Subclass 457 visa versus the new Temporary Skill Shortage (TSS) visa Subclass 482
From 18 March 2018 the Subclass 457 visa was abolished and replaced with the new Temporary Skill Shortage (TSS) visa Subclass 482. This change does not impact existing 457 visa holders – their visas are still valid.
The TSS visa has three streams. Generally, the short term stream and medium term streams permit up to two years or up to four years stay respectively, depending on whether your nominated occupation is on the short term skilled occupation list (STSOL) or the medium and long term strategic skills list (MLTSSL). The third stream, labour agreement stream, is available for businesses that have negotiated a labour agreement with the Department of Home Affairs (DOHA).
Genuine Temporary Entrant (GTE) requirement
Applicants for the short term visa can only apply for one subsequent TSS visa onshore, and must also provide evidence that they are a genuine temporary entrant. That is, they intend to depart Australia at the end of the approved visa period. For these applicants there is no pathway to permanent residence under the employer sponsored visa program.
TSS visa process
Just like the Subclass 457 visa, the TSS visa process is a three step process:
- Sponsorship application by the business. Existing Subclass 457 visa sponsors can use their current approval to sponsor workers for the TSS visa.
- Nomination application – the business nominates the applicant for full time employment in one of the occupations on either the short term or medium term list
- Visa application by the proposed employee.
Compulsory labour market testing (LMT)
Before lodging a nomination application, the business must have completed labour market testing within the last 12 months (or from June 2018, within the last 6 months) to show that the position cannot be filled by an Australian worker. There is an exemption if certain international trade obligations apply.
There are strict criteria for advertising, so it is important to check that any advertising completed meets the requirements, (including the minimum duration of 21 consecutive days) before lodging the nomination application.
When considering whether to sponsor an overseas worker for a TSS visa, it will be important to allow sufficient lead time to meet the labour market testing requirements.
Currently, businesses are still required to meet one of two training benchmarks, but these are no longer assessed during the sponsorship application. The business must meet either:
- Training benchmark A – A contribution of 2% of total gross payroll to an industry training fund OR
- Training benchmark B – Expenditure of 1% of total gross payroll on training Australian citizen/permanent resident employees
Note: The training obligations will be replaced by the SAF (Skilling Australians Fund) levy, once the legislation has been passed by the government. Assuming the legislation is passed, the SAF levy will be payable by businesses at the time of lodging a nomination for a TSS visa or permanent employer sponsored visa. The amount of the levy varies depending on the turnover of the business and the period of the TSS visa.
For businesses with turnover of less than $10M, the SAF levy is $1200 per year, and for businesses with a turnover of more than $10M, the levy is $1800 per year. The levy must be paid by the business – it cannot be recovered from the worker, and there are only limited circumstances in which the levy can be refunded.
Annual market salary rate (AMSR)
The visa applicant must be paid a salary which is above the TSMIT (currently $53900 per annum) and the salary must be consistent with AMSR for the position. The AMSR is assessed by reference to any applicable industrial instrument or the salary of an equivalent Australian worker. If there is no equivalent Australian worker, the employer must provide a detailed explanation with supporting evidence about how the market salary was determined.
All visa applicants must have completed at least 2 years work experience in the nominated occupation or a closely related field. This will impact recent graduates, who will no longer be able to meet the skills requirements for the visa until they have completed the required work experience.
Applicants for the short term visa must score an overall score of 5.0 on the IELTS test (with a minimum of 4.5 on each component) or equivalent test. Applicants for the long term visa must score 5.0 on each component of the IELTS test or equivalent test.
Generally, you must provide a police clearance certificate from each country you have lived in for at least 12 months cumulatively in the past 10 years since turning 16 years of age. This is a requirement for the primary applicant and all family members included in the application.
The visa application charge for the short term stream is from $1150 and from $2400 for medium term stream. An additional application fee applies for each additional family member included in the application.
Additionally, the sponsorship application fee is $420 and the nomination application fee is $330. Like the Subclass 457 visa, the employer is required to pay for all costs associated with the sponsorship and nomination applications. These costs must not be passed on to the visa applicant.
How the TSS visa changes will affect future permanent residence visa applications
Employer sponsored permanent residence visas have been directly affected by changes introduced on 18 March 2018. For TSS visa / 457 visa holders wishing to transition to a permanent visa, they will need to have worked for their employer in the nominated occupation for at least 3 years. The age limit has been reduced from 50 years to 45 years.
There are transitional exemptions on the age and employment requirements for applicants who held their 457 visa or applied for their 457 visa before 18 April 2017, so it’s important to know when the 457 visa was granted. These transitional arrangements only apply until 18 March 2022, so we recommend that applicants seek advice to check their eligibility as soon as possible.
Once the legislation is passed, the Skilling Australia Fund (SAF) levy will also apply to permanent residence visas. This levy is a one-off payment of $3000 for businesses with a turnover of less than $10M and $5000 for businesses with a turnover of more than $10M.
For further information on any work visa, please call 07 5526 6869 or email firstname.lastname@example.org