Issue Number 29
March 2017

Possible changes to salary requirements under the Temporary Work (Skilled) subclass 457 program

The long-awaited results of the Temporary Skilled Migration Income Threshold (TSMIT) review have now been released. This report was commissioned by the government back in May 2016 to consider the effectiveness of the TSMIT as a minimum salary requirement under the Temporary Work (Skilled) subclass 457 program.

The report has recommended the following key changes to TSMIT:

  • it should be retained as a single figure for all industries and occupations;
  • it should continue to be set at $53,900 until a review is completed;
  • it should be annually indexed as of July 2016 (the TSMIT has been frozen since after July 2013 since a review of the whole program commenced); 
  • it should be indexed according to the seasonally adjusted Wage Price Index;
  • any concessions to TSMIT should continue to be negotiated through the existing Labour Agreements system;
  • Labour Agreements should be included in the simplified sponsorship model; 
  • the current legislative framework should continue to be used for TSMIT; and
  • the current discrepancy between the 457 programme, which requires sponsors to meet TSMIT, and the employer nominated permanent residence programs should be addressed.

The government has not as yet responded to this report, however, it is reasonable to conclude there are likely to be some changes to TSMIT following the government’s response.

The good news is that the mechanism by which the TSMIT is currently managed will almost certainly stay unchanged.

What employers should be prepared for is a likely increase to the TSMIT in July 2017 if the findings of this review are adopted by the government. Given that the recommended July 2016 date for an increase for TSMIT has passed, it is probable that this July will see changes to the current figure of $53,900.

The other important change that employers may see in the near future is an introduction of TSMIT to the employer nominated permanent residence schemes. This consists of the Employer Nomination Scheme and the Regional Sponsored Migration Scheme. These programs currently only require employers to pay no less favourably than the market salary rate. This has been particularly advantageous to many employers in hospitality, trades and regional areas where the market rate for these roles is lower than $53,900.

In the short-term, those who either do, or intend to, employ temporary residents on earnings under $60,000 would be well placed to consider how to manage this before any changes take effect.

James Hyett leads our immigration engagements and is a registered migration agent (MARN 0957324).  Prior to joining McLean Delmo Bentleys, James led an immigration team at a large professional firm servicing a diverse client base requiring both corporate and personal immigration services.

Please call James on (03) 9018 4679 should you wish to discuss immigration issues.

James Hyett

Important: This is not advice. Clients should not act solely on the basis of the material contained in this newsletter. Items herein are general comments only and do not constitute or convey advice per se. Also changes in legislation may occur quickly.

We therefore recommend that our formal advice be sought before acting in any of the areas. This document is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our prior approval.

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