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Preparing your business for incoming 457 visa changes

Charmaine Loratet
14 June 2017 3 minute readShare
Australian passport, 457 Visa

Businesses and individuals are facing a momentous challenge following the government’s recently announced 457 visa changes. Charmaine Loratet shares her thoughts on how to manage the transitional period.

The 457 system that allowed businesses to source temporary skilled workers from overseas has been replaced with a new scheme that puts Australians first for these roles. The sudden axing of the program, and the breadth of roles removed from the occupation list, came as a shock to many.

SMEs and start-ups, in particular, are waiting for the government to present a strong case behind the changes and to supply details on how it will benefit all parties.

In the interim, it’s essential that businesses help their teams to understand how the changes will impact them as individuals, and the industry in which they operate.

It’s crucial to review all facts at hand, and to prepare, act and communicate such changes to employees in a timely manner.

Firstly, businesses should note that staff employed under the previous 457 visa conditions will not be impacted, thanks to a grandfathering arrangement within the legislation.

Communicating this to employees should be priority, before setting the ball rolling on other required adjustments like recruitment, training and other internal culture-building strategies to support the workforce.

Prospective applicants and businesses sponsoring skilled migrants will, however, feel the greatest impact due to the significant amendments to the occupation list and the application process.

The 457 visa program will be replaced from March 2018 with the Temporary Skill Shortage (TSS) visa. The TSS will be split into two streams: Short-Term (two years) and Medium-Term (four years).

In addition, the government has released an updated list of the occupations eligible for the new visas, scaling back the list from 651 to 435 occupations, to be reviewed every six months.

It’s not all doom and gloom

The revised conditions of the TSS will likely provide more working opportunities for Australians looking to step into a career in areas that are currently satisfied by temporary workers.

By adjusting the requirements for temporary visas to focus more on specialised skill sets, employers will be encouraged to look at Australian citizens to fill the workforce gaps and will ultimately help start-ups access the right local talent to grow and drive SME business success.

With this in mind, Australian SMEs should know how to prepare. From management to HR, businesses need to focus on risk mitigation, seeking advice from industry bodies, peers and agencies, communicating with current employees and readying for business impact.

Risk mitigation and employee communication

SMEs must constantly assess whether the right people are in place with the appropriate skills to help the company compete, innovate and grow. This is particularly important for businesses adopting the start-up mentality and those looking to expand at scale into new markets.

In light of these visa changes, businesses must assess which employees are current 457 holders before taking the time to discuss how the organisation will protect and support them in this volatile period.

Irrespective of the grandfathering rule, international employees will feel uneasy about the changes and are more likely to look for overseas roles or wish to return home.

They may have hoped for a partner or family member to join them in Australia, so working through the changes to permanent residency should form part of this conversation.

Industry advice

Working through the impact of these visa changes will require collaboration with key industry bodies, peers and government agencies.

Unions claim the changes are mostly ‘cosmetic’, while some industries have pronounced that it will make it more difficult to secure experienced individuals, potentially impacting commercial growth and innovation.

As the changes come into full effect, SMEs may also need to engage with legal professionals throughout the hiring process to mitigate risk and ensure compliance with the new visa classes.

Buffering the business impact

The TSS visa will be roughly equivalent to the current 457, but it will be harder to get. The TSS will have higher requirements than the current 457 program, including a ‘higher standard of English’, a ‘proper police record and criminal check’, a two-year work experience requirement, and ‘mandatory labour market testing’.

Holders of the new visa will not be as easily able to apply for permanent residency as 457 visa holders are. This may cause issues when recruiting from overseas for newly emerging or highly specialised roles.

In the recent federal budget, a new foreign skilled worker levy was also unveiled that will significantly affect SMEs. Businesses with a turnover of less than $10 million will have to make an upfront payment of $1,200 for every year they employ someone on a TSS visa, and make a one-off payment of $3,000 for each employee they sponsor for a permanent skilled visa.

This is despite a government consultation process that suggested the training levy should be set at $400 for small businesses.

The compulsory payments, however, will be spent on the training and development of Australian apprenticeships and traineeships in high-demand occupations, which may aid some businesses looking to onboard more Australian staff in these entry-level roles.

SMEs and start-ups that work within this framework to assess the visa changes will be better prepared for the TSS when it comes into play in March 2018.

Maintaining open and collaborative communication lines at every stage will be imperative for ensuring employee peace of mind. Working with wider industry bodies, peers and government agencies will also help businesses assess skill shortages and recruit the right people for these roles.

Charmaine Loratet is the people and culture director at payroll services provider Ascender.

Preparing your business for incoming 457 visa changes
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Charmaine Loratet

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