In brief

Subsequent to Prime Minister Turnbull's surprise announcement regarding the repeal of the subclass 457 visa, the Government has released further details of what the new program will look like.

In detail

New Temporary Skill Shortage (TSS) Visa

From March 2018, the new Temporary Skill Shortage (TSS) Visa will become available, offering two streams for business who are seeking to address genuine skills shortages:

  • a Short Term stream, providing a stay of up to two years; and
  • a Medium Term stream, providing a stay of up to four years.

As with the current 457 visa program, the new TSS visa will be subject to a number of safeguards designed to support prioritisation of Australian workers. The Government has confirmed that the new TSS Visa will be subject to the following requirements:

  • a more targeted occupation list designed to better align with Australian labour market skills needs;
  • a requirement for visa applicants to evidence at least two years' work experience in their skilled occupation;
  • a minimum market salary rate (similar to the current Temporary Skilled Migration Income Threshold - or TSMIT - currently set at AU$53,900 per annum);
  • mandatory labour market testing to be satisfied unless an international obligation applies;
  • limiting option for onshore renewal to 'once only' under the Short Term stream;
  • providing a pathway to permanent residence for Medium Term stream after three years (onshore renewal would also be possible);
  • a non-discriminatory workforce test to ensure employers are not actively discrimination against Australian workers;
  • strengthened requirement for employers to contribute to training Australian workers;
  • collection of Tax File Numbers for TSS visa with a view to enhanced data matching with the Australian Tax Office's records;
  • and introduction of mandatory police clearance requirements

New Consolidated Occupation Lists - to be introduced from 19 April 2017

While the majority of changes will be implemented over the coming 12 month period, the announcement confirms that the Government will be significantly condensing the current occupation lists used for skilled migration visas, including the subclass 457 visa, from 19 April 2017.

Impacts on employer sponsored permanent skilled visas

As part of the announcement, the Government has also noted that there will be some changes introduced to eligibility requirements for permanent employer sponsored visas. This includes again reducing the maximum age limit for these visas to 45 years. In addition, the following will apply:

  • tightened English language requirements;
  • at least three years' work experience - it appears this will apply to the Temporary ResidenceTransition Stream (TRTS) pathway of the permanent employer sponsored visa, which currently requires two years' work experience;
  • strengthened requirement for employers to contribute to training Australian workers;
  • formally extending the requirement for employers to pay the Australian market rate for the nominated occupation, in addition to a requirement to meet the applicable TSMIT (these two criteria currently apply to the 457 visa program, but are not embedded in the permanent employer sponsored visa criteria).

Employers based in regional Australia will continue to be able to access concessions under the permanent employer sponsored pathway which include access to a broader range of occupations for nomination reflecting their skills needs. The current regional concessions which waive payment of employer nomination fees and which also provide age exemptions for certain occupations will also be retained.

Impacts on employer sponsored permanent skilled visas

The Government has confirmed that the reforms are to begin immediately, with implementation to be completed in full by March 2018. As with previous program changes, there will no doubt be transitional arrangements put into place to minimise disruption to business and existing visa holders.

While the full raft of changes will be introduced over the coming 12 month period, the Government has indicated a new, significantly condensed occupation list as introduced on 19 April 2017.

The takeaway

Under the current legislation, individuals may be eligible to apply for permanent employer sponsored migration where they are able to lodge an application prior to their 50th birthday, with limited exemptions available to individuals who are 50 years or over.

As this has been flagged for change, we would strongly recommend that any individuals aged between 45 and 50 who have been considering a permanent residence application proceed with lodging these now, where they can satisfy the eligibility criteria currently in place.

Employers should also note the announcement regarding the change to the occupation lists, as this change may have an impact on applications which have been drafted but which have not yet been lodged.