Skilling Australians Fund each year. Employers must also pay the Australian market salary rate to workers in both streams.
  6. The skilled occupation lists will undergo revisions. The short-term list every six months. The medium-term, annually by the Department of Education and Training.