Australia’s Immigration Department has made a number of changes to the 457 temporary worker visa program so far in 2009, with additional changes announced amounting to a complete overhaul of the 457 visa system. 457 allows employers to sponsor workers for a visa that lasts up to 4 years. Permanent employer-sponsored options are not affected by the changes, making them more attractive than 457 visas in many ways.

The changes have been in response to a number of concerns. First, there is a perception that employers are relying too heavily on the 457 program at a time when the unemployment rate in Australia has been on the rise. Second, there have been several examples of employers abusing the 457 system, leading to the exploitation of workers.

Minimum wage level

There will be an increase in the Minimum Wage Level effective July 1, 2009. The changes will result in an increase in the applicable minimum wage of 4.1% for all workers who currently have a 457 visa.

Minimum wage levels for sponsored workers after July 1, 2009 will be as follows:

• Non-IT occupations: $45,221 (currently $43,440)
• IT occupations: $61,919 (currently $59,480) Benefit for Australia

Since February 2009, the Immigration Department has been requesting evidence of the benefit to Australia of sponsoring the employee in question at the visa application and nomination stage of the 457 process. Establishing the benefit to Australia has always been a requirement for approval as business sponsor, although the Immigration Department has not actively monitored.

Employers are now being asked to provide information about any layoffs that have occurred within the company, evidence of efforts made to hire local workers, and the specific benefits of sponsoring each worker. This has introduced significant delays in the application process.

Minimum wage to be based on the market rate

In addition to the aforementioned increases in the Minimum Wage Level, the Minister for Immigration has announced that from September 1, 2009 the required wage level will be based on a “market rate”. At this point, there aren’t many details on how this will be calculated.

However, the market rate requirement may only apply when the compensation package is less than $100,000. The following sources of information are likely to be considered when estimating the market rate:

• Salary paid for equivalent positions in the business;
• Rate set by the Collective Agreements in force
• Data from the Australian Bureau of Statistics (ABS)

The Department has already taken steps to implement this policy; In some cases, sponsors have been asked to provide copies of employment contracts for employees in positions similar to the 457 applicant.

English language ability for business applicants

English language tests are required for individuals sponsored to work in trade occupations (ie ASCO Group 4). For applications submitted on or after April 14, 2009, the English language requirement has been increased from an IELTS average of 4.5 to an IELTS average of 5.0.

Additionally, chefs and head chefs are now required to provide evidence of English; these occupations are in ASCO Group 3 and were previously exempt from English language tests.

Workers are still exempt from English language tests if:

• Must be employed in ASCO Groups 1-3 (ie Managers, Professionals, and Associate Professionals) in addition to Chefs and Head Chefs; Prayed
• Base salary is $77,850 or more; Prayed
• They hold a passport from the UK, Ireland, USA, Canada or New Zealand; Prayed
• They have completed certain degrees taught in English

Skills Assessment for Business Applicants

Beginning July 1, 2009, a formal skills assessment or “job readiness” test will be phased in. To date, there are few details on what this would entail, but it is likely to include a workplace-based assessment.

Regional Sponsorship for Semi-Skilled Workers

Previously, employers could sponsor semi-skilled workers in ASCO Groups 5-7 to fill positions in regional areas. These charges had to be endorsed by the local Regional Certifying Body.

However, as of May 15, 2009, such workers must be sponsored under an employment contract. Obtaining an employment contract involves an individual negotiation process for each employer or group of employers, and can take 12 months or more.

Upcoming changes to the 457 program

The above changes have made obtaining 457 visas more difficult for many employers. However, we can expect more changes in the future, including:

• Introduction of more objective criteria for the evaluation of the employer’s training history;
• Review of sponsorship obligations;
• Expand the labor agreement requirement to larger 457 visa users;
• Restrict the maximum time a person can spend in Australia on a 457 visa to 8 years;
• Making it easier for 457 holders to change employers or obtain permanent visas from within Australia.

Permanent visas now more attractive

The changes have so far not affected permanent employer-sponsored options (ie, ENS and RSMS). Currently, the permanent options process reasonably quickly and may be a better option for employers who are concerned about sponsoring under the 457 program. In particular, the permanent options:

• Do not require employers to show benefits for Australia
• It is not necessary to pay the salary at the market rate.
• Regional concessions are still available
• English language tests can be skipped and are lower for regional positions
• There are no ongoing sponsorship obligations.

For employees, permanent visas are also much more favorable, giving them access to Medicare, eligibility for Australian citizenship, and making them less vulnerable if they lose their job.