Navigating the 457 changes – what you need to know

8 May 2017

On the 18 April 2018, Prime Minister Turnbull and Minister for Immigration and Border Protection Peter Dutton announced a series of reforms to the Temporary Work (subclass 457) and the permanent employer sponsored visa programs, including the introduction of a new, more restrictive Temporary Skill Shortage visa in March 2018, designed to 'put Australians first'. This was followed two days later with an announcement of measures to tightening the Citizenship requirements, including the introduction of a stand-alone English test, a refined Citizenship test and proposal to increase the period of permanent residence to at least four years instead of the current 12 months. The Department of Immigration and Border Protection's (DIBP) website suggests that the citizenship reforms will apply retrospectively to applications lodged on or after 20 April 2017, the date of the PM's announcement, although will require legislative change.

Even more remarkable than the method of the announced changes (a video posted on the PM's Facebook) is the retrospective application of the two new Short-term Skilled Occupations List (STSOL) and Medium and Long-term Strategic Skills List (MLTSSL) occupation lists which took effect from 19 April 2017. The new occupation lists are not limited to new 457 visa and Employer Nomination Scheme (ENS) Direct Entry stream applications, but also apply to 457 nomination and visa applications that are already lodged and not yet decided by the DIBP.

With effect from 19 April 2017:

  • 457 visas for occupations that are on the STSOL will only be granted for a maximum two years;
  • 457 visas for occupations on the MLTSSL will be granted for a maximum of four years.

So what is all the fuss about the new occupation lists?

With the removal of 216 occupations, the new STSOL and MTSOL are significantly reduced from their predecessors, the Consolidated Skilled Occupation and Skilled Occupation Lists. The new occupation lists also include 59 occupations that are subject to a 'caveat' which restrict their usage in the 457 program based on factors such as the location of the position, size and nature of the sponsoring business, proposed base salary minimum level of experience that is required.

The Explanatory Statement to the legislative instrument of the new occupation list indicates that 'these occupations have been restricted and removed on the basis of their historically low visa grant rates, Australian citizenship requirements and advice from the Department of Employment concerning their appropriateness for this list."

The removal and limit of access will likely have a significant impact on a number of key industry groups. For example, the ICT sector will be affected by the removal of ICT Support and Test Engineers NEC, ICT Support Technicians, Multimedia Designers and Web Developers whilst a further 20 ICT specific occupations are now only eligible for a 2 year visa including ICT Project Manager, ICT Security Specialist, Network Analyst and Data Administrator to name but a few.

The Oil and Gas sector will be impacted by the removal of occupations such as Petroleum Engineer, Driller and Gas and Petroleum Operators and the restrictions on further engineering occupations such as Mining Engineer and Engineering Professional NEC which are also only eligible for a 2 year visa.

Finally, the removal of the occupation of Retail Buyer (including merchandise planners) will likely affect the retail sector as will restricted access to other key occupations such as Sales and Marketing Managers, Customer Service Managers, Marketing Specialists and Fashion Designers.

Other changes to the 457 and permanent employer sponsored programs

There will be some further tightening of the 457 and permanent employer sponsored programs ahead of the introduction of the new Temporary Skill Shortage (TSS) visa in March 2018.

With effect from 1 July 2017:

  • The English language salary threshold exemption for 457 visa applicants with a salary above AUD96,400 will be removed;
  • Both the STSOL and the MLTSSL will be further reviewed;
  • Clearer policy guidance will be released regarding the current training benchmarks that apply to the 457 visa program;
  • Police clearances will become mandatory for all 457 visa applications;
  • The age limit for Direct entry stream applications for ENS and Regional Sponsored Migration Scheme (RSMS) visas will be decreased from 50 to 45 years;
  • The English language requirements will be increased for Temporary Residence Transition stream ENS and RSMS applications.

With effect from December 2017:

  • The DIBP will begin to collection Tax File Numbers to facilitate matching of data with Australian Tax Office records to ensure that visa holders are not paid less than their nominated salary; and
  • The DIBP will begin to publish details of sponsors who have been sanctioned for failing to meet their Subclass 457 Visa sponsorship obligations.

March 2018 - Introduction of the new Temporary Skill Shortage Visa and further changes to the permanent employer sponsored categories

From March 2018, a new Temporary Skill Shortage (TSS) visa will replace the 457 visa and will be comprised of two streams:

  • Short-term stream of up to two years – a minimum English requirement of International English Language Testing System (IELTS) 5 will apply (with a minimum score of 4.5 in each component). Visas granted under this stream may be renewed once only; and
  • Medium-term stream of up to four years – a minimum English requirement of IELTS 5 (or equivalent test) will apply (with a minimum score of 5 in each component). Visas granted under this stream may be renewed and may also provide a pathway to permanent residence after three years.

The new TSS will have the following features:

  • Targeted occupation lists: The new Short-term Skilled Occupations List (STSOL) will apply to the Short-term stream and the new Medium and Long-term Strategic Skills List (MLTSSL) will apply to the Medium-term stream. Additional occupations will be available on both lists to support regional Australia
  • Minimum two year work experience requirement;
  • Requirement for employers to meet the minimum market salary rate;
  • Mandatory labor market testing, unless an international trade agreement applies;
  • A test to ensure employers are not actively discriminating against Australian workers; and
  • Stricter requirement for employers to contribute to training Australian workers.

There will also be some further tightening of the permanent employer sponsored programs from March 2018 as follows:

  • The maximum age limit will be reduced from 50 to 45 years across the board;
  • A new minimum work experience requirement of at least three years will apply
  • The permanent residence eligibility period under will be extended from two to three years;
  • The requirement for employers to contribute to training Australians will be strengthened; and
  • Employers will be required to pay the Australian market salary rate and meet the Temporary Skilled Migration Income Threshold (TSMIT), currently set at AUD 53,900.

Navigating the changes

Much is still unknown as to how the new TSS will operate in practice and as with any legislative change; the devil is always in the detail. It is important for businesses to seek informed advice at this time, particularly regarding any pending 457 nominations or visa applications - these will need to be withdrawn if the occupation has been removed or subject to caveat restricting the occupations use in the 457 program, or where the applicant cannot meet a specific caveat. If the visa applicant is in Australia, their immigration status will need to be carefully managed.

The changes to the permanent employer sponsored programs will also have significant impact to 457 visa holders in Australia, particularly those aged 45 and above. It is unclear at this stage as to whether any exemptions for age, English or skill will apply under the new framework and any 457 visa holders who are interested in permanent residence should seek expert advice at this time to have their eligibility assessed.

Article by Cherie Wright, Special Counsel, Fragomen. For more information, visit the Fragomen Immigration Reforms website.

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