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Introduction of Labour Market Testing to the Subclass 457 Visa Scheme

The contents of this article are correct as at 30 November 2013.

On 23 November 2013 laws in relation to labour market testing under the subclass 457 visa scheme came into effect. The Department of Immigration and Border Protection has stated that labour market testing (LMT) has been introduced to ensure that the subclass 457 visa is only used to meet genuine skill shortages in the Australian labour market. To this end, some Standard Business Sponsors under the subclass 457 visa scheme are now required to test the Australian labour market, and show that there are no readily available workers in Australia who could fill a nominated position, before they will be permitted to nominate a foreign national to fill the role on a subclass 457 visa.

A significant number of exemptions to LMT are available.

If an exemption to LMT is not available then the nominating sponsor must test the market for suitably qualified Australians before submitting a nomination application under the subclass 457 scheme.

When will Labour Market Testing be required?

The requirement for Standard Business Sponsor’s to undertake LMT before submitting a nomination application under the subclass 457 scheme is only applicable in certain circumstances. This is due to the broad range of exemptions which have been introduced as part of the labour market testing legislation

The legislation creates three types of exemptions:

  1. Skill and occupational exemption
  2. International trade agreement exemption
  3. Disaster exemption

Where LMT is required, it must be performed before an application to nominate a foreign national under the subclass 457 visa scheme is submitted. If it is determined that no exemption applies and no LMT has been performed prior to the application for nomination being submitted then the nomination application must be refused. It is therefore critical to the success of a nomination application that standard business sponsors correctly determine whether an exemption applies prior to proceeding with an application, otherwise they must conduct LMT.

Skill and occupational exemptions

Under section 140GBC of the Migration Act standard business sponsors are also exempt from LMT where the position to be filled falls within a particular occupational category. Sponsors are exempt from LMT where the nominated occupation:

  • Requires the person to hold a relevant bachelor degree or higher, or at least five years of relevant experience; or
  • Requires the person to hold a relevant associate degree, advanced diploma or diploma, or at least three years of relevant experience; and
  • Is specified in a legislative instrument.

For the purposes of this section, the relevant legislative instrument specifies all occupations classified as Skill Levels 1 and 2 in the Australian and New Zealand Standard Classification of Occupations (ANZSCO) other than engineering and nursing occupations.

The legislation creates an exception to this broad reaching exemption for nursing and engineering occupations. Where an employer is seeking to nominate a foreign national to work in a nursing or engineering occupation they will be required to perform LMT unless another exemption applies.

Trade Agreement Exemptions

An additional exemption to LMT can be found in section 140GBA(1)(c), which requires that the obligation to test the labour market not be “inconsistent with any international trade obligation” Australia owes to other nation states. Accordingly, companies are exempt from LMT where they are employing foreign nationals from particular countries in certain occupations. Please let us know if you would like information on this aspect.

Major disaster exemption

Under section 140GBB of the Migration Act 1958 the Minister for Immigration may exempt a sponsor from LMT where a major disaster has occurred in Australia which has a significant impact on individuals and requires a government response. The Minister must consider the exemption necessary or desirable to aid in disaster relief or recovery. The policy objective is to enable disaster response personnel to be brought in quickly from overseas if required.

The disaster exemption must be given by the Minister in writing and the Minister must specify the individual sponsor to whom the exemption applies. The exemption may be limited to a particular nomination application to be made by the sponsor or it may apply to a particular class of nominations to be made by the sponsor. The exemption cannot be made to apply to a class of sponsors, which means each individual sponsor seeking to bring disaster response personnel in from overseas must receive an exemption from the Minister in writing before submitting a nomination application reliant on the disaster exemption.

What constitutes labour market testing?

LMT is defined by Immigration Policy as an Australian employer’s attempts to recruit suitably qualified Australian citizens or Australian permanent residents to the nominated position. This would include the following types of efforts on the part of the employer:

  • Any advertising of the position and any similar positions
  • Participation in job and career expositions
  • Fees paid to recruitment companies to undertake recruitment on the employer’s behalf

These activities must have occurred within the 12 months immediately prior to any nomination application being lodged, unless Australian citizens or permanent residents have been made redundant by the nominating employer or an associated entity in the four months immediately prior to the application being lodged. Where there have been redundancies or retrenchments within the preceding four months in the nominated position, then LMT must have occurred after the retrenchments.

What evidence should be included with a nomination application where LMT is required?

Evidence of the employer’s recruitment activities must be provided with the nomination application and can include:

  • Details of any advertising for the position (whether paid or unpaid)
  • Evidence of advertising fees paid
  • Evidence of fees paid to recruitment companies
  • Evidence of money spent to participate in job and career expositions
  • Details of the results of any recruitment attempts
  • Copies of any research relating to labour market trends generally or in relation to the nominated occupation, if it has been released in the four months immediately prior to the application being lodged
  • Any expressions of support from Commonwealth, State/Territory government authorities

Immigration policy states that where an applicant has provided details of any advertising undertaken by the employer relating to the nominated position or similar positions, decision makers may consider this requirement met with no further inquiry.

If you require assistance with Labour Market Testing provisions or have any enquiries regarding the subclass 457 visa scheme, please feel free to contact us.