What You Need to Know About Australia’s Visa Changes: The new rules are all about protecting jobs

Monday, November 13, 2017 - 16:34

Australia has been next in line across a number of jurisdictions around the globe to announce significant changes to employer-based immigration programs. This article provides an overview of some of the key changes announced as well as guidance on what actions businesses should be taking where impacted.

In April, Prime Minister Malcolm Turnbull and Minister for Immigration and Border Protection Peter Dutton announced a series of reforms to the temporary work (subclass 457) and the permanent employer-sponsored visa programs, including the introduction of a new, more restrictive Temporary Skill Shortage visa in March 2018. This was followed two days later by an announcement of measures tightening the citizenship requirements.

The reforms, which will be staggered through next March, have been introduced not only to address immigration compliance issues with the use of the 457 program across certain occupations and industry sectors, but also to deliver a strong message to the electorate that the government is serious about “putting Australians first” when it comes to jobs.

The scale of some of the announced changes caught business by surprise, as did the retrospective application of the two new Short-term Skilled Occupations List (STSOL) and Medium and Long-term Strategic Skills List (MLTSSL), which took effect in April. These lists are not limited to new 457 visa and some employer-based residency applications, but also apply to 457 applications that were already lodged and not yet decided by the Department of Immigration and Border Protection (DIBP) before the changes were announced.

With the removal of 216 occupations, and the imposition of additional application requirements on 59 other occupations, many undecided applications caught up in the changes have had to be withdrawn to avoid being refused by the DIBP.

The New Lists

Under the new lists, occupations that are on the STSOL will only be granted for a period of up to two years, while occupations that are on the MLTSSL will be granted for a period of up to four years. Prior to the changes, all 457 visas could be granted for a period of up to four years.

DIBP has indicated that the STSOL will be reviewed every six months, based on government advice on labor market vacancy statistics. Occupations on the MLTSSL will be reviewed annually to ensure that it is composed of occupations that have been assessed as being of high value to the Australian economy.

Industry sectors that have been impacted by the removal of occupations include the information, communication and technology (ICT) sector through the removal of ICT support and test engineers, support technicians, multimedia designers and web developers, and the oil and gas sector through the removal of petroleum engineers, drillers, and gas and petroleum operators.

The changes to the occupations lists will affect recruitment strategies and mobility programs of many businesses, and government lobbying has already commenced to try to influence additional changes to them.

Further Changes in the Pipeline

In July, subclass 457 visa applicants will need to meet mandatory English language testing (exemptions will be available) and mandatory police clearances, which will add time to the preparation of applications.

In December, the DIBP will enhance monitoring of compliance with sponsorship obligations under the 457 program by collecting the tax file numbers of 457 visa holders, which will facilitate the matching of data with the Australian Tax Office. Furthermore, the DIBP will commence publishing details about sponsors who have been sanctioned for failing to meet their 457 visa sponsorship obligations.

Abolition of 457 Visas

In March 2018, the 457 visa program will be closed altogether and replaced with the new Temporary Skill Shortage (TSS) visa, comprising two streams:

  • A short-term stream of up to two years: Visas granted under this stream may be renewed once only, and will not have a pathway to employer-sponsored permanent residence.
  • A medium-term stream of up to four years: Visas granted under this stream may be renewed and may also provide a pathway to permanent residence after three years.

The new TSS visa will also have the following features:

  • Targeted occupation lists. The STSOL will apply to the short-term stream, and the MLTSSL will apply to the medium-term stream.
  • Requirements that employers meet the minimum market salary rate.
  • Mandatory labor market testing, unless an international trade agreement applies.
  • Imposition of the “Skilling Australians Fund Levy,” which will require businesses sponsoring foreign workers to make an up-front payment of up to AUD 1,800 (U.S. $1,350) per visa per year (or part thereof) for each employee on a TSS visa.

Changes to Employer-Based Permanent Residence Applications

There are also many changes to these programs. For example, beginning in July, individuals over the age of 45 (currently 50) will not be eligible to apply under the eligibility pathway known as the “Direct Entry Stream.” In March 2018, this lower age limit will be expanded to become the main eligibility pathway, known as the “Temporary Residence Transition Stream,” which is the pathway most frequently used by 457 visa holders.

Effective March 2018, further reforms will be implemented. Beginning then, the government will:

  • Limit the availability of occupations that can be nominated to those on the MLTSSL.
  • Require all applicants to have at least three years’ work experience.
  • Extend the qualifying period of service under the Temporary Residence Transition Stream from two years to three.
  • Extend the Skilling Australians Fund Levy, which is an additional charge, to permanent residence applications.

Additional legislative changes will be required to enable the introduction of the TSS visa and other earmarked reforms. The government has yet to release the draft legislation, and is unlikely to do so until much closer to the intended date of effect.

Businesses with sponsored foreign worker populations in Australia will need to review the impact of the changes on their existing staff, particularly individuals who may be affected by changes to permanent residence eligibility requirements that commence in July and continue until March.

More broadly, the 457 changes, and the introduction of the TSS visa, will impact the ability of companies to attract talent in Australia and to assign overseas-based workers to Australia, given the limited occupations and the new visa rules that have already been introduced. 


Amy C. Cococcia, a partner in Fragomen’s New York office, is a leading member of the firm’s practice group devoted to compliance. She can be reached at acococcia@fragomen.com.

Sasko Markovski is a partner in Fragomen's Sydney office. He can be reached at smarkovski@fragomen.com.