Australia's Unexpected 457 Visa Announcement and Steps Businesses Should Take Now
By Dafydd Williams, Senior Director, Advisory Services
On April 18, 2017 Australian Prime Minister Malcolm Turnbull announced (via his Facebook page) that the Temporary Work (Skilled) visa, usually called the 457 visa, used by non-Australian skilled workers for employment in Australia, will be replaced. The announcement was reportedly unexpected, with even immigration lawyers and senior immigration officials unaware of the change prior to the announcement.
Over a million people have used the 457 for work in Australia since it was introduced 20 years ago. Two new Temporary Skill Shortage (TSS) visas (what are called “streams”) will be rolled out over the next year and will replace the 457 in March 2018; a short-term stream of up to two years, and a medium-term stream of up to four years, stay.
There are currently fewer than 100,000 primary 457 visa holders, making up less than one percent of the Australian labor force. Presumably the number of TSS visa holders would be less. While not large in number, some of these jobs have been matters of public debate, a debate common to other industrialized nations around the world.
The maneuvers businesses will need to perform in Australia will no doubt have similarities with those required in other countries.
Key Issues for Employers and Their Workers
First, the status of any current 457 visa holder is grandfathered and thus unaffected. However, anyone with a 457 application that was not completed by April 19, 2017 will need to be on a now-shorter list of eligible applications to be considered.
More than 200 types of occupations which foreign workers are eligible to fill will be cut from the list. Industry classifications most affected include IT, scientific and technical services, and hospitality and food services.
It is that last set of classifications, as well as trade and retail, which are widely acknowledged to have been misused. Such workers often suffer from poor employment conditions, given the difficulties in regulating certain industries and sectors.
Effects on the Path to Permanent Residency
While a lot of the discussion has been around occupation categories eligible for sponsorship and new requirements, one big benefit of the 457 was as a known path to permanent Australian residency.
The occupations falling under the short-term list are explicitly not a path to permanent residency. To qualify, an applicant must attest to being a “genuine temporary entrant,” with no intention of staying in Australia. It is renewable onshore (that is, without leaving Australia) once.
The occupations falling under the medium-term list are indefinitely renewable onshore, as the 457 was, but the list has a much narrower range of eligible occupations. The required period an employee must live and work in Australia before qualifying for permanent residence is raised to three years from two.
So, while anyone with a current 457 faces no immediate changes, permanent residency will be affected as of March 2018, since the new English language requirement, an age limit of 45 at the time of application (whatever other kind of foreign worker Australia may accept, it clearly does not want any old ones), and the restricted list of eligible occupations will be in force.
Effects on Businesses
The changes were announced without preparation, so employers will need to devote resources to analyzing the consequences to their specific business. The changes do, however, have certain clear administrative consequences:
- The greater documentation requirements of the new visas will likely result in greater administrative burdens. Simply managing the two streams, with their differing effective lengths, different lists of occupations, and other requirements, will be more difficult than the single 457.
- Both streams have stricter English language and work experience requirements than the 457 did, reducing the pool of eligible temporary workers.
- Employers must demonstrate that they are not actively discriminating against Australian workers.
- Employers must advertise more intensively in their local area before employing a migrant worker, in what is called “labor market testing.”
- Employers must contribute to training Australian workers, and a revised training framework will be in place.
- The list of restricted industry classifications is significantly longer, particularly for the medium-term stream, which may affect businesses that have trouble recruiting Australians for those positions.
Employers should do an audit of workforce skills and their distribution to identify where these visa changes might cause skills shortfalls. Providing skills training for current Australian staff may well be cheaper than hiring a sponsored worker.
There will be more scrutiny on applications during the transition period between now and March 2018, so advancing some plans might make sense.
The Most-Benefitted Job Category Is Always Compliance
Many of these requirements will have changes or be refined over the next year, adding an additional burden to compliance. Australia’s Department of Immigration and Border Protection has integrated with the Australian Customs Service and is applying strict enforcement under the current visa stream. Many of the changes which apply now in transition could affect renewals of existing 457s. It is highly recommended that any changes to a sponsored employee’s circumstances, including salary and location, should be reviewed to ensure the new measures do not rule out a renewal.
Given the unexpected announcement of these changes, and with subsequent details being less publicly introduced, employers with existing sponsored employees in Australia, and those considering sending employees there, should seek professional guidance to lower risks and administrative burdens.