However, due to its flexibility it has been a resounding success for many business owners.
Background
The 457 visa program was born out of the need for flexibility for businesses to quickly fill skill shortages which were exacerbated by a mining and resource boom.
What is a 457 visa?
The Temporary Work (Skilled) (Subclass 457) visa allows a worker to perform a highly skilled role in Australia under very specific conditions which include receiving no less favourable terms and conditions generally enjoyed by equivalent Australian workers.
However, the approval of a Standard Business Sponsorship by the Department of Immigration and Border Protection (the “Department”) is required before a business can sponsor and nominate a foreign worker for a 457 visa. From the date of the approval, the Sponsor is permitted to nominate workers for a period of up to three years.
A key factor in obtaining sponsorship approval is whether a business can demonstrate that it provides training to its existing employees that can be quantified as a percentage of its gross payroll expenditure.
How many and who hold 457 visas?
Unsurprisingly there was a substantial reduction in numbers of 457 visas during the global financial crisis in 2007-2010 but recovered to a peak in 2011-2012 with a little over 90,000 workers in Australia with over 22,000 businesses employing 457 visa holders.
Over 90% of all 457 visa holders work in the private sector and more than a third are in New South Wales, particularly in Sydney. Over two thirds are highly paid managers and professionals.
The Carrot
Successful sponsors have been able to attract well qualified foreign nationals who often have a strong desire to work hard and ultimately settle in Australia.
The Stick
The “stick” for being allowed to sponsor foreign workers is that all sponsors are subject to compliance with continuing obligations.
The obligations that the Department pays particularly attention to include the need for sponsors not to allow the sponsored worker to perform duties which lie outside the approved position as well as the need for sponsors not to underpay their sponsored workers.
Sponsors must also continue to provide training to its Australian employees at a satisfactory level relevant to payroll expenditure.
Sponsors need to ensure that genuine attempts to hire from the local labour market have been made before seeking to recruit overseas workers.
Abuse of the 457 program?
The 457 program has experienced repeated allegations, both proven and unproven of exploitation of foreign workers.
However, there have only been a very small number of employers who have been found to have intentionally abused the system.
The Department has itself acknowledged that the majority of sponsors use the program as it was intended.
Today and next month
Those business owners who are already on the 457 visa sponsorship train have been generally well served. The program has worked in the way it was intended – to address genuine needs and to assist business growth.
Without doubt there continues to be a need to maintain the training of Australians to meet medium to long term skill shortages.
The current government has appointed a panel to conduct an independent review of the integrity of the 457 visa sponsorship program given the importance of the program in supporting employers in industries and regions which are experiencing skill shortages.
The panel will also be investigating important aspects of the program such as non-compliance rates among sponsors as well as examining the existing compliance burdens on employers.
By the end of June 2014 the review will aim to provide recommendations on how to maintain the integrity of the program, while not placing unnecessary administrative burdens on business.
Contact Phillip at phillip@yiplawyers.com
