Australia: Subclass 457 Visa Program to be Replaced in 2018 and Amendments to the Permanent Employer Sponsored Skilled Program Forthcoming

The Australian Prime Minister has proposed to replace the Subclass 457 Visa Program with a more restrictive visa program called the Temporary Skill Shortage Visa, effective March 2018. Most of the proposed program's features exist in the current Subclass 457 Visa system, but the actual impact and level of restrictions will only be known once the practical details are announced. The Permanent Employer Sponsored Skilled Migration Program will also be restricted, including a reduction in the maximum age limit from 50 years to 45 years for applications under the Direct Entry eligibility stream effective July 1, 2017, among other limitations.

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Apr 20, 2017
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The Australian Prime Minister has proposed to replace the Subclass 457 Visa Program - the most

commonly-utilized temporary work visa process in Australia - with a more restrictive visa program called the Temporary Skill Shortage Visa, effective March 2018. Some details on the proposed changes have been announced, but they are subject to change based on the Australian legislative process. Most of the proposed program's features exist in the current Subclass 457 Visa system and have been revised in the past, but the actual impact and level of restrictions will only be known once the practical details are announced. The Permanent Employer Sponsored Skilled Migration Program will also be restricted, including a reduction in the maximum age limit from 50 years to 45 years for applications under the Direct Entry eligibility stream effective July 1, 2017, among other limitations.

Temporary Skill Shortage Visa Details

The proposed Temporary Skill Shortage Visa would address skill shortages in the Australian workforce while prioritizing Australian workers.

The following streams would comprise the Temporary Skill Shortage Visa:

  • Short-term stream of up to two years; and
  • Medium-term stream of up to four years.


The requirements for the Temporary Skill Shortage Visa would likely include the following changes from the current Subclass 457 Visa program, according to the following timetable:


Implemented April 19, 2017:

  • More targeted occupation lists which better align with skills needed in the Australian labor market. The new Short-term Skilled Occupations List (STSOL) applies to non-regional Australia and the new Medium and Long-term Strategic Skills List ( MLTSSL) applies to regional Australia.


Proposed to be implemented on July 1, 2017:

  • Removal of the English language salary threshold exemption for applicants with a salary above AU 96,400. A minimum English requirement of International English Language Testing System (IELTS) 6 will apply to the Short-Term Stream and IELTS 5 (or equivalent test) will apply to the Medium-Term stream; and
  • Mandatory police clearance certificates for the application process.


Proposed to be implemented in December 2017:

  • Collection of Tax File Numbers by the Department of Immigration and Border Protection (DIBP) to
    match data with Australian Tax Office records to ensure that visa holders are not paid less than their nominated salary; and
  • The DIBP would begin to publish details of sponsors who have been sanctioned for failing to meet
    their Subclass 457 Visa sponsorship obligations.


Proposed to be implemented in March 2018:

  • Requirement for visa applicants to have at least two years of work experience in their skilled occupation, instead of meeting the minimum Australian and New Zealand Standard Classification of Occupations (ANZSCO) skill level, which is the current requirement under Subclass 457 Visa rules;
  • Requirement for employers to meet the minimum market salary rate;
  • Mandatory labor market testing, unless an international trade agreement with other rules applies;
  • One in-country visa renewal under the short-term stream;
  • In-country visa renewal and a permanent residence pathway after three years under the medium-term stream;
  • A test to ensure employers are not actively discriminating against Australian workers; and
  • Stricter requirement for employers to contribute to training Australian workers.


Restrictions to the Permanent Employer Nomination and Regional Sponsored Migration Schemes

In addition to the proposed Subclass 457 Visa program replacement, DIBP also proposes to restrict the eligibility requirements for the Permanent Employer Nomination Scheme (Subclass 186) Visa) and Regional Sponsored Migration Scheme (Subclass 187) Visa in the following ways:

Proposed to be implemented on July 1, 2017:

  • Increasing the English language proficiency requirements under the Temporary Residence Transition stream to a IELTS (or equivalent test) score of 6 in each component.


Proposed to be implemented in March 2018:

  • Imposing a new minimum work experience requirement of at least three years, regardless of the
    eligibility stream;
  • Extending the permanent residence eligibility period under the Temporary Residence Transition
    Stream from two to three years;
  • Reducing the maximum age limit from 50 to 45 years - this will take effect on July 1, 2017 for Direct Entry stream Employer Nomination Scheme (ENS)/ Regional Sponsored Migration Scheme (RSMS) applications and will be expanded to all other streams on or after March 2018. DIBP has indicated that it is currently considering expanding the list of occupations in Australia that will be exempt from this age requirement under the RSMS;
  • Strengthening the requirement for employers to contribute to training Australian workers; and
  • Requiring employers to pay the Australian market salary rate and meet the Temporary Skilled
    Migration Income Threshold, currently set at AU 53,900.


What This Means for Employers and Foreign Nationals

Current visa regulations for employment in Australia will continue to apply until the proposed changes are officially implemented in Australian legislation, including the current waiver of the nomination fee and age
exemptions for certain occupations.

Due to the proposed collection of Tax File Numbers by the DIBP, there would be increased cross-checking of information with the Tax Office, which would increase the sharing of private information. Additionally, there would be an increased compliance risk in cases where employers fail to pay the required salary.

F ragomen will continue to monitor the situation and will work to ensure the government understands the potential ramifications of the proposed changes. Fragomen will provide further updates as new information is released.

This alert is for informational purposes only. If you have any questions, please contact the global immigration professional with whom you work at Fragomen or send an email to fragomenclientcorrespondence@fragomen.com.

© 2017 Fragomen, Del Rey, Bernsen & Loewy, LLP, Fragomen Global LLP and affiliates. All Rights Reserved.

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