Changes to the 457-visa scheme are mostly in favour of 457 holders, and will disadvantage employers that have relied on on-the-job training, according to Acacia Immigration Australia director, Mark Webster.

The changes that came into effect on 14 September, 2009 include:

New training benchmark

The requirements for approval as a business sponsor have been "completely re-written", and to meet the training benchmark, businesses must make a payment to an industry training fund (of at least 2% of payroll); or spend at least one per cent of payroll on training employees.

"It was previously possible for a business to show that they were introducing or utilising in Australia new technology as an alternative to demonstrating training, but this no longer appears to be possible," Webster says.

The "benefit to Australia" requirement which previously applied to sponsorship approvals is no longer required, he says. "Employers previously needed to show that employment of a person on a 457 contributed to employment of Australians, trade in goods and services, competitiveness of an Australian business sector or links with international markets."

The changes also require employers to "provide an attestation that they have a strong record or demonstrated commitment to employing local labour and non-discriminatory employment practices", he says. "This presumably means that it may be more difficult for employers who have a large number of 457 holders to sponsor further applications. The emphasis on non-discriminatory employment practices might result in issues for employers preferentially hiring overseas nationals or paying lower salaries to overseas workers."

The training benchmark will be very difficult for employers to meet if they rely mainly on on-the-job training, Webster says. "Employers must now in general show payments to external training providers or that they have hired a training officer to meet the training requirement. High-tech companies which would have previously relied on the introduction or utilisation in Australia of new technology will be disadvantaged."

Nomination requirements

The legislation for approval of 457 nominations has also been completely revised, Webster says.

"The occupation the employee is to work in must in general be on the list of approved occupations for 457 visas. The employer must now certify that the duties of the position match the ASCO definition of the occupation and that the qualifications and experience of the applicant meet the skill level specified in the definition."

Webster says a number of "not elsewhere classified" occupations - where the tasks and duties are not specified by ASCO, and are considered "catch all" occupations - have been eliminated from the list.

"Another category targeted for elimination are occupations in the meat industry - an area where employment of 457-visa holders has been of concern to unions for some time."

Farmers and farm overseers have been added to the approved list of 457 occupations.

Another interesting addition, Webster says, is that "the legislation has a provision to require employers to seek the support of certain organisations for a nomination to be approved in certain occupations. Presumably, this would include occupations where labour unions had concerns about the presence of overseas workers in Australia".

The only way to nominate employees whose occupations are not on the approved list is to negotiate a labour agreement with the Department of Immigration and the Department of Employment and Workplace relations, he says. "This process can take many months and the agreement can be quite restrictive in terms of which occupations can be nominated, salary level and training undertakings. Previously, it was possible for employers operating in regional areas to nominate occupations outside the usual list, but this concession has now been eliminated."

Market rate salaries

New 457-visa applicants must now be paid at the "market rate", Webster says, which will depend on the occupation and location of the employee. Employers must provide evidence as to what the market rate is for the occupation, unless the base salary is over $180,000.

"This replaces the previous system which allowed for the grant of a 457 visa providing the salary level was above a clearly specified minimum for the occupation."

Sponsors of current 457-visa holders have until 1 January 2010 to ensure that they are paying the market rate. "This will require an extensive audit process for larger users of the 457 program," Webster warns.

The intention of the change is to ensure that 457-visa holders are paid in accordance with Australian standards, he says, and to avoid exploitation of overseas workers. But, "in reality, the change seems to be in response to concerns that workers on 457 visas put downward pressure on Australian wages and salaries".

Webster says this change is probably the most significant, because "in most cases, the market rate will be much higher than the minimum salary level which applied prior to 14 September".

"While some guidance has been provided on determining market rate, this requirement is very subjective and is likely to result in significant delays for employers using the 457 program going forward."

Health Costs and Insurance for 457 Holders

Employers who have employees on 457 visas which were granted prior to 14 September 2009 are still expected to cover costs of public hospital treatment of the 457 visa holders, Webster says, but the health obligation is no longer part of the sponsorship obligations for 457 visas granted after that date.

Instead, employees must show that they have adequate medical insurance to be granted their 457 visa, and must maintain this insurance during their stay in Australia.

"Employers had significant exposure to potentially very high health costs under the previous sponsorship obligation regime," Webster says. "Requiring the employee to hold suitable insurance is a more sensible way to offset the risk."

However, the requirement that the insurance be already in place prior to visa grant could be "rather troublesome", he warns, because "many applicants would need to pay for health insurance without being sure that their 457 visa will be granted".

Sponsorship obligations

A new regime of sponsorship obligations has been introduced, with the most significant amendments:

• changing the events which must be notified to the Department of Immigration, as well as the timeframe (10 business days) and method of notification;
• clarifying the obligation to return 457 holders and family members to their home country;
• requiring the employer to maintain certain records for a period of two years; and
• forbidding employers from recovering the cost of obtaining sponsorship approval and recruitment fees from the sponsored employee.

Easier to change employers

Subclass-457 visa holders are now able to change employers without needing to apply for a new 457 visa, Webster says. "The process of doing this is for the new employer to lodge a nomination and once this is approved, the 457 holder can work for the new employer. The work restriction on 457 visas, condition 8107, has been rewritten to reflect this change."

Under the changes, 457 holders can only work for the employer who most recently nominated them. If a 457 holder ceases employment, they must start working again within 28 days, otherwise they will be in breach of their visa conditions.