In brief - How will employees and employers be affected?

The government recently announced that the 457 visa will be replaced with the Temporary Skills Shortage Visa in March 2018. The government also announced  that the number of occupations on the 457 visa occupation list has been reduced. Employees subject to these visas, and the employers who engage them, should consider the impact of these changes on their working arrangements. 

457 visa to be replaced by a temporary skills shortage visa

On 18 April 2017, Prime Minister Malcom Turnbull announced changes to Australia's famed Temporary Work (Skilled) visa (subclass 457) (457 visa). 

The change has the effect of removing a number of occupations from the list of occupations eligible to apply from 457 visas. In particular positions in the mining, and oil and gas industries (such as drillers, gas or petroleum operators, and petroleum engineers) will be affected.

The changes were to be phased in, starting from 19 April 2017, and finalised by March 2018 when the 457 visa will be abolished. After this time a temporary skills shortage visa (available for two and four year periods) will be available for foreign skilled workers. 

At this stage, there has been no drafted bill or legislation provided by the government to analyse and the detail has instead been provided through a series of government press conferences and Department of Immigration and Border Protection (DIBP) produced fact sheets.

What is a temporary work (skilled) 457 visa?

The 457 visa allowed for a skilled worker to travel to Australia to work in their nominated occupation for their approved sponsor for up to four years. Essentially the 457 visa is a temporary skilled worker visa. Foreign workers on the 457 visas were able to bring their family to Australia while they were working under the visa.

Under this visa, employees were required to work in occupations detailed in the "Occupation Lists", deemed to be occupations where Australia had a skilled worker shortage. Before Prime Minister Turnbull's announcement, there were 651 occupations named on those lists. From 19 April 2017 that number has been reduced to 435, with restrictions added to a further 59 occupations of the 435 occupations. 

Temporary Skills Shortage Visa scheme imposes requirements on entrants and their employers

The changes announced by Prime Minister Turnbull will eventually see the 457 visa "abolished" but replaced with the Temporary Skills Shortage Visa (TSS visa) in March 2018. The TSS visa will have two streams, the short-term stream and the medium- to longer-term stream. 

From 19 April 2017, the occupations list will also be renamed (from the Consolidated Sponsored Occupation List (CSOL) to the Skilled Occupations List (STSOL)) and will be reviewed every six months. The other occupations list used for skilled migration, the Skilled Occupations List (SOL) will be renamed the new Medium and Long-term Strategic Skills List (MLTSSL). 

The maximum term for a short-term visa for an occupation under the STSOL will be two years, while the medium-term visas under the MLTSSL will continue to be issued for four years.

The TSS visa scheme will require entrants to be "genuinely temporary" and require IELTS (English language) test scores of above 5 (with a minimum of 4.5 in each area).

Both streams will include requirements of two years' work experience, labour market testing, a minimum market salary rate (designed to stop foreign workers being paid less), non-discriminatory tests (to ensure Australian workers have not been discriminated against) and a training requirement to ensure employers are contributing toward the training of Australian workers. 

For most of these changes, detailed policy and regulatory amendments are yet to be provided.

Character testing, removal of English language exemption for high paid employees, training benchmarks among other changes

Additional changes under the TSS visas will be phased in over the next year. From 1 July 2017, the government will impose character testing (read criminal record checks), remove the English language exemption for highly paid employees (earning more than $96,400), and introduce changes to training benchmarks (which we have been told will be clarified later). 

Before 31 December 2017, the DIBP will begin collecting the tax file numbers for all 457 visa holders and start publishing details of visa sponsors who do not comply with the rules. 

Effect of trimming occupation list may be minimal

The overall effect of the changes will no doubt lead to hotly contested, politically charged analysis. A review of data from the DIBP reveals that in reality the trimming of the occupation list from 651 to 435 may have minimal effect. The ABC reports in its article entitled HR, coders and manufacturing: The occupations most affected by 457 visa changes that of the 24,270 457 visas granted between June and December 2016, only 2,083 were granted in the 216 occupations that are now removed from the occupations list, which would equate to an only 8.6% decrease in temporary skilled foreign workers under the new regime.

What do visa holders and employers need to do?

Employees currently subject to 457 visas need to understand what the consolidated short- and medium-term effects mean for their current working arrangements.

Employers will need to review their current hiring requirements, the current conditions of work for 457 visa workers and should review the revised occupation lists to ensure compliance with the changing visa requirements. A list of removed occupations is available from the DIBP site. 

This is commentary published by Colin Biggers & Paisley for general information purposes only. This should not be relied on as specific advice. You should seek your own legal and other advice for any question, or for any specific situation or proposal, before making any final decision. The content also is subject to change. A person listed may not be admitted as a lawyer in all States and Territories. © Colin Biggers & Paisley, Australia 2024.

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