Summary

The 457 visa scheme was introduced by the Howard government in 1996-97 and has seen around 1.3 million migrants granted temporary visas to work in Australia. On 18 April 2017, the Turnbull Government announced that it would abolish the 457 visa and replace it with two new visas.

In this eBulletin, we summarise the Government's changes to the 457 visa program and look at how this may affect workplaces, including whether the changes are likely to increase the burden on businesses seeking to fill a skills need within their organisation. We also reflect on some of the workplace issues that may need to be considered going forward.

The Changes

The current Temporary Work (Skilled) (subclass 457) visa will be abolished and replaced with a new Temporary Skills Shortage (TSS) visa in March 2018. In the meantime, various alterations will be made to the current program. Those already holding visas will be unaffected. The changes will be rolled out over the next 11 months.

From 19 April 2017: Occupation lists which provide the jobs for which an application for a 457 visa may be made will be condensed, reducing the number of occupations from 651 to 435 and restricting access to 59 others. Occupations on the new Short-term Skilled Occupations List will be limited to a visa length of two years.

From 1 July 2017: Occupation lists will be further reviewed. The English language salary exemption threshold will be removed. Applicants will:

  • need to provide criminal clearance certificates; and
  • be less than 45 years of age.

From 31 December 2017: the Department of Immigration and Border Protection will commence the collection of Tax File Numbers for 457 visa holders (and other employer-sponsored migrants), and data will be matched with the Australian Tax Office’s records to ensure that visa holders are not paid less than their nominated salary. The Department will start publishing details relating to sponsors that are sanctioned for failing to meet their obligations under the Migration Regulations 1994 and related legislation.

From March 2018: Two streams of visa will be introduced: Short-Term for up to two years and Medium-Term for up to four years. Eligibility criteria differ in some ways between the two streams.

Both streams will include the following requirements:

  • two years' relevant work experience;
  • labour market testing will be mandatory;
  • market salary rates and minimum income threshold;
  • mandatory penal clearance certificates;
  • non-discriminatory workforce test; and
  • employer contribution towards training Australian workers.

The TSS visas will continue to have different requirements, similar to those that currently exist for employers in country and regional areas, in order to recognise the fact that it can be more difficult to attract Australian workers to these zones.

Impact

There have been mixed reactions to the Government's announced changes. Many groups have supported the principle of prioritising Australian jobs, while others have warned that the result may be a shortfall in required skills in certain areas of the economy. Some commentators have argued that the changes are more about the political message and that the actual impact will be limited. There are particular concerns in sectors, such as higher education and technology, where it is said there are simply not enough Australians with the appropriate skills.

While employers will have to wait and see how some of the administrative elements of the policy play out, it is clear that the changes will result in greater costs and time for businesses when they do need to recruit international workers. Mandatory labour market and non-discriminatory workforce testing will certainly contribute to this. More simply, it may be harder for business to find eligible temporary visa workers as they now face stricter English language and work experience requirements.

The reduction in the occupations list for the 457 visa and new TSS visa may constrain businesses operating in Australia that are not currently able to recruit Australians into these roles.

It will be interesting to see whether these changes will affect overseas companies' decisions on whether to continue or commence operations in Australia.

Bottom line for employers

The changes are grandfathered, which means that those businesses currently using workers on 457 visas can continue with their current arrangements.

We suggest that employers review their current arrangements in order to strategically plan their workforce for the future. If 457 visas are currently used for any of your staff, ensure that you examine what changes may need to be made to your current recruitment practices.

More broadly, employers may need to consider upskilling current Australian staff to ensure that the visa changes do not lead to skills shortages within your own workforce, or at least to reduce the increased administrative costs that will be associated with hiring TSS workers going forward.