Changes to the 457- Visa Scheme Problematic in Practice
17-Oct-2011September 2009 changes to the 457-visa scheme were "so far reaching, and so hastily introduced", that even the Department of Immigration and Citizenship is still struggling to understand them, says Acacia Immigration Australia CEO Mark Webster.
One change that's proving particularly problematic is the new training requirement, he says.
"Previously you could put together a submission that talked about all the on-the-job training you were doing. Now employers must show that at least one per cent of wages and salaries is spent on training."
The point of the requirement is to show the company is not simply relying on skills from overseas, but training Australian employees to bring them up to standard, he says.
"Typically, the Department of Immigration will want to see every single invoice for training that's happened in the last, say, 12-month period. So that's turning out to be quite a huge administrative hurdle for some businesses."
What some employers might not realise, is that their training spend can include trainee salaries. However, there has been some confusion over what constitutes a trainee for this purpose, Webster says.
"That makes a big difference, because if someone's entire salary can be counted, you can get through the one per cent really quickly. But if the Department doesn't think that person's a trainee, you could easily fail the training requirement."
A lot of the time it comes down to whether they are formally registered as a trainee, with paperwork to prove it. "But under [the] policy, and when you talk to the department, there's not much guidance on it, and there's actually a lot of inconsistency between the various offices on that particular point".
For large employers that already have formal external training programs, the requirement will not be a significant burden, and any negatives will likely be offset by much faster processing times.
But many small employers, who might only fill one role at a time, and rely on on-the-job training, are finding it extremely discouraging, Webster says.
"I would be very surprised if the number of approvals for small employers hasn't dropped remarkably," as many are simply giving up, he says.
Loophole gives access to an "unlimited" number of 457 employees
According to Webster, the 2009 changes introduced "a really big loophole" into the system.
In the past, employers sought approval to sponsor a certain number of employees on 457 visas. "So you'd say, 'All right, how many people do we need? Maybe we need 10 over the next two years', and then you'd get approval for 10. If you used that up, you had to go back and get permission to sponsor a few more people."
However, now there is no set limit. "Once you get approved as a sponsor, that's now valid for three years and you can sponsor as many people as you want."
For example, if a technology company that is already a sponsor wins a contract, and needs to hire again, it can take advantage of connections in China or India and place the extra staff on its own.
"I don't think it was intended to work that way," Webster says. "Technically you're supposed to have a labour agreement if you're doing that; practically, it's become very easy to do that."
Market rate salary another "sticking point"
The requirement to show 457 applicants will be paid at "market rate" is another "sticking point".
Webster says the test is complex and counter-intuitive:
1. If there is an Australian in an equivalent position, then the person being sponsored must be paid at least the same as the Australian; otherwise
2. If there is a Fair Work instrument, state industrial instrument or transitional instrument which would apply to an Australian, the 457 applicant must be paid at least this amount; otherwise
3. DIAC considers ABS data, job ads etcetera to determine the market rate.
A key problem with the "equivalent position" test is, "How do you show whether a position is equivalent or not?", Webster says.
"There are lots of ways of making that distinction, and the Department hasn't been really clear on that. And if there's nobody in an equivalent position, actually there's no requirement to show that the terms and conditions are equivalent."
It follows that it is not always in the employer's best interests to deem an existing position equivalent. If the salary based on an industrial instrument or the job market is lower, there is an incentive to make a distinction.
Another problem is that the policy on this requirement talks about salary level, but does not address benefits such as income protection insurance, Webster says.
"The Department policy is that you should just worry about the guaranteed earnings, but I think it's open to challenge."
If all of an organisation's Australian employees are receiving income protection, but a 457 visa holder is not, the employee could say, "Actually, my terms and conditions aren't equivalent because I'm not getting income protection insurance", he says.
"It hasn't been tested, but I'd love to run a case like that because I think that you'd probably win it."
Moving forward
For unions, the 457-visa scheme is still a "hot topic", Webster says.
Several years ago, a labour-market-testing clause required employers to prove they had advertised a position and were unable to find an Australian to fill it.
"The unions are very, very interested in getting that back," he says.
"They're very interested in the 457 program and I think they would like to see it limited even further.
"I don't think they got as many changes through as they wanted last time, so this is still a hot topic for them," he says.
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