457 Visa Changes – What you need to know

In a sudden announcement yesterday, Prime Minister Malcolm Turnbull announced that the Government will abolish the Subclass 457 Temporary Skilled Work visa and replace it with a new work visa that tightens controls of temporary skilled migration. The changes are aimed at improving the integrity of the visa system and “putting Australians first.”

What do these changes mean for your business, and what do you need to think about right now to respond to these changes?

The Government has changed the Skill Lists
Overnight the Government has implemented two new skill lists – the Medium and Long-term Strategic Skills List (MLTSSL) and the Short-term Skilled Occupation List (STSOL) – to replace the previous Skilled Occupation and Consolidated Sponsored Occupation lists.

216 occupations have been removed from the list of occupations eligible for 457 sponsorship. Changes will impact external recruitment activities and internal mobility for employers from small business through to large corporates.

For technology companies, there are a few IT positions now off the skill list for 457 visas:

Web developers
ICT Support Technician NEC
ICT Support and Test Engineers

Employers who hire software developers or engineers need to be very careful about categorising employees correctly for immigration purposes. Whilst positions are commonly referred to as “web developer”, in fact we often find that the role involves working with code rather than building websites and software developer or engineer would be more appropriate classification.

Other removed occupations include positions in Engineering, Science, Professional and Financial Services, Management, Sales & Marketing and other fields.

Restrictions on IT positions and sponsorship by small tech businesses
New caveats have been imposed on attached to 59 additional occupations.

One of the most relevant caveats is that small to medium business will be precluded from sponsoring certain positions if the business has turnover of less than AUD 1 million or fewer than 5 employees.

Tech companies will also only be able to sponsor the following occupations where the visa applicant has more than 2 years’ relevant work experience in their field:

ICT Project Manager
ICT Support Engineer
ICT Systems Test Engineer

Other caveats include a higher minimum salary or limitations in terms of the scope or activities of the business. This change takes immediate effect, and will impact entrepreneurial companies, corporates, trades and specialist technical roles.

What you need to do now
These changes take immediate effect. Employers will need to review the list of removed occupations on the Department’s website and identify which occupations can no longer be filled through skilled migration.

Any pending application lodged in relation to one of the 216 removed occupations will no longer be granted, and impacted employees will need to either find a new visa or depart Australia within 28 days of withdrawal.

The Government will replace the 457 visa with a brand new visa product, called the Temporary Skills Shortage (TSS) Visa.
The new TSS visa programme is expected to be phased in by March 2018. There will be a Short-Term stream of up to two years and a Medium-Term stream of up to four years with a focus on addressing genuine skill shortages and prioritising Australian workers.

We expect that following this announcement, the Government will provide a draft bill to legislate the specific reforms to the employer sponsored work visa programme. In the meantime, employers should continue to use the current 457 visa program as usual for new sponsorships.

Some of the key features of the new proposed visa include:

  1. Minimum 2 years’ relevant work experience. This precludes international students or recent graduates from sponsorship.
  2. Labour market testing, except where an international trade agreement applies. This requires companies to advertise a role to show that the position could not be filled locally.
  3. One renewal permitted for occupations on the Short-Term skill list.
  4. Permanent residence pathway after 3 years for Medium-Term Visa holders only.
  5. New training fund for employers
  6. Greater focus on tax compliance through data matching with the ATO
  7. Police clearances to be obtained and provided at lodgement

The new programme enables employers to continue to sponsor employees in occupations on the STSOL and MLSSL but the new focus is on using the programme to fill short term vacancies.

With visa holders in a STSOL occupation precluded from applying for permanent residence, employers will no longer be able to use the work visa programme for work placements of longer than 4 years or to retain non-Australian workers on a permanent basis unless the occupation is on the shorter MLSSL.

The 2-year work requirement will also preclude companies from accessing talent directly from research, such as PHD or Masters students. We see tech companies increasingly sourcing talent with specialist knowledge and tech skills acquired through research to drive new innovation and technological advancements in their businesses.

Many companies use the 457 programme to supplement their local workforce with senior, internationally experienced workers to help train less experienced workers and graduates coming from Australian schools. The flow of skilled people is two-way – many skilled Australians travel overseas to live and work, and companies need to be able to fill the gap with international workers in a flexible way. The ability to hire talent with diverse skills and experience is also a key driver for use of this programme. Research also shows that this diversity of experience, skills and perspective powers innovation and business growth especially for growing businesses.

FinTech Australia and StartupAUS are conducting a Survey to see how Startups are being impacted by the changes. If you have 2 minutes, please go here to fill it out.

Sarah Thapa is a lawyer and the founder of The Migration Agency, which specialises in strategic immigration and visa solutions for tech companies and individuals. If you have any questions about how 457 changes impact you, you can contact her at sarah@themigrationagency.com.au or by phone 8896 6056.