Subclass 457 Visa Reforms – Panel Recommendations and Compliance Measures

by 09 Oct 2014
A review of Australia’s subclass 457 visa program for essential temporary skilled worker visas is now complete. Conducted by an independent panel, the review makes 22 key recommendations largely favoured by the Department of Immigration and Border Protection (DIBP) and which are seen as positive steps towards a more streamlined visa program. It is expected that a formal government response, including the possible introduction of the necessary legislative changes, will follow in the coming months. 

The main recommendations are:
  • The abolition of Labour Market Testing. It appears this is unlikely to be adopted by the current government as it will be difficult to obtain the necessary support in Parliament.
  • The relaxation of English language requirements. It is proposed that:
  1. The current English testing / IELTS requirement to achieve a score of five in each band be amended to the achievement of an average score. 
  2. The current requirement to study for five consecutive years be amended to five cumulative years, allowing applicants who have taken breaks from study to maintain their eligibility for the English language exemption.
  • The alignment of the high income exemption for the purposes of the market rate requirement with the top marginal tax rate, enabling the lowering of the threshold from $250,000 to $180,000 per annum.
  • The Temporary Skilled Migration Income Threshold (TSMIT) to remain fixed pending a two year review, rather than be subject to annual indexation. This will mean the current TSMIT of $53,900 may not change until July 2015.
  • The implementation of a tiered application processing system according to the attributes of the business and the individual nomination / visa application.
  • The development of a simplified process for sponsorship renewal with an extended approval period of five years.
  • The replacement of current training benchmarks with an annual training fund contribution scaled according to the number of 457 visa holders in the sponsor’s business.

Compliance Measures

To ensure the integrity of the 457 program, a number of recommendations also focus on giving greater priority to monitoring compliance with sponsorship obligations and reducing the administrative burden on employers. Recommendations include:
  • Increasing the number of educational programs, either through DIBP or Migration Advice Professionals, in order to promote understanding and compliance. 
  • Allocating more resources to allow DIBP to investigate and prosecute civil penalty applications and court orders.
  • Providing greater transparency of compliance activities, including publishing details of any sanctions action on DIBP’s website.
  • Encouraging greater collaboration between DIBP and other government agencies, such as the Fair Work Ombudsman, Fair Work Commission and the Australian Taxation Office. For example, applicants may be required to provide their Australian Tax File Number.
  • Extending the timeframe in which an employer must notify DIBP of certain events, such as a cessation of employment or change in work duties, from ten working days to 28 calendar days after the event.

What This Means for Employers 

If the Australian Government adopts the recommended changes, employers wishing to obtain subclass 457 visas for foreign nationals are likely to face fewer administrative hurdles. Additionally, employers with a strong compliance history may benefit from a more streamlined sponsorship process.
However, employers will still need to ensure they are fully aware of their obligations as a sponsor. Greater focus on compliance may mean that DIBP will take a stricter approach to employers who do not take reasonable steps to ensure they comply with the new guidelines. 

Fragomen’s Advisory, Compliance and Government Relations Practice assists employers navigating the complex legal environment associated with employing foreign workers, including compliance with the 457 visa program. Please contact us at

Fragomen’s webinar on the 457 visa review can be found here.