4 November 2007

A Special 457 Edition –Summary of Recent Changes

The objective of a 457 visa is to enable Australian employers, and in some instances, overseas employers, to recruit skilled overseas workers to work in Australia.Traditionally, the majority of 457 holders have been highly skilled professionals or executives. As Australia has been experiencing acute skills shortages in many sectors of the economy, we have also seen a dramatic increase in the entry of skilled trades persons and other semi-skilled workers to fill skills shortages in certain industry sectors.The increase also led to isolated instances of abuse and has become a subject of adverse publicity in recent years, resulting in intense scrutiny by the Federal Government.

The Minister for Immigration and Citizenship instigated an inquiry into the 457 visa program by the Senate Joint Standing Committee on Migration (JSCM), culminating in the release in August 2007 of the JSCM's Report – Temporary Visas, Permanent Benefits: Ensuring the effectiveness, fairness and integrity of the temporary business visa program.The Report made 25 recommendations.Many of these recommendations have become law andsome with little prior warning.One of the most significant changes which caught even the industry associations by surprise were the dramatic changes implemented on 1 October 2007 to the 457 visa programme relating to On Hire firms (please see below). If you wish to obtain information regarding the 25 recommendations in the JSCM report, please contact our office.

This Visa Alert is aimed at providing a Summary of these recent changes (some of them have already been reported in our previous Alerts) to assist our business clients to better manage their 457 program.

1 July 2007

English Language Requirement unless exempt, IELTS 4.5 is minimum

1 July 2007

Adverse Information leading to Processing Freezes on the Sponsorship, Nomination and Visa application.      

From 1 July 2007, new law was passed to prevent the DIAC from approving sponsorships, accepting nominations or granting the 457 visa where adverse information is known to the DIAC about the business background of the sponsor or prospective sponsor, or the sponsor or prospective sponsor is under investigation for an alleged breach of a sponsorship undertaking, or of a law of the Commonwealth, a state or territory.

17 August 2007

The Migration Amendment (Employers Sanctions) Act 2007

Please see Page 7 of a joint article -"The Future of Work – A Compliance Perspective"by Linda McCreath – Principal Lawyer of Abacus Visa, and Elizabeth Devine, anEmployment Law lawyer. View it here

September 2007

FAQs for all 457 Visa Holders

The Minister for Immigration in September 2007 wrote to all 457 sponsors providing them with a Frequently Asked Questions document for Subclass 457 visa holders, and advised sponsors that this document must be provided to employees holding Subclass 457 visas within 5 days of receiving the Minister's letter or within 5 days of an employee commencing work. As a service to our clients, we provide this information sheet to all 457 applicants upon grant of this visa.A copy of this FAQ information sheet can be obtained here

1 October 2007

Labour Agreement for On-Hire Firms

From 1/10/2007, on-hire firms seeking to recruit skilled overseas workers to hire out to unrelated businesses must request access to a Labour Agreement.On-shire firms seeking to recruit overseas workers to fill positions in their own business can continue to use the Standard Business Sponsorship and are not affected by the changes.

Transitional arrangements:These changes do not affect the validity of a Subclass 457 visa that has already been approved.These changes will also not apply to all undecided nominations and visa applications on-hand with DIAC as at 1 October 2007.These may continue to be processed under SBS arrangements.If nominations are approved they may lodge visa applications under SBS arrangements in line with the approved nomination.The changes affect allnominations and visa applications on or after 1 October 2007 and they will be processed in accordance with the new arrangements.

It is interesting that the use of Labour Agreement for OHFs has not been vigorously canvassed or discussed in the JSCM Report.The sudden announcement of these changes without prior warning sent a shock wave throughout therecruitment and on-hire industries because of the potential impact on the operations of these businesses.

A Labour Agreement in this context is a formal agreement to be entered into between the Minister for Immigration and Citizenship (DIAC) and the Minister for Employment and Work Place Relations and the individual OHF.The Labour Agreements for OHFs are administered by the Labour Agreement Section of the DIAC at its Canberra office.Information on accessing the LA can be obtained by emailing to Labour.Agreement.Section@immi.gov.au Abacus Visa can provide advice and assistance in relation to the access of the LA and the on-going management of the 457 visa program.Please contact Linda McCreath at our office on (02) 9262 6244.

11 October 2007

New methods for calculating the Minimum Salary Levels (MSL)

MSL to be calculated using one of the two methods:

Method 1:
Where the Subclass 457 visa holder works an average of more than 38 hours per week in a given period:
Number of hours in an average year = 1982.745
MSL = (applicable base salary) x (number of hours worked in the given period / (Number of hours in an average year)

Method 2:
Where the Subclass 457 visa holder works an average of 38 hours per week in a given period:
Number of weeks in an average year = 52.1775
MSL = (applicable base salary) x (number of weeks worked in the given period) / (Number of weeks in an average year)

Example:

Occupation:Chef
Applicable Diac base salary: $41,850
Hours/week:50 hours per week for 52 weeks (2600 total)
Total payment for the year:$45,500 (before tax)

Use Method 1:

MSL = (41850 x 2600)/1982.745  =  $54,876.46

Total payment for the year: $45,500
Minimum Salary Level (MSL): $54,878.46
Sponsor has breached their undertaking to pay MSL.

MSL and Deductions

• The only allowable deductions are PAYG taxation and FBT exempt items such as reimbursement for work tools and safety/work wear.
• All other deductions:
• must be authorised by the visa holder in accordance with industrial law, and
• must not reduce salary below the MSL.

(Note:Businesses should seek their own professional tax advice on whether an item is 100% tax deductible or otherwise exempt from FBT.Further information is available from the Australian Taxation Office website: www.ato.gov.au or their own tax advisors.)

15 October 2007

Re-engineering 457 Monitoring by DIAC

DIAC has implemented a more robust and proactive monitoring framework.The previous Monitoring approach has now been replaced by an Enforcement Oriented approach to monitoring.In short, the monitoring and compliance activities have been aligned to become an enforcement initiative.Low risk sponsors will be given faster processing (have not seen this happen yet), whilst unannounced site visits will be undertaken for high risk sponsors.This reflects a targeted risk-based approach to Diac's monitoring activities.

DIAC will start to conduct surveys of Subclass 457 visa holders.

15 October 2007

Australian Values

From 15 October 2007, the Migration Regulations 1994 has included a new requirement that applicants for permanent, and selected temporary visas (including 457 visa) must sign a statement that, among other things, they will respect Australian values and will comply with Australian law for the duration of their stay in Australia (a values statement).As a results, a large number of DIAC forms have again been changed.

Possible Future Changes

• Increase in the Minimum Salary Levels .
• The Migration Amendment (Sponsorship Obligations) Bill 2007 – introducing tougher undertakings for 457 employers.This Bill was introduced into the Parliament in June 2007 and is expected to be passed after the Federal election, regardless ofwhich party forms government. Abacus Visa's June Alert 2007 discussed this Bill in detail Viewit here.