Abolition of the 457 Visa – What Does it Mean for the Hospitality Industry?

The 457 visa program has been used by hospitality businesses for many years to sponsor overseas workers. Some of the most frequently used 457 occupations are in the hospitality field – for instance chefs, cooks, cafe or restaurant managers.

The 457 program was abolished effective 18 March 2018 and replaced with the Temporary Skills Shortage Visa. This article goes through the likely impacts on the hospitality industry.

RIP 457 Visa

New applications for 457 visas can no longer be lodged. Any 457 visa applications which had been lodged prior to the 18th of March 2018 will still be processed. It is still possible to use an existing 457 sponsorship approval to sponsor for the TSS visa which replaces the 457 visa.

3 Application Streams

There are 3 application streams for the TSS visa:

1. Medium-Term Stream

For this option, the occupation must be on the MLTSSL (Medium Long Term Strategic Skills List). This a short list of occupations which are in short supply in Australia. Of the commonly used hospitality occupations, only chef is on the MLTSSL. The TSS visa for this stream can be valid for up to 4 years, and can be converted to a permanent employer sponsored visa.

2. Short-Term Stream

This is for occupations on the STSOL (Short Term Skilled occupations List), which includes most hospitality occupations (eg cook, cafe/restaurant manager and hotel manager). The TSS visa can only be valid up to 2 years for this stream, and there are restrictions on extending the TSS onshore and applying for permanent employer sponsored migration is only possible through the regional RSMS visa.

3. Labour Agreement Stream

This is for employers who have negotiated a labour agreement with the Commonwealth Government (eg through the Fast Food Industry, Restaurant (Fine Dining) Industry or On-Hire Industry agreement). This stream is generally used where off-list occupations are required, and can result in a 4-year visa.

More Hoops to Jump Through

The Temporary Skills Shortage visa has more requirements which need to be met compared to the 457 visa. For instance:

1. Labour Market Testing

This requires employers to show that they have advertised the position and have been unable to fill it from the Asutraian workforce. For the 457 visa, most manager, professional and associate professional occupations were exempt (eg Chefs, Hotel Managers and Cafe/Restaurant Managers).

For the TSS visa, labour market testing will be required by default for all occupations. This is likely to add cost and delays to the process.

2. Two Year Work Experience Requirement

For the 457 visa, work experience was not required if the applicant had a relevant qualification. For the TSS visa, all applicants must have at least 2 years of work experience in the occupation, or in a relevant field.

This will mean that it will be very difficult to sponsor international students for TSS visas as they generally do not have the required 2 years of work experience.

3. English Requirement Increased

For the 4-year Medium-Term stream, the English requirement has increased from a 5-average level in IELTS to a 5 minimum score in each band.

More Costly

The visa application fees for the TSS are higher than for the 457 visa

The TSS application fee depends on which stream is being applied for:
• Short Term Stream: $1,150
• Medium Term Stream: $2,400
• Labour Agreement Stream: $2,400

The application fee for a 457 visa is $1,080, so this represents an increase in application fees. There are no increases to the nomination or sponsorship application fees at this stage.

The Government has also announced that a Training Levy will apply to TSS nominations. The legislation for this has not yet passed, but the following amounts are likely to apply:

• Large organisation (over $10 million turnover): $1,800 per year of visa validity
• Smaller organisations: $1,200 per year

When the training levy is introduced, this will significantly increase the cost for employers of obtaining a TSS visa.

More Restrictive

The focus of the TSS visa is to fill short-term skill shortages in Australia. For the Short-Term stream, the applicant needs to show they have a genuine intention to stay in Australia only on a temporary basis, then depart. It is possible to extend a Short-Term TSS visa only once from within Australia. After that, it will be possible to apply for a new TSS visa from outside Australia, but as applicants need to meet the Genuine Temporary Entrant requirement, this will be difficult.

In addition, applications for the permanent employer sponsored ENS visa will only be possible for applicants on the MLTSSL. Regional RSMS applications will remain available for a range of occupations on the STSOL though.

These changes will make it more difficult for employers to meet long-term staffing requirements if the occupation is on the STSOL – which most hospitality occupations are.

Conclusion

We have already seen significant drops in the application rate for 457 visas due to changes made in 2017.

The TSS visa requires applicants to jump through more hoops, will be more expensive and more restrictive. This may mean that employers who previously sourced staff through the 457 program may need to look at other options – for instance workers on other temporary visas such as student visas, working holiday visas and occupational trainee visas.

How vSure Can Help

These temporary visas are more difficult for employers to keep track of – and penalties apply for employers who have staff in breach of visa conditions ($18,900 per worker found to be in breach). The vSure system makes tracking temporary visa holders easy for employers.

If you only have a few foreign workers, use vSure Instant Check to confirm your employee’s work rights.

The vSure Work Rights app has been built to ensure medium to large employers are compliant with the obligations to take “reasonable steps at reasonable times” to check employee work rights. If you want the easiest and most effective way to ensure work rights compliance, please click here to request a demonstration today.

References

Department of Home Affairs – Abolition and replacement of the 457 visa – Government reforms to employer sponsored skilled migration visas

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