March 2018 Overhaul of Subclass 457 Programme

The implementation of the Temporary Skills Shortage (TSS) scheme to replace the subclass 457 programme is fast approaching. So what will this mean for applicants and employers?

1. On 1 March 2018, the subclass 457 scheme will be abolished completely and replaced with the TSS visa.

The TSS visa will essentially have 2 streams –

  • Short-term stream visas which will be valid for up to 2 years. This stream will apply to any occupation on the Short-term Skilled Occupation List (STSOL)*

  • Medium-term stream visas which will be valid for up to 4 years. This stream will apply to any occupation on Medium and Long-term Strategic Skills List (MLTSSL)* * employers in regional Australia will have access to a broader range of occupations.

Applicants with occupations on the STSOL will only be able to apply for one onshore renewal, for a further 2 years. There is no pathway to permanent residency through this stream. Applicants with  occupations on the MLTSSL will have a pathway to permanent residence after three years’ work on their TSS visa, subject to meeting other eligibility criteria.

The application process will still require employers to become Standard Business Sponsors if they do not hold SBS approval already, and ‘nominate’ the relevant occupation.

2. The visa application cost will increase

While the TSS cost of sponsorship and nomination will remain the same ($420 and $330, respectively), the primary application fees for the TSS visa are more expensive than the current subclass 457 fees –

Short-term stream

  • Primary Applicant – $1,150

  • Adult Dependent – $1,150

  • Child Dependent – $290

Medium-term stream

  • Primary Applicant – $2,400

  • Adult Dependent – $2,400

  • Child Dependent – $290

3. The Department will introduce the Skilled Australia Fund levy (SAF)

The SAF will be managed by the Department of Education and Training, and will replace the current training benchmarks – currently, employers are required to spend at least 1% of their annual gross payroll towards the training of Australian employees or pay over 2% towards an approved training fund.

From March 2018, sponsoring employers will instead be required to pay the SAF levy ‘up front’ as part of each nomination per applicant, for every year that they wish to sponsor that applicant.

The SAF levy costs will be as follows:

Small business (annual turnover less than 10 million)

  • TSS visa – $1,200 per year/part thereof

  • ENS/RSMS – $3,000 one-off

Other businesses

  • TSS visa – $1,800 per year/part thereof

  • ENS/RSMS – $5,000 one-off

The SAF will not apply to employers that received SBS approval prior to March 2018, unless they are renewing their sponsorship after that date.

4. Employers will be required to undertake compulsory Labour Market Testing (LMT)

LMT will be a mandatory requirement for the TSS visa unless an international trade obligation applies – occupation exemptions will no longer apply. Employers will need to demonstrate their efforts to find a suitably qualified Australian citizen before they can seek to employ an overseas worker.

5. Applicants will be subject to more stringent requirements

Applicants for the TSS visa will need to demonstrate –

  • At least 2 years’ relevant work experience

  • Good character (through mandatory police clearances)

  • English language (IELTS or equivalent testing) results with a minimum score of 5 in each testing component and an overall score of 5 (Medium-term stream applicants only)

If your subclass 457 nomination and visa applications were both lodged prior to TSS implementation, they will be processed under the current framework. However, employers and applicants should note that subclass 457 nominations cannot be linked to TSS visa applications, so if you have lodged a nomination without an associated application, the nomination will become redundant after 1 March 2018 (even if it is already approved). Employers and applicants are encouraged to complete and lodge all outstanding nominations and applications together before the end of February, and to become Standard Business Sponsors before the levy is implemented.

Contact Putt Legal if you require urgent lodgement of subclass 457 SBS, nominations and visa applications.


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