Australian Prime Minister Malcolm Turnbull has recently announced sweeping changes to the Subclass 457 Visa category that will eventually lead to the elimination of the current Subclass 457 visa category and create a new temporary visa program. The Subclass 457 visa category is currently the most widely used employment based work visa category by companies in Australia. Significant changes to the Subclass 457 visa program will be implemented over the next 12 months, at the conclusion of which the Subclass 457 visa will ultimately be eliminated and replaced by a new employment based immigration system called the Temporary Skill Shortage Visa program.

The new Temporary Skill Shortage (TSS) Visa program will consist of two streams, the Short Term and the Medium Term, both of which will have fewer qualifying occupational classifications than the current Subclass 457 visa and will be restricted to critical skills shortage areas within Australia. The Short Term visas will be issued for a period of two years, and visa holders will not be eligible for permanent residence.  The Medium Term visas will be issued for up to four years and will be eligible for permanent residence.

Both streams will include:

1. mandatory labor market testing;
2. a new non-discriminatory workforce test;
3. mandatory criminal background checks;
4. a market salary rate assessment; and
5. a new two-year work experience requirement.

There will also be enhanced English language requirements for the Medium Term Stream.

Significantly, the proposed changes will not affect current Subclass 457 visa holders, who will be able to continue working on their current Subclass 457 visa through the end of the current validity period. However, there will be an immediate impact on eligibility for Subclass 457 visas for job classifications that have been removed from the Consolidated Sponsored Occupation List (CSOL). The CSOL will be significantly condensed, with 216 occupations removed, and access to additional occupations restricted to regional Australia (i.e. occupations relating to farming and agriculture). This means that beginning April 19, 2017, any applicant whose position is no longer on the CSOL may no longer be eligible for a 457 visa under the new scheme and a new analysis should be undertaken to determine whether there is an appropriate alternative CSOL classification available for their position. Currently pending applications under a CSOL position that is no longer eligible will be rejected.

Timeline of the major reforms that will occur over the next year:

Effective Immediately – Significant Reduction in Eligible Job Occupations

Currently, two occupation lists – the Consolidated Sponsored Occupations List (CSOL) and Skilled Occupation List (SOL) – determine which positions can be filled by foreign nationals in Australia. Effective April 19, 2017, these lists will be renamed and significantly shortened from 651 to 435 available occupations, with 216 occupations removed from the lists and another 59 occupations restricted. Specifically, the CSOL will be renamed as the Short-term Skilled Occupation List (STSOL) and will be updated every six months based on feedback from the Department of Employment. The maximum duration of 457 visas issued under the STSOL will be two years. The SOL will be renamed as the Medium and Long-term Strategic Skills List (MLTSSL) and will continue to allow for a maximum four-year visa validity period.

Beginning  July 1, 2017 – Additional Reduction in Eligible Job Occupations and Increased Application Requirements

From July 1, 2017, both the STSOL and MLTSSL will be reviewed based on guidance from the Department of Employment. Additional revisions to the occupations on each list will be made as needed. Exemptions from English language testing based on salary will be eliminated and police clearance certificates will become mandatory. Both of these requirements could delay applications depending on the availability of English language exams and the time required for police clearances to be issued. New policies on training benchmark requirements for Business Sponsors will be clarified and expanded.

Beginning December 31, 2017 – Salary and Tax Auditing To Commence

Effective December 31, 2017, the Australian Department of Immigration and Border Protection (DIBP) will begin collecting tax file numbers from 457 visa holders and other employer sponsored migrants to ensure that visa holders are not paid less than the salary listed on their nomination petitions. Additionally, the DIBP will publish the details of any Business Sponsors that have been deemed to fail their obligations under the Migration Regulation 1994.

Beginning March 2018 – Elimination of Current Subclass 457 System and Implementation of TSS Visa Scheme

In March 2018, the Subclass 457 visa category will be eliminated and will be replaced by the TSS Visa Scheme. This new visa category will be comprised of a short-term stream, allowing for visas valid for up to 2 years, and a medium-term stream, allowing for visas valid for up to 4 years. To be eligible for the short-term visa, applicants must fill an occupation on the STSOL. For the medium-term visa, applicants must be nominated to a position listed on the MLTSSL. Finally, applicants must have at least two years of related work experience and labor market testing will be mandatory.

Foster will continue to monitor these ongoing changes in Australian immigration laws and will provide future updates via Foster’s website at / and via future Immigration Updates^©.