On Tuesday, Prime Minister Malcolm Turnbull announced that the Temporary Work (Skilled) visa (commonly called the 457 Visa) will be replaced by a new Temporary Skilled Shortage (TSS) visa scheme in March 2018. There will also be some immediate changes to the eligible occupations on the current 457 visa scheme.

The new TSS visa program will be made up of two streams:

  • Short Term - two year visa with capacity to be renewed once and no permanent residence pathway.
  • Medium Term - four year visa with capacity to be renewed once and permanent residence pathway after three years.

Both streams will require applicants to have at least two years’ experience in their occupation, to obtain police clearance and to be paid a minimum market salary rate. Labour market testing will also be mandatory, unless an international obligation applies, though this will continue to be conducted by employers.

The change is said to promote “the national interest to put Australians and Australian jobs first” while still maintaining flexibility to fill critical skills gaps with foreign workers where suitably skilled Australian workers cannot be sourced.

While the announcement has created some anxiety amongst employers and current visa holders, it is worth noting that existing 457 visa arrangement will not be affected by the new scheme. However current and future potential 457 visa applicants and sponsors should be aware of the following changes which came into effect as of 19 April 2017:

  • The occupation list for skilled migration visas, including the subclass 457 visa, is significantly condensed from 651 to 435 occupations, and 59 of the remaining occupations are restricted (for example, 24 of the occupations are restricted to regional Australia).  
  • For the 268 occupations on the new Short-term Skilled Occupations List, the new maximum duration of a 457 visa is two years.  
  • For the 167 occupations on the new Medium and Long-term Strategic Skills List, the maximum duration of a 457 visa is four years.

Undecided 457 visa and nomination applications lodged before 18 April 2017 will be affected by the changes in the occupation list. If an applicant’s occupation has been removed, the application cannot be granted. The applicant and nominating business may be eligible for a refund of fees.

Occupations that have been removed include web developer, financial institution branch manager, petroleum engineer, HR advisor, ICT support technician, licenced club manager, bed and breakfast operator, retail buyer, operating theatre technician, public relations manager and procurement manager. The new skilled occupations lists can be viewed here and the list of removed occupations can be viewed here.

Two permanent skilled visas, being the Employer Nominated Scheme visa (subclass 186) and Regional Sponsored Migration Scheme visa (subclass 187), will also be affected by the changes. For example, the new Short-term Skilled Occupations List applies to the direct entry stream of the 186 visa from 19 April 2017. Further, from March 2018, the applicants for both these visas will be required to have at least three years’ work experience in their occupation and the permanent resident eligibility period will be extended from two to three years.