• Government Proposes Labor Market Testing and Other Key Changes to Subclass 457 Program
  • June 12, 2013
  • Law Firm: Fragomen Del Rey Bernsen Loewy LLP - New York Office
  • The Australian government has introduced new legislation in Parliament that would further toughen standards and increase compliance monitoring mechanisms for the Temporary Work (Skilled)(Subclass 457) program. If approved, the legislation would take effect July 1, 2013, though a new labor market testing requirement would take effect at a later date.

    Labor Market Testing

    The legislation’s labor market test provisions would require subclass 457 sponsors to demonstrate at the nomination stage that there are no suitably qualified and experienced Australian citizens or permanent residents readily available to fill the nominated position, unless an exemption applies.

    Sponsors would need to demonstrate that they have made efforts to find a suitably qualified and experienced Australian for the nominated position within six months before the submission of the nomination application and submit evidence of local recruitment efforts. The proposal does not specify what types of evidence would be acceptable, but it could include details of advertising for the position, participation in job fairs, general research relating to labor market trends and specific research on trends relating to the nominated occupation.

    DIAC would have the authority to designate occupations at Skill Levels 1 or 2 (as provided for in the Australia and New Zealand Classification of Occupations) that would be exempt from the labor market testing requirements. Designated occupations might also be exempt from the obligation to comply with Australia’s commitments under international trade agreements. Exemptions would also be possible in the event of a major disaster, to assist relief and recovery.

    The labor market testing requirements would not take effect on July 1, 2013 with the rest of the legislation, but rather at a later date to allow employers sufficient time to undertake recruitment.

    Enhanced Training Benchmarks

    The obligation of subclass 457 visa sponsors to train Australian workers for the duration of the sponsorship status would be enhanced. DIAC would have the authority to sanction sponsors who have not maintained the required training expenditures throughout the term of their sponsorship. Currently, sponsors are required to commit to training Australians, but DIAC has limited powers to enforce this requirement.

    Enforceable Sponsorship Undertakings

    To enhance the subclass 457 compliance enforcement framework, the legislation would introduce new enforceable undertakings to be concluded between DIAC and 457 sponsors that would augment existing administrative sanctions, infringement notices, and civil penalties.

    The enforceable undertakings are designed to secure compensation for any losses resulting from a sponsor’s contravention of 457 visa program rules. The proposal does not provide details of all types of potential undertakings, though it does provide examples. An undertaking might require additional compensation to a subclass 457 worker who was underpaid or require the sponsor to hire a payroll officer to ensure that subclass 457 workers are paid the correct amounts in the future. This undertaking could be used as a supplement or an alternative to barring a sponsor or cancelling a sponsor’s approval.

    Greater Monitoring Powers for the Fair Work Ombudsman

    The Fair Work Ombudsman and Fair Work Inspectors would be given additional power to monitor and investigate compliance with the subclass 457 visa program, in particular whether sponsored foreign employees are working in their most recently nominated position and are paid the market salary rates specified in their visa application. Inspectors would also have the power to investigate whether sponsors have contravened employer sanction provisions, including the new civil penalty regime that took effect June 1, 2013.

    The government’s capacity to monitor compliance under the subclass 457 visa program would be significantly expanded, as Fair Work Inspectors would be given the ability to exercise all powers currently conferred to DIAC inspectors. This would essentially expand the number of compliance inspectors from DIAC’s current 32 to include over 300 Fair Work Inspectors.

    The inspectors would also monitor sponsors’ use of other temporary visas with work rights, such as student and working holiday visas, to ensure no foreign workers are working in breach of their visa conditions.

    Extension of Grace Period After Employment Termination

    The legislation would extend to 90 days the grace period granted to 457 visa holders who have stopped working for their sponsoring employer, so they can find a new sponsor or arrange their affairs before departing Australia. Currently, subclass 457 visa holders who are unemployed for 28 consecutive days or more are in breach of visa condition 8107, a common 457 visa condition that prevents holders from working in a different occupation or for another employer than their sponsor, and are subject to visa cancellation.

    Further changes to the subclass 457 visa program are expected to be announced in the coming weeks. Fragomen is closely monitoring these developments and will advise clients as further updates become available.