20 February, 2018
What you need to know
The Temporary Work (Skilled) (subclass 457) visa will be abolished.
A new temporary visa program, the Temporary Skill Shortage (TSS) visa, will be introduced in March 2018 to allow employers to engage skilled foreign workers where genuine skill shortages exist.
Corresponding changes will be introduced to the employer-sponsored permanent visa programs (the Employer Nomination Scheme and the Regional Sponsored Migration Scheme).
There may be delays to application processing during the period of change, meaning employers should plan in advance and be aware that foreign workers may not be readily available to commence work.
The Department of Home Affairs will introduce streamlined processing requirements for some sponsors and applications to reduce processing times.
The lists of eligible skilled occupations have changed and will continue to be reviewed on a six-monthly basis.
What you need to do
Prior to changes being introduced next month, employers who sponsor foreign workers should:
- familiarise themselves with the changes and be prepared to monitor further developments
- review their current workforce demographics and contact existing sponsored foreign workers regarding their ability to remain in Australia and work in their nominated occupation
- review employment contracts for existing foreign workers and template employment contracts to ensure compliance with the changes
- consider the broader impact of the changes on future workforce planning and the targeting of recruitment activities; and
- if in doubt, seek advice about how these changes may impact your business or employees.
Changes to the use and composition of occupation lists
Historically, the ability for an employer to recruit and employ foreign workers has been subject to the nominated occupation appearing on either the Consolidated Sponsored Occupation List (CSOL) or the Skilled Occupation List (SOL), or the predecessor lists.
Following changes introduced last year, the CSOL has been renamed the Short-Term Skilled Occupation List (STSOL) and has been amended to contain only those occupations that are necessary to meet critical, short-term shortages. The SOL has been renamed the Medium and Long-term Strategic Skills List (MLTSSL) and has been amended to include only occupations that are considered high value and likely to contribute to the long-term needs of the Australian labour market.
Caveats have also been applied to particular occupations, meaning that the nomination of certain occupations need to be approached with care. For example, a business may still recruit and sponsor a Chief Executive Officer directly from offshore for a permanent visa, but only in circumstances where the salary exceeds $180,001 per annum and the individual meets the visa applicant eligibility requirements.
The changes to temporary migration
Last year the Government announced that it would abolish the subclass 457 visa and introduce the TSS visa program, in an effort to ensure that Australian workers are given first priority for jobs and that employers remain able to employ foreign workers to address critical skill shortages. Over the past year, changes have been underway to adjust eligibility requirements and the use and composition of occupation lists.
The new TSS visa program is due to commence in March 2018. It will mandate eligibility requirements relating to occupation, English language ability, character, work experience, salary rates, labour market testing and the investment required in the training of Australian workers to offset the use of foreign workers.
In summary, the TSS visa program will comprise three streams:
- Short-term stream – available for employers to source genuine temporary overseas skilled workers in occupations included on the STSOL for a maximum of two years (or up to four years if an international trade obligation applies).
- Medium-term stream – available for employers to source highly skilled overseas workers to fill medium-term critical skills shortages in occupations included on the MLTSSL for up to four years, with the ability to apply for permanent residence after three years.
- Labour agreement stream – available for employers in instances where other visa programs are not available and a demonstrated labour market need exists. A labour agreement can be negotiated to allow foreign workers to enter and work in Australia on a temporary basis, and in some instances, to remain in Australia indefinitely.
Further information on the TSS visa is available here. We expect further details to be made available over the coming month.
The corresponding changes to permanent migration
Employers and foreign workers will also need to navigate corresponding reforms to the permanent skilled worker visa programs. The Employer Nomination Scheme (ENS) and the Regional Sponsored Migration Scheme (RSMS) will undergo further reforms including:
- an increase in the duration for transition to permanent residency (from two years to three years)
- a maximum age limit (45) for all applicants (unless exemptions apply)
- increased work experience requirements; and
- payments to the Skilling Australians Fund (as a method of demonstrating commitment to, and investment in, the training of Australian workers for each foreign worker who is nominated by an employer).
The MLTSSL will now apply to the Direct Entry stream for both the ENS and the RSMS, with additional occupations being available through the RSMS to support employers located in regional areas.
Further details on the changes to the employer-sponsored permanent visa programs is available here.
Understanding the impact
Foreign worker mobility
The ability of a foreign worker to obtain permanent residency will largely be dependent on their occupation and their age. In some instances, a foreign worker may be able to obtain a temporary visa and transition to a permanent visa allowing them to remain working in Australia indefinitely. In other instances, the foreign worker may only be eligible for a temporary visa, meaning that the employer may need to consider alternate strategies to fill certain vacancies on a longer term basis. Relevant to executive talent, a pathway still exists for some senior executives to enter and remain in Australia on a permanent visa, however caveats may apply. Employers may need to consider temporary visa renewal options and other incentives to retain talent for short-term assignments where the option for permanent residency may no longer exist.
Impact on existing subclass 457 sponsors and visa holders
Employers who are already approved standard business sponsors for the subclass 457 program will be able to sponsor skilled overseas workers under the TSS visa program.
Existing subclass 457 visas will remain in effect, meaning that any foreign worker currently holding a subclass 457 visa will be permitted to remain in Australia until the expiration of their visa.
Transitional arrangements will allow foreign nationals who held, or had applied for, a subclass 457 visa on 18 April 2017 to access certain existing provisions under the Temporary Residence Transition, meaning that they may still be eligible for a permanent visa.
If in doubt, employers and foreign workers should seek advice relevant to their particular circumstances.
For further information, please contact:
George Cooper, Partner, Ashurst
george.cooper@ashurst.com
