Training Requirements for 457 Business Sponsors: A New Model?
October 19, 2015
By: John O’Brien
As part of the 457 visa program review conducted in 2014, Australia’s Department of Immigration and Border Protection (DIBP) is considering changes to the training benchmark requirement which businesses must meet in order to qualify as sponsors.
Current sponsorship rules require a business to demonstrate recent expenditure to the value of at least:
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1% of business payroll in the provision of training for Australian employees of the business; or
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2% of business payroll in payments allocated to an Industry Training Fund which operates in the same industry as the business.
Maintaining the training benchmark requirement is a sponsor’s ongoing obligation throughout each year of the sponsorship agreement where the business employs a 457 visa holder.
Levy payment system
In an effort to simplify the training contribution scheme, the panel conducting the review recommended the introduction of a levy for each 457 sponsored person, with all payments to be deposited to a centralised fund managed by the Department of Industry.
Money raised by the levy would be invested in training and support programs for disengaged groups, such as unemployed youth. Funds from the scheme would also be used to alleviate skills shortages in other areas of the Australian workforce.
The proposed levy payment system would replace both of the existing training benchmarks and apply equally to both standard business sponsors and accredited sponsors.
Value of the levy
The proposed levy would involve payment of an initial contribution ranging from AUD 400 to AUD 800 per sponsored person, with an additional annual payment of AUD 400 for each subsequent year the individual is sponsored. Levies would be scaled according to the size of the business, as follows:
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Small businesses (less than 20 employees): AUD 400 per sponsored person;
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Medium businesses (20–199 employees): AUD 600 per sponsored person; and
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Large businesses (more than 200 employees): AUD 800 per sponsored person.
The subsequent annual payment of AUD 400 per sponsored person would be paid by all business sponsors, regardless of size. The panel recommended that transitional arrangements would apply for a period of 12 months from commencement of the scheme to ensure that employers sponsoring workers under current arrangements are not disadvantaged.
Stakeholder consultations
The DIBP is currently engaging in stakeholder consultations regarding the changes to the training benchmarks proposed by the review panel.
Whilst the new training contribution scheme may alleviate some of the administrative burden on sponsors involved in producing evidence of their training compliance, we acknowledge a number of concerns with the proposed scheme, including:
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The levy does not consider training expenditure currently being outlaid by sponsors upskilling their Australian workforce;
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The calculation of a levy rate based on the size of a business is not a fair representation of that business’ use of the 457 visa program;
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The rationale behind levy figures ranging from AUD 400 to AUD 800 has not been properly explained; and
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The levy does not recognise an accredited sponsor’s proven history of compliance with the requirements of the 457 visa program, including meeting the existing training benchmarks.
Fragomen has made submissions to the DIBP on behalf of its clients in response to the proposed changes and will continue to report on any developments throughout the consultation process.
MARN 1170685
