How recent changes affect the Seller, Buyer and Worker in a subject business affected by 457 visas.
What is the 457 visa?
Introduced by the Howard Government in 1996, the 457 ‘Temporary work (skilled)’ visa was an uncapped program created to allow approved employers to address skill shortages by sponsoring overseas workers to work temporarily in Australia. Granted certain requirements were met, this could have potentially lead to permanent residency for some, who wanted to make a home in the land down under.
What has changed since the 1st of July 2017?
In April 2017, Australian Prime Minister, Malcolm Turnbull announced that the current 457 visa would be replaced by two new visa categories.
These two new visa programs have greater restrictions, including:
- Requiring a higher level of English proficiency
- Only certain occupations will be included, instead of the previous list of over 200
- Both visas will require prior work experience
- One of the two visas, labelled the ‘Short-Term TSS’ will be limited to a two-year duration, with no option for permanent residency
- The second visa option, the ‘Medium-Term TSS’ will be focused on long-term skill shortages, will have a four-year limit and require a higher standard of English than the Short-Term TSS
- Criminal record checks will be conducted
- Eligibility requirements will be tightened
- Applicants must be sponsored by an Australian organisation, and if their employment ceases, their visa becomes invalid.
- All applicants must be younger than 45 years of age
- Employers must pay the Australian market salary
How will this affect Australian Businesses?
All Australian jobs must be advertised locally before being given to foreign workers, in attempt to provide jobs for Australians before visa-holders. This in theory sounds great. However, there are important factors may negatively impact both Australian businesses and individuals currently on the 457 visa that need to be considered.
For certain industries such as oil & gas resource sectors and health, niche skills result in shortages that can only be filled by sponsored workers. This will result in significant cost, as the high levy combined with visa fees equals an expensive endeavour.
The fast food industry has been banned from sponsoring foreign workers under the new visa program.
Current 457 visa holders will not be immediately deported. However, they may encounter issues when looking to extend their stay. The new rules associated with the new visa categories means that for many international workers that currently call Australia home, they may face the possibility of having to find a permanent home elsewhere in the near future if they are unable to continue to be sponsored under the new system.
What if the business is being sold?
If you are selling a business and you currently employ workers on a 457 visa, you need to inform potential Buyers that your 457 workers do not automatically transfer to the incoming Buyer. The Buyer must take on a new sponsorship of that worker if they wish to employ that worker going forward. Alternatively, they may be bringing their own staff into the business and will not require the 457’s to continue.
However, the Seller and the Buyer need to be aware that the Federal Government has just slashed 200 worker visa categories from the 457 program. Consequently, some 457 workers will not be able to be taken on by the new owner and the new owner will have to find new replacement staff who are not visa workers.
From the worker’s point of view, it has apparently always been the case that their 457 contract could be terminated by their business owner for a variety of reasons including the sale of the business, but also simply because a business has experienced a down turn and that job position is no longer required.
The worker in today’s new circumstances has several possibilities in store:
- Firstly, the incoming business owner does wish to sponsor the worker with a new 457 agreement and the worker commences a fresh on the 2-year journey of working in the same business with the same owner with a view to hopefully achieving future permanent residency. All parties should note, the time spent with the old owner is effectively lost by the worker in accumulating the necessary work experience to potentially lead to permanent residency. Many would argue that this is not fair, however this is the way the rules currently operate.
- Secondly, if the visa work category is one of the 200 deletions, then the worker needs to qualify for a different work category or they must with 60 days make plans to return to their home country.
- Thirdly, if the visa work category remains a valid 457 category, then the worker needs to find a new sponsor in a similar business in the same industry with the same approved skill check.
During the process of buying or selling a business, it is highly recommended that Buyers, Sellers and workers seek advice from the Department of Immigration on these issues.
“The fact remains Australian workers must have priority for Australian jobs … We will no longer allow 457 visas to be passports to jobs that could and should go to Australians. The new visa will better target genuine skills shortages, including in regional Australia.” – Malcolm Turnbull