Abolition of the 457 visa program - what this means for employers

By Veronica Siow
Employment & Safety Government

In brief

The Turnbull Government announced on 18 April 2017 that it is abolishing its 457 visa program and replacing it with a new Temporary Skill Shortage visa program. Implementation of the visa reforms commenced immediately and are to be completed in March 2018. Partner Veronica Siow provides a snapshot of the key changes.

Key implications for employers

  • Employers can no longer nominate a person for a 457 visa in one of the positions that is no longer on the Occupation Lists (see below for the list of removed occupations).
  • Your employees who currently hold a 457 visa will not be affected by these reforms. Their current visa conditions will continue to apply to them.
  • In March 2018, the Temporary Skill Shortage (TSS) program will replace the 457 visa program. The TSS program will comprise two visa streams – a Short Term 2-year visa and a Medium Term 4-year visa.
  • Employers will need to plan ahead to satisfy the labour market testing requirement under the TSS program. Unless the Government further changes these requirements, currently labour market testing requires employers to provide evidence of their attempts in the 12 months prior to submitting the application to recruit an Australian citizen or Australian permanent resident for the nominated position. These attempts may include advertising for the position locally or engaging a recruitment agency to recruit locally.

What are the key changes?

  • On 19 April 2017, the number of occupations that are eligible under the 457 visa program was reduced from 651 to 435. Further changes to the occupations list have been foreshadowed.
  • From 1 July 2017, visa applicants must clear a criminal records check and demonstrate English language proficiency. Under the TSS program, they must also be younger than 45 years old and have a minimum of three years' relevant work experience.
  • Under the TSS program, labour market testing will be mandatory for all occupations unless an exemption applies under Australia's international obligations. Under the current system, in addition to the international obligations exemption, labour market testing is mandatory only for certain occupations and may be exempted for positions that require higher skill levels (such as general managers).
  • In addition, under the TSS program, employers will be required to:
    • to undertake a 'non-discriminatory workforce test' to ensure that Australian workers are not being 'actively discriminated' against. It's unclear what form this test will take;
    • pay the minimum Australian market salary rate (set at $53,900 per annum as at 1 April 2016);
    • contribute more towards training Australian workers.
  • Holders of the 2-year Short Term visa will not be eligible to apply for permanent residency.
  • The Department of Immigration and Border Protection will begin collecting Tax File Numbers and match data with the ATO's records to check that visa holders are being paid their nominated salaries. This process should be completed by 31 December 2017. The Department will also be publishing the identity of employers who are sanctioned for breaches of their obligations under the Migration Act.