457 Visa Reform

27th Apr 2017

After nearly twenty years the 457 Temporary Work (Skilled) Visa will close in March 2018.  It has morphed into two Temporary Skills Shortage (TSS) visas.

The subclasses for these two visas and their full details have yet to be released.

Although the 457 visa has been under review for some time, the severity of the announcement came as a shock and surprise to the industry.  The facts suggest that much of the detail is still being considered given the lack of full information available.  For instance, the government is saying the draft guidelines on occupation caveats and the occupations on the new lists will be refined over coming months.

Many issues pertaining to the announcement are still far from clear with many questions remaining unanswered.  It is expected over coming months when the details of the new policy are clearer there will be better certainty about the reforms.

For instance, we have no idea when the two new TSS visa subclasses will be named or indeed when they might commence, although the Department of Immigration (DIBP) suggests that they will commence in March 2018 when the 457 visa formally ceases.

We know however, from 19 April 2017, the Skilled Occupation List (SOL) and the Consolidated Sponsored Occupations List (CSOL) have been replaced with the Medium and Long-term Strategic Skills List (MLTSSL) and Short-term Skilled Occupation List (STSOL) respectively, affecting a range of Visa Subclasses.

This is a link to the current MLTSSL:  https://www.border.gov.au/Trav/Work/Work/Skills-assessment-and-assessing-authorities/skilled-occupations-lists/mltssl

And a link to the STSOL:  http://www.border.gov.au/Trav/Work/Work/Skills-assessment-and-assessing-authorities/skilled-occupations-lists/combined-stsol-mltssl

We also know from 1 July 2017, the occupation lists, STSOL and MLTSSL, will be further refined.  And that the English language salary exemption threshold ($96,400 pa), which exempts applicants from the English language requirement, will be removed.

The policy settings for the training benchmark requirement is expected to be made clearer, and the requirement for penal clearances will be made mandatory.

The department has also advised that before 31 December 2017, it will commence the collection of Tax File Numbers for visa holders, and the data matched with the Australian Tax Office records to ensure that visa holders are not paid less than what had been advised to the department.

DIBP will also commence the shaming of sponsors who fail to meet their 457 visa obligations.

For both the TSS Short-term stream and Medium-term stream, the criteria will include having:

  • Work experience of at least two years by the applicant;
  • Labour Market Testing undertaken, unless an international obligation would exempt it;
  • A minimum market salary rate which is at least equal or more than the Temporary Skilled Migration Income Threshold (TSMIT);
  • Providing mandatory Police clearances;
  • Ensuring Australian employers are not actively discriminating against Australian workers; &
  • A strengthened training requirement for employers.

 What happens from here?

Given the 19 April 2017 watershed announcement, we expect that current and future 457 applicants will be processed in one of two ways, depending on when the application was lodged.  But ultimately the processing for both will be the same, that is under the new rules:

People who currently hold 457 visas:

No impact on this group of people.  They will continue to hold this visa until it expires.

People who applied for a 457 visa before 19 April 2017:

For people who lodged their 457 application before 19 April, their processing will depend on a number of factors explained here.  If they reside in Australia, they will remain on their substantive visa or Bridging Visa, whichever is applicable, until a decision is made on the 457 application.

How a validly lodged 457 application will be decided after 19 April is dependent on:

  • Whether their 457 nomination is approved – If their 457 nomination has not yet been decided, the applicant has to wait till the 457 nomination is approved before the application will be considered. If the nomination is refused, then it will be difficult for a nomination-reliant 457 application to proceed; and
  • If the nomination is approved, then the next process is whether the applicant’s occupation is on STSOL or MLTSSL.

People currently in the pipeline applying for a 457 visa must be on one of the new occupations list.  If the nominated occupation is not on either STSOL or MLTSSL, then the 457 applicant will be refused.  Alternatively, the applicant can withdraw the application and seek a refund as a result of the policy change.

The term of the 457 visa is dependent on which list the applicant belonged when the application is decided.  The applicant will be granted four years if they are on MLTSSL; but only two years if the applicant’s occupation is on the STSOL.

Whether the applicant is able to later apply for the pathway to permanent residence via the ENS or RSMS Transition Entry stream will probably be dependent on whether their occupation is on MLTSSL from March 2018 onwards.

