Three things SMEs should know about skilled visas now that 457 visas are being replaced

It’s been seven months since the government announced it was axing the 457 skilled worker visa in favour of a new system, but there are still plenty of unknowns for small businesses.

The Turnbull government enraged the startup community in April when it announced an overhaul of the 457 program with an aim of putting “Australian jobs first” in a number of sectors.

The new policy shortened the list of eligible occupations for the visas, strengthened English tests for visa holders and separated the program into a two-year short term skilled migrant category and a four-year medium term visa.

For workers falling into the short-term, two-year scheme, the visa holds no path to permanent residency. Many in the technology sector say the proposed shortened time frames and uncertainty over future settlement are a disincentive for top talent coming to Australia.

However, outside the tech sector, experts say SMEs still face uncertainty over how the scheme will operate when it is scheduled to come into full effect in March 2018.

Here are three things to watch.

A “dynamic” list

Director of Teddington Legal, Mark Gardiner, says the changes announced around the 457 visa program are “fairly considerable”, and employers need to be mindful of the fact that occupation lists for the skilled migration visas are now “dynamic”.

“They reviewed them in April, September and will again in March [2018],” he says, suggesting this creates uncertainty for employees and businesses,because a job type could be moved from the four-year list to the two-year list or vice-versa when the department looks to review labour market information.

Regular reviews of the system, which are slated to happen every six months, pose a challenge for SMEs trying to plan into the long-term, Gardiner says.

“There may be movement between those two lists, and there looks to be movement on these into the future,” he says. 

Minimum requirements for visa holders

Small business owners intending to use skilled worker visas will have to double check the new classifications of workers, as a number of employment classes will only be able to access the program if they meet certain criteria.

From July 1, the government updated its list of caveats across 68 classes of occupations that can hold the visas. These caveats place limitations on who can come into the country to work in these roles, and generally relate to the turnover of the business hosting them, the worker’s level of experience and whether the position is in a regional or metro area.

For example, ICT project managers are not eligible for a visa if the role they are coming for doesn’t require at least two years’ experience, according to the Department of Immigration and Border Protection’s website.

New fees for training

SMEs should also be mindful of new fees they will be required to contribute for training under the new scheme.

The government announced the Skilling Australians Fund in the May budget, and businesses will be required to pay a levy into this fund for each worker they have on a visa. For businesses with turnover of up to $10 million, this has been set at $1200 per worker per year, or $1800 for larger companies.

Gardiner says these fees may mean businesses end up paying more.

“Previously with a 457 sponsorship, the sponsoring company had to establish they were spending at least one percent of their payroll on training, or pay two percent of their payroll into an approved fund,” he says.

However, he says many SMEs already had this required training built into their annual budgets. Now they will have to pay the levy even if they already provide training within their organisations.

Changes to the visa system have been rolled out since the announcement and are scheduled to be fully complete by next March. Gardiner says SMEs will still look to use these types of visas to fill skills shortages, but business owners should anticipate movement in the space for some time. 

“We’re going to be in a state of flux for some time,” he says.

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