Sweeping Changes to 457 Program Effective 14 September 2009

Date: Oct 03, 2009
Document Type: Newsletter

The Commonwealth Government introduced a number of changes to the sponsorship regime for temporary workers in Australia on subclass 457 visas. These changes came into effect on 14 September 2009.


New Criteria for Approval as a Business Sponsor

In order to streamline the approval process for employers seeking to sponsor employees under the 457 program, the Commonwealth Government revised the requirements for approval as a business sponsor.

There are now two ways for a business to meet the required training benchmark. First, the business can make a payment to an industry training fund of at least 2% of payroll. Alternatively, it can spend at least 1% of payroll on employee training. Previously a business could demonstrate that it was introducing or using new technology in Australia as a third alternative, but this no longer appears to be the case. The effect of the new training benchmark is that it will be very difficult for employers to meet if they rely mainly on “on the job” training. This is because employers must now show payments to external training providers or that they have hired a training officer to meet the training requirement.

Previously, employers were required to show that employment of a person on a 457 visa benefitted Australia by contributing to the employment of Australians, trade in goods and services, competitiveness of an Australian business sector or links with international markets. This requirement has now been removed. Instead, employers must now attest that they have a strong record of employing local labour and non-discriminatory employment practices. One consequence is that it may be more difficult for employers who have a large number of 457 visa holders to sponsor additional applications.


Nomination Requirements

Generally, the worker’s proposed position must be on the list of approved occupations for 457 visas. This list was revised on 11 September 2009. In addition, employers must certify that the duties of the position match the government definition of the occupation and that the qualifications and experience of the applicant meet the skill level specified in the definition. Further, some occupations now require prospective employers to seek the support of certain organisations (such as labour unions) for a nomination to be approved.

If an occupation is not on the approved list, it is necessary to negotiate a labour agreement with the Commonwealth Government in order to employ the foreign worker, a process which can be lengthy and restrictive.


Salaries and Benefits

As of 14 September 2009, new 457 visa applicants must be paid at the “market rate” for the occupation taking into account the place of work. For existing 457 visa holders, employers have until 1 January 2010 to ensure that they are being paid the market rate. Employers will generally be required to provide evidence regarding the market rate. This represents a significant change from previous salary requirements.

Where a 457 visa was granted prior to 14 September 2009, employers are required to cover costs of the employee’s public hospital treatment. With respect to visas granted after 14 September 2009, employers will no longer be responsible for these costs. Instead, visa holders must demonstrate that they have adequate medical insurance prior to the visa grant and must maintain this insurance while in Australia.


Changing Employers

A significant benefit for 457 visa holders is that it will now be possible to change employers without having to apply for a new 457 visa. Instead the new employer can lodge a nomination. Once approved, the 457 holder can work for the new employer. However, 457 holders can only work for the employer who most recently nominated them. If they cease to be employed, they must start working again within 28 days.

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