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With skill shortages across many trades and the hospitality industry in particular, the changes to 457 visas will impact many small businesses that rely on foreign workers.

What’s changed?

The Australian government recently announced that the 457 Temporary Work (Skilled) visa would be abolished and replaced with the new Temporary Skill Shortage (TSS) visa in March 2018.

How does the new TSS visa work?

From March 2018, the new visa programme will include:

  • A Short-Term stream of up to two years
  • A Medium-Term stream of up to four years.

The Short-Term TSS visa allows businesses to fill posts with foreign workers on a temporary basis. It’s a two-year visa that can only be renewed once.

The Medium-Term TSS visa allows businesses to fill posts with foreign workers for up to four years. It’s designed for highly skilled occupations that have been assessed as being of high need to the Australian economy.

The financial outlay for small businesses to recruit foreign workers will be higher than the costs associated with bringing someone in on a 457 visa. In addition, for many occupations where restrictions apply, your company won’t be able to participate in the visa scheme if you have less than five staff and/or a turnover of less than $1m

How will the changes affect your small business?

Changes to the occupations list

  • 216 occupations have been removed, while others have been restricted (for instance, to regional areas only).
  • Occupations and industries that will be hardest hit by this based on the number of 457 visas granted in 2015-16 include:
    • Human resource advisers
    • Manufacturing production managers
    • Web developers
    • Fast food, takeaway, café and production kitchens.

Your business is unlikely to be affected if your employees work in occupations that haven’t seen changes to foreign worker visas, including lawyers, accountants, programmers and doctors. See the full list of eligible occupations.

Changes to eligibility requirements

The new TSS visas also include new requirements for eligibility when it comes to work experience, language proficiency and criminal clearance certificates. Workers must also be under the age of 45 at the time of application.

Your small business will be impacted by these changes if you currently employ foreign workers:

  • In junior positions with less than two years’ current industry experience before they came to Australia on a temporary visa, or three years for those on permanent visas
  • Who may not meet the English language or criminal clearance requirements
  • Over the age of 45.

Changes to the training levy

Previously, employers who sponsored people through 457 visas had to invest 1 or 2% of their total payroll into training. Now, a fixed fee must be paid to the Skilling Australians Fund.

The aim is to offer more support to around 300,000 apprenticeships and traineeships in high-demand occupations that currently rely on skilled migration. However, this levy will mean more costs for employers. The total amount payable will depend on the size your business.

Businesses with a turnover of less than $10 million will be required to make:

  • An upfront payment of $1,200 for every year they employ someone on a TSS visa
  • A one-off visa payment of $3,000 for each employee they sponsor for a permanent skilled visa.

If your business has an annual turnover of more than $10 million, these payments will increase to $1,800 and $5,000, respectively.

Changes to minimum salary requirements

Employers must pay the Australian market salary rate and meet the Temporary Skilled Migration Income Threshold.

This will affect your business if you’ve been paying workers on foreign worker visas less than the new minimum market salary of $53,900 a year – for example, in junior positions in the hospitality sector.

Special terms and conditions, including some exemptions to this rule, apply in rural Australia.

What do you need to do now?

If you employ staff under the previous 457 visa, their conditions will not be impacted. However, if your business or staff are impacted by the changes, here’s where to begin:

  • Communicate openly with your staff. Your international employees will naturally feel uneasy. Set up a meeting with your staff to explain how your business will accommodate and protect them. You may even want to arrange meetings with a lawyer or immigration specialist for your employees to give them peace of mind.
  • Get expert advice. Speak to a lawyer or immigration specialist to help you fully understand how the changes will affect your business. You may also need to seek legal advice when you hire international staff to make sure you comply with the new visa stipulations.

Why has this change been made?

The government claims that the new visas will provide more opportunities for Australians, particularly those who want to build long-term careers in areas that are now staffed by temporary workers.

Businesses are also encouraged to focus on Australian citizens hiring staff for roles requiring more specialised skills. The government claims this will ultimately help start-ups access the right local talent to grow and drive small business success.

Looking to grow your business? Talk to Prospa about a business loan to suit your needs.

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