Maintaining Training Benchmarks – The Challenge of Renewing Business Sponsorships
August 31, 2014
By: Navpreet Kanwar and Ross Ahmadzai
One of the main challenges associated with renewing a business sponsorship is being able to show the Department of Immigration and Border Protection (DIBP) that the business has met its relevant training benchmark. Maintaining business sponsorship status is crucial for businesses that need to sustain their visa program, but maintaining training benchmarks can be a headache. Providing the documentation required as evidence of training spend is one issue; difficulty in reaching the required amount of spend in the first place is another.
So, just what are the training benchmarks?
Any business wishing to renew its business sponsorship must meet its training benchmark for each year of recent sponsorship approval (excluding any period where it does not have any subclass 457 visa employees). A business operating for a period of 12 months or more is required to meet Training Benchmark A or Training Benchmark B in order to be granted subsequent sponsorship status by the DIBP.
If a business has been operating for less than 12 months, the business needs to show a plan for meeting the benchmarks.
Benchmark A
This training benchmark is calculated by reviewing 2% of the payroll expenditure where a business makes a contribution to a training fund.
Benchmark B
This training benchmark is calculated by reviewing 1% of payroll expenditure to demonstrate direct training of staff who are Australian citizens or permanent residents.
If a business doesn’t employ any Australian workers, it must show evidence of contributing to a training fund operating in the same industry as the business.
As sponsorship obligations currently stand, an approved business sponsor must continue to meet its training benchmark for three years following their approval. This commitment rises to six years if they have Accredited Status. In addition, all sponsors are required to keep detailed records of their training expenditure for possible monitoring by the DIBP.
There are also times when a sponsor needs to be able to provide evidence demonstrating that it has met the training benchmark for each year it has been operating as an approved sponsor. These are:
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When seeking to renew their sponsorship;
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When they need to vary the terms of their sponsorship; or
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When they wish to nominate a subclass 457 visa holder under the Temporary Residence Transition Stream of the Permanent Employer Sponsored program.
Applying to become a business sponsor
When making an application to become a business sponsor, the business must first determine if they have operated for more than 12 months. Next, they must determine whether they have a payroll. A payroll exists where the business pays its employees wages, remuneration, salary, commission, bonuses, allowances, superannuation or termination payments. If a payroll does exist, then it is this payroll amount which must be used to determine the figure required in order to meet one of the two training benchmarks.
What can be included under Training Benchmark B?
A variety of training and expenditure can be included, such as:
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Funding a scholarship for your employees in a formal course of study approved under the Australian Qualifications Framework;
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Funding study for your employees which is relevant to the business;
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100% of salary for apprentices or trainees where there is a formal apprenticeship or traineeship agreement in place;
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Graduate salaries where they are participating in a formal, structured graduate program of up to two years, or where they are completing a professional year following their graduation;
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On the job training as part of a formal, structured course and where there are defined learning outcomes;
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Expenditure associated with purchasing online learning and self-development material;
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Journal and magazine subscriptions of publications relevant to the activities of the business; and
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Reasonable and necessary costs associated with training, such as travel and logistics where they represent a minor proportion of the training expenditure.
What cannot be included?
The types of expenditure that are not eligible to be counted toward the benchmark include:
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Wages paid to staff whilst attending training;
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Training provided by a third party, including different branches/entities of the same business, unless the costs have been incurred by the sponsor;
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Membership of professional associations, unless a specific percentage of the membership fee entitles the member to attend professional development seminars conducted by the organisation;
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Registration or licensing fees; and
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Networking opportunities or the costs associated with establishing a presence at a trade show, conference or expo, such as hiring a booth or stand.
Tips to keep track of training expenditure
It is important for business sponsors to keep up to date records of:
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Who has received training;
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When the training was held; and
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What skills were mastered.
Often, businesses struggle to source necessary information quickly when required to do so. Consider implementing systems which record and maintain training expenditure in one single summary sheet or system. It does not have to be complex, but it does need to be accurate and up to date at all times.
Ideally, training budgets should be set in accordance with the budgeted payroll amount for each financial year.
Businesses should also conduct quarterly reviews of their training policies and expenditure to ensure that expenditure equivalent to the applicable benchmark of payroll is being met or will be met.
Please contact Fragomen Australia on [email protected] if you require any clarification or assistance with your training spend.
MARN 1069114 / MARN 1171402