Finally, there are also ‘caveats’ to some occupations on the STSOL and MLTSSL.  A caveat is designed to ensure that the occupation continues to meet the context of the position for which it is expected.  Using a Cook as an example, the caveat there will exclude positions which involves mass production such as a fast food or a takeaway setting.  The position of Cook is expected to be one where it is for a dining establishment which involves preparing, seasoning and cooking food.

People who apply for a 457 visa after 19 April 2017:

For this group of people, it is assumed that they are aware of the new announcement.

Accordingly, a nomination should only be lodged if the occupation is on STSOL or MLTSSL.  And when the nomination is granted, the applicant could then lodge their 457 application.

However, applicants should keep in mind that the government will be further refining the occupation lists in the coming months, and that their occupation may be removed from the list before a decision is made on their application. If this occurs, the 457 application may be refused.

How much time the applicant is given in their 457 visa is dependent on whether their occupation is on STSOL or MLTSSL.  Like applications lodged before 19 April, the occupations on STSOL will be granted up to two years stay depending on the nomination, in contrast with people on the MLTSSL who will be granted up to four years depending on the nomination.

Note the 457 visa program will close by March 2018.  It is expected by then the 457 applications in the queue will all have been finalised.

Impact beyond the 457 Visa

Although the 18 April 2017 announcement was specifically for the 457 visa, it had strong ripple effects and will impact on visas other than 457.

As a result of the change in the Medium and Long-term Strategic Skills List and the Short-term Skilled Occupation List respectively, a range of Visa Subclasses will be affected.

Skilled Migration Visas (subclass 189, 190 and 489) for example will be affected as the occupation lists have changed.  It is interesting that the Department of Immigration’s website on these visas have been updated but still, they have not been very instructive about the new lists.

Similarly, the Employer Nomination Scheme (ENS) and Regional Sponsored Migration Scheme (RSMS) will also be impacted on a staggered basis.  From 1 July 2017 applicants for the Direct Entry stream in the ENS and RSMS programs will have to be under 45 years old at time of the application, and by March 2018 all applicants for both Direct Entry and Transition entry will have to be under 45 years old at time of application. Additional occupations will be added to support regional employers for RSMS.

The minimum market salary rate will have to match or be better than the Temporary Skilled Migration Income Threshold (TSMIT), a concept similar to the 457 visa.

Departmental information suggests that the narrow MLTSSL will apply from March 2018 when previously the wider CSOL (now renamed STSOL) applied.  This will mean a lot less occupations can be nominated from March next year.  This is a significant change.  It is also expected the training obligation requirement for ENS and RSMS employers will be “strengthened”, with this clarification expected soon.

There are other reforms that will be introduced, but they are not clear as to whether they impact solely on Direct Entry stream or both Direct Entry and Transition Entry stream applicants.  This is the nature of the confusion which departmental information has provided.  But over the coming months, it is expected that this confusion will clarify itself.

Conclusion

 It has been widely commentated that the changes were undertaken for political reasons.  Aside from that, while one can say the TSS Medium-term stream is a rebadging of the 457 visa, there are quite a few substantive changes and it is expected that the volume of TSS Short-term or Medium-term visas will unlikely to match the volume of 457 visas issued in the past.

Certainly the breaks will be placed on the number of visas issued for the Medium-term stream, as there are only 183 occupations listed in the MLTSSL compared with the 651 occupations listed in the old CSOL.  And the TSS Medium–term stream can now be sourced only from MLTSSL, not STSOL (which has 435 occupations).

Like the 457 visa before it, we can expect the TSS Short-term stream to be more numerous than the Medium-term stream because of the more expansive occupations listed.  But the final number of TSS visas granted will depend on whether the occupations in the listings will further shrink, and how the department will assess the cases that come before it.

Overall, however, given the politics of the day, we can expect to see TSS visas reduce in number and in scope to previous 457 visas.

Commentators have opined that this will impact adversely on the employment market over time.  We will wait and see if this is accurate.

CONTACT

 With changes underway in the complicated transitioning 457 and TSS visas, and changes expected in other employer sponsored visas like ENS and RSMS, as well as skilled visas, consult with a migration lawyer that you can trust in all your migration law matters.

Contact:

Peter Kuek-Kong Lee on (07) 3009 8444  or mobile 04242 888 43.

Emailp.lee@rclaw.com.au

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