Australia: New Training Benchmark Requirements for Subclass 457 and Subclass 186 Visa Programs

The Department of Immigration and Border Protection has registered two new laws specifying new training benchmarks that will apply to the Subclass 457 and Subclass 186 visa programs from July 1, 2017 with the intention of clarifying policy settings for the training benchmarks and other training requirements.

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Jul 07, 2017
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The Department of Immigration and Border Protection has registered two new laws specifying new training benchmarks that will apply to the Temporary Work (Subclass 457) and Employer Nomination Scheme (Subclass 186) visa programs with the intention clarifying policy settings for the training benchmarks and other training requirements. The new training benchmarks apply to applications submitted on or after July 1, 2017.

Training Benchmark Requirements Businesses operating in Australia for more than 12 months must meet either Training Benchmark A or B as set out below when seeking to apply for Business Sponsorship under the Subclass 457 Visa program or nominate a foreign national under the Direct Entry Stream of the Employer Nomination Scheme (ENS):

A.         Recent expenditure by the business equivalent to at least two percent of the payroll, in payments allocated to an industry training fund that operates within the same or related industry; or B.         Recent expenditure by the business equivalent to at least one percent of the payroll, in the provision of training to their employees. The new laws now specify that in the case of Training Benchmark B, the business is also required to show that the provision of training is related to the purpose of the business.

Start-up businesses which have been operating in Australia for less than 12 months must demonstrate an auditable plan for achieving these benchmarks. New Definitions of Payroll and Recent Expenditure The two new laws seek to clarify policy settings for the training benchmarks, which now specify the types of expenditures included when calculating payroll. This is defined under the new laws as follows:

a.         The total amount of the two payments specified below:
i.          Any wages, remuneration, salary, commission, bonuses, allowances, superannuation contributions or eligible termination payments, defined as wages in payroll tax legislation for the relevant State/Territory, that the business has paid to their employees during the same period; and
ii.          Payments made to contractors or subcontractors during the same period if work provided by the contractor is related to the service/product provided by the business, regardless of whether such payments are included for payroll tax purposes or not;

OR

b.         If the business does not pay either of the types of payments specified above:
i.          The total monetary values of the director's salaries, fees and drawn payments; or
ii.          The actual profit of the business.

Expenditure for Training Benchmark A Recent expenditure for Training Benchmark A is defined in the new instruments as "expenditure made in the previous financial year or the previous 12 months, as evidenced by a receipt for the payment or a letter from the relevant fund". Training funds that can be used for this purpose are:

  • An industry training fund, e.g., a statutory authority responsible for providing funding for training of eligible workers in certain industries;
  • A fund managed by a recognized industry body that provides training opportunities in their industry and quarantines contributions to the fund for training purposes only; or
  • A recognized scholarship fund operated by an Australian university or TAFE college only.

Expenditures which cannot be used for the purposes of meeting Training Benchmark A are payments made to:

  • Training funds operated by Registered Training Organizations (RTOs) or private individuals; or
  • Funds that allocate a percentage or part of the contributions received to commissions or offer refunds for failed immigration applications.

Expenditure Training Benchmark B Recent expenditure for Training Benchmark B is defined in the new instruments as "expenditure made in the previous financial year or the previous 12 months, as evidenced by a receipt for the payment(s) or a contract for employment of the relevant individual for whom salary payments are being included within expenditure that can count towards the benchmark." Expenditures that can count towards this benchmark include:

  • Payments for Australian employees to undertake a formal course of study, including any reasonable and necessary associated costs;
  • Payments to RTOs to deliver face-to-face training to Australian employees that will contribute to an Australian Qualifications Framework qualification;
  • Purchase of an eLearning platform or standalone training software;
  • Payments to cover the salary of Australian employees engaged by the business as apprentices or trainees under a formal training contract, or recent university graduates (must have completed within the previous two years) who are  participating in a formal, structured graduate program for up to two years or completing a professional year following their graduation;
  • The salary of a person whose sole role is to provide training to Australian employees; and
  • Expenditure to attend conferences for continuing professional development.

Examples of expenditures that cannot count towards Benchmark B include:

  • On the job training that is not otherwise identified above as applicable expenditure;
  • Induction training;
  • Training undertaken by persons who are principals in the business or their family members;
  • Staff salaries apportioned to time spent undertaking online or other training courses;
  • Membership fees;
  • Purchase of books, journals or magazine subscriptions; and
  • Attending conferences for purposes other than continuing professional development.

What This Means for Employers and Foreign Nationals
Employers should take note that the new training benchmarks apply to ENS Direct Entry nominations and business sponsorship applications lodged on or after July 1, 2017 and will apply until March 2018, when they will be replaced by payment of levies into the new Skilling Australians Fund.

They should consider that while the new instruments replicate much of the DIBP policy guidance on the training benchmarks, the instruments tighten the acceptable expenditure. For example, for the purposes of Training Benchmark B, a trainer's salary may now only be counted if "their sole role is to provide training" whereby the previous policy position was that they could be counted where such training was a "key part" of the trainer's job.

Relevant application forms have also changed on July 1, 2017 to improve the collection of information around the training benchmarks, and it will be important to ensure that only acceptable evidence of expenditure is included to minimize the risk of refusal of an application.

This alert is for informational purposes only. If you have any questions, please contact the global immigration professional with whom you work at Fragomen Worldwide 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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