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Changes to salary levels for 457 visa holders

The contents of this article are correct as at 22 September 2009

On 14 September 2009 significant changes came into effect concerning salaries to be paid for 457 visa holders.

For applications lodged on or after 14 September 2009 there is a requirement that the applicant must be paid:

  • At market salary rate; and

  • At the Temporary Skilled Migration Income Threshold

Market Salary Rate

The only exception is where annual earnings of $180,000 or more are proposed for the applicant.

For current subclass 457 visa holders, transitional arrangements will allow employers currently paying less than market salary rates to have until 1 January 2010 to commence paying market rates.

Market salary rates will be determined in one of two ways:

Scenario 1: If there is an equivalent Australian worker in the workplace:

The market rate will be determined by the industrial arrangements that apply to this worker – for example, a collective agreement, award, award conditions with above award salary rates or a common law contract [This may be referred to as the ‘site’ or ‘enterprise’ rate].

Scenario 2: If there is no equivalent worker onsite:

The employer may reference collective agreements or awards for that position to substantiate the market rate. If there is no applicable agreement or award, other evidence such as remuneration surveys or earnings data must be provided.

If Scenario 2 applies, it is the sponsor’s responsibility to identify market terms and conditions of employment supported by a range of evidence.

Possible resources for obtaining evidence for market rates include:

  • Australian Bureau of Statistics
  • Job Outlook (DEEWR resource)
  • Employer Associations
  • Unions
  • Recruitment firm web sites and job market reviews 

Temporary Skilled Migration Income Threshold (TSMIT)

The Temporary Skilled Migration Income Threshold (TSMIT) commences on 14 September 2009 and is currently $45,220 per annum.

A nomination under the Subclass 457 visa program will be refused in most cases if the market salary rate for the nominated position is below this level of income.

The TSMIT has no bearing on what the Subclass 457 visa holder should be paid in the workplace.

Example given by DIAC

If the market salary rate for an occupation is $39,500 – that is, the market salary rate amount that is paid to equivalent Australian in the employer's workplace – then the nomination would normally be refused, as the salary is below TSMIT. Even if the sponsor decided to offer the nominee a salary of $45,220, then the nomination could still be refused, as it is the market salary rate that the department compares to TSMIT, not the actual salary proposed.

There will be specially trained officers with investigative powers to monitor workplaces and conduct site visits to determine whether employers are complying with the redefined sponsorship obligations.

Breach of sponsorship obligations could result in fines up to $33,000, the cancellation of an employer's approval as a sponsor or barring them from making further applications for overseas workers.

DIAC can also obtain information from the Commissioner of Taxation to ensure correct salary levels are being paid to visa holders.

If you are an employer or you have questions or concerns about the above, please click this link to contact Visa Lawyers Australia.