July 2013 changes to the 457 visa program

The Department of Immigration and Citizenship (DIAC) has introduced a number of changes to the 457 visa program, effective from 1 July 2013, including previously unannounced changes to sponsorship, nomination and visa requirements. The scope of the changes is broad, including changes to the application process, language requirements, income threshold, training requirements and a number of other areas.

The following changes to the existing 457 visa requirements have now been implemented:

No paper 457 applications

It is no longer possible to lodge a paper application for a 457 visa. All applications (including sponsorships and nominations) now need to be lodged through DIAC’s online lodgement system. This means that offshore businesses wishing to sponsor employees to work in Australia will no longer be able to apply at the nearest Australian diplomatic post. All applications will now be processed by the Department in Australia.

Limited alternatives to online 457 applications will exist where onshore applicants would become unlawful the day after attempting, but failing, to lodge an application.

Clients should be aware that during periods of high demand, DIAC’s online lodgement systems can be unreliable, and businesses and individuals should avoid ‘last minute’ lodgements wherever possible.

Fees and charges

As foreshadowed in previous updates, the base application fee for 457 visas has increased significantly from $455 to $900. The Department has also implemented additional fees for dependent family members included in the application, and extra fees for certain applicants in Australia who hold temporary visas.

The DIAC fee for Standard Business Sponsor (SBS) approval remains unchanged at $420, while the fee for nomination approval has almost quadrupled to $330.

The new charges are shown in the Visa Pricing Table on the Department’s website.

Changes to Temporary Skilled Migration Income Threshold (TSMIT) and ‘market rate’

The minimum salary level for nominating a position for the 457 program, the ‘TSMIT’, has been raised from $51,400 to $53,900.

The exemption for high income earners from the ‘market rate’ requirement has also been increased. Previously, where employees were to be paid a salary in excess of $180,000, it was not necessary to demonstrate how the salary corresponded with local market rates. From 1 July, nominations will only be exempt from the ‘market rate’ requirement if the annual earnings are greater than $250,000.

Employees must be engaged directly by the SBS

The sponsoring entity must now engage the 457 visa holder as a direct employee under a written contract of employment. Previously, it had been possible under the conditions of the 457 visa for employees to be sponsored by one entity, but to be directly engaged by an associated entity of the sponsor.

From 1 July 2013, if the sponsor lawfully operates another business in Australia the 457 visa holder can still work in the business of an associated entity (but cannot be directly engaged by that business).

As was the case previously, the 457 visa holder cannot be on-hired to work in another business (unless permitted by an approved work agreement or nominated to an exempt occupation). The SBS holder must also be solely responsible for the payment of certain sponsorship and recruitment related costs.

A ‘genuineness’ test for nominations

DIAC will now assess whether a nomination relates to a ‘genuine’ position required to address skills shortages in Australia. Previously, this requirement was assessed at the visa application stage but DIAC did not have the power to refuse nominations on the basis of ‘genuineness’.

Examples of situations where DIAC may not consider a nomination to be ‘genuine’ could include circumstances where the nominee is related to the principal of the business, or where the nominated occupation appears unrelated to the purpose of the business.

Caps on nominations

Applicants for sponsorship approval will now be required to justify the number of nominations required. The proposed number of nominations must be considered to be ‘reasonable’. Previously, approved sponsors were able to nominate an unlimited number of positions within the business during the term of their sponsorship approval.

Changes to training requirements

The training criteria for sponsors have been clarified to require the training expenditure of a sponsoring entity to meet the DIAC ‘training benchmark’ throughout each year of the sponsorship. Previously, sponsors were required to show that training expenditure met the requirements at time of application and make a ‘commitment’ to maintaining that level of expenditure in future years.

Existing sponsors seeking to renew their sponsorship approval must now demonstrate that they have complied with their sponsorship obligations and commitments relating to training expenditure during the entire term of their sponsorship. Before the changes, renewing sponsors were only required to demonstrate that they met the training requirements in the previous 12 months.

Removal of exempt occupations from English language requirements

From 1 July 2013, there are no longer any occupation based exemptions from the English language requirements for 457 visa applicants. Previously, applicants in most occupations (other than trade occupations) were not required to provide evidence of English proficiency unless this was a requirement of registration/licensing in the occupation.

Under the new arrangements, applicants will be required to demonstrate ‘Vocational English’ (defined as a score of 5 or above on an IELTS test) unless one of the following exemptions apply:

  • applicants earning a salary over $96,400 in their position; and
  • applicants who have completed at least five consecutive years of full time study in a secondary and/or higher education institution where the instruction was delivered in English (where English proficiency is not a requirement of registration/licensing in the occupation).

Eligible passport holders from English speaking countries (New Zealand, United Kingdom, United States of America, Ireland and Canada) will continue to be assumed to meet the English language requirement.

Skills requirement strengthened

457 visa applicants must now have the skills, qualifications and employment background “that the Minister considers necessary to perform the tasks of the nominated occupation”. Previously, the skills requirement for 457 visas was a discretionary criterion.

Changes to conditions for 457 visa holders

Condition 8107 on 457 visas has been amended. 457 visa holders must now commence work within 90 days after their arrival in Australia.

For 457 visa holders who have ceased employment, the timeframe in which they are required to find a new sponsor, apply for another visa or depart Australia has been extended to 90 days. The previous deadline was 28 days from the cessation of employment, although this shorter timeframe was impractical for DIAC to enforce.

Other changes to be aware of include:

  • 457 visa applicants must now meet the mandatory registration and licensing requirements for their occupation that exist in the relevant State or Territory;
  • 457 visa application charges can now be refunded if the application is withdrawn because there is no approved nomination;
  • various changes to Departmental forms; and
  • new skilled occupation lists.

These changes will affect the eligibility of some businesses applying for sponsorship and nomination approval, and will also have an impact on individuals applying for 457 visas. While amendments to introduce ‘labour market testing’ have now passed the Parliament, the Government is yet to clarify when these amendments will take effect.


Mark Dunphy

Mark is an employment lawyer experienced in litigious and non-litigious applications of employment and industrial relations law.

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