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News & Knowledge

Australia’s business-based 457 visas abolished

2nd May 2017

David De Alwis & Genevieve Lakey, Aitken Partners

The Prime Minister indicated (on Tuesday 18 April 2017) that the Federal Government will get rid of 457 visas. The purpose for which the subclass 457 visa was initially established was to prevent short term skill shortages in Australia. In more recent years it has been increasingly been used as an avenue to permanent residency in Australia. MSI's Melbourne law member Aitken Partners explains further.

The abolition of the 457 visa is currently a policy statement only and it will take some time for the relevant legislation to be tabled in parliament However, the Department of Immigration and Border Protection (DIBP) website states that the reforms will commence immediately and be completed by March 2018.

This change is not a huge surprise, considering the recent crackdown on 457 visas for fast food chains earlier this year and the government flagging that there needed to be a tightening of visa regulations in particular those relating to the 457 visa. These reforms will impact current 457 visa holders, current applicant for 457 visas and prospective skilled worker applicants once the reforms are in force and their prospective employers.

Current 457 visa holders
Mr Dutton has specified that the reforms will include grandfather clauses for those currently on valid 457 visas. A grandfather clause will mean that the new provisions will not apply to those current 457 visa holders. The extent to which a grandfather clause will operate has not yet been revealed by the government.

Current applications for 457 visas
It is currently unclear what the position is for applications for 457 visas that have been lodged but not yet approved. This will become clearer once the government publishes more specific information in relation to the intended reforms.

Prospective applicants should the 457 be abolished
The 457 will be replaced with two different streams of visa:

Short term

  • Valid for two-year period with the option of one onshore renewal
  • For a reduced number of occupations
  • Applicant required to have 2 years work experience
  • Police check required
  • Will be eligible to apply for permanent residency after 3 years rather than 2
  • US$ 1,150 application fee

Medium term

  • Valid for four-year period with option of renewal after three years
  • For a further reduced number of occupations (more highly skilled)
  • Applicant required to have 2 years work experience
  • Police check required
  • Will be eligible to apply for permanent residency after 3 years rather than 2
  • US$ 2,400 application fee

Prospective 457 employers
There will be additional obligations which are likely to be tighter than the current ones on employers including:

  • Higher minimum market salary must be paid to visa holder
  • Stronger mandatory labour market testing required (in most cases unless international obligation applies)
  • DIBP will collect Tax File Numbers to be compared with ATO records
  • Strengthen skills training requirements for Australian workers

It has been indicated that concessions will apply for regional Victoria and while the eligible occupation list will be significantly reduced it is still unclear which occupations will be removed.

The government will continue to release information in the coming weeks to provide clarity in relation to the reforms however, until then the situation remains unclear. If you have any queries in relation to the content of this article and the proposed reforms, please contact David De Alwis & Genevieve Lakey at +61 (3) 8600 6000.

Current clients who employ workers on 457 visas should also contact David and Genevieve in the coming months to clarify any increased obligations and to discuss whether their business can continue to employ foreign workers.