A Busy Start to the Year: Introducing the Skills in Demand Visa and Other Developments in the Employer-Sponsorship Space

Since 21 March 2023, when the Review of the Migration System Final Report (also known as the Parkinson Review) was released, changes have been creeping into the employer-sponsored visa system. The capstone changes were announced to come into effect in November 2024, being the so-called three-tired system in relation to the Subclass 482 Temporary Skills Shortage (TSS) visa.

So, legislature was a bit late, but the changes finally came into effect on 7 December 2024.

Many of these changes were as anticipated, although to the dismay of many employers, the lip-service of “labour market testing” has clung on to live another day.

Here, I outline some of the changes and their impact on employers and visa holders.

First, a change in nomenclature. The TSS visa began life as the maligned (-by-unions) Subclass 457 visa. A number change to 482 and a name change to “Temporary Skills Shortage” did little to alter the substance of the visa or public sentiment towards it. Yet, it remained a powerful tool for employers to legitimately fill skills shortages and to ultimately reward the skilled worker with eventual permanent residency (maybe).

From 7 December, the visa has retained its number but is now called the “Skills in Demand” (or SID) visa.

Second, the distinction between “Short Term” and “Medium-Long Term” streams of the visa has been removed. No longer are some occupations relegated to a lesser status, allowing only a stay of up to 2 years (renewable once) and without a pathway to permanent residency. Now, all SID visas may be granted for up to 4 years and renewal for as long as there is an Australian employer prepared to sponsor.

Third, unless concessions are provided under a Labour Agreement, the English language requirement is now 5.0 overall in IELTS, with a minimum score of 5.0 in each component. Previously, at least for Short-Term stream applications, individual component scores can be lower at 4.5.

Fourth, instead of requiring an applicant to have 2 years of work experience in order to apply for the visa, an applicant now needs 1 year of work experience in the last 5 years. This is definitely a welcome change for overseas students, for example, who are usually only granted a 2-year Graduate visa upon completion of their degree and then given the slimmest of opportunity to gain 2 years of work experience and find a sponsor before their Graduate visa expires.

As anticipated, there will be three streams to the SID visa.

1. Specialist Skills Stream

This is for positions offering a minimum salary of $135,000 (to be indexed) being generally professional and management occupations.

Technicians, tradesworkers, machine operators and labourers are specifically excluded, for example, the FIFO diesel mechanic who might be earning $180,000 a year. They will have to apply under the Core Skills Stream (see below).

The Department has indicated it will process applications in the Specialist Skills Stream within 7 days.

2.  Core Skills Stream

This stream closely approximates the standard TSS system it replaces.

There’s a new occupation list, known as the “Core Skilled Occupation List” (or CSOL – not be confused with the old “Consolidated Skilled Occupation List”), containing 456 occupations (a reduction of some 125 occupations compared to the amalgam of the old Short Term Skilled Occupation List and the Medium-Long Term Strategic Skills List).

Importantly, all occupations may qualify for eventual permanent residency.

The old Temporary Skilled Migration Income Threshold (TSMIT) of $73,150 (indexed annually), now renamed the Core Skills Income Threshold (CSIT), applies to these positions.

3.  Labour Agreement Stream

Little has changed with the Labour Agreement stream, and it remains available for all other (usually lower-skilled occupations) not available under the CSOL.

Other Changes

Corresponding changes have also been made to the Subclass 186 Temporary Transition Stream (TRT) visa to make it easier for SID visa holder to attain permanent residency.

Changing employer

Previously, the visa applicant would have to not only work in their nominated position for two years whilst holding the TSS visa before accessing the TRT visa, they also had to work with the same employer for two years. This disincentivised visa applicants from “employer hopping”. In some ways, it also penalised a worker who may have met with the misfortune of redundancy.

On the other hand, employers having spent a large sum of money to sponsor a worker from overseas may find that they are more susceptible to having their overseas worker “poached”, with little repercussions to the complicit worker. Employee retention strategies should become a stronger focus for sponsors.

2 years in the “same occupation”

The worker must have worked for 2 years in “same occupation” as that in which they were nominated. The Department has since clarified that changes between “closely related” occupations (i.e. with the same 4-digit ANZSCO code) will be acceptable.

Sponsorship obligations

Last year, changes in the Subclass 482 conditions allowed a sponsored worker to cease employment for up to 180 days without breaching their work conditions.

The duration of sponsorship obligations has been (rightfully) changed to end upon the employee’s ceasing employment. Prior to the change, an employer faced uncertain and contingent liability until potentially another employer took over the sponsorship or until the employee finally left Australia.

Some Implications

• Advisers ought to carefully review the CSOL to ascertain the impact on the availability of the SID visa for certain occupations. For example, occupations such as “Customer Service Manager” has been omitted, but “Retail Manager” has now been included (a positive development for fast food restaurants, it seems).
• Visa holders on now defunct occupations ought to work towards the TRT visa in order to lodge it just before their current visa expires, as they may find themselves unable to extend their temporary visa.
• Whilst the changes to the permanent residency pathway is welcome news to employees, particularly those may face the risk of exploitation, they may adversely affect employers who are doing the right thing by exposing them to greater risk of competitors taking over the overseas worker after the employer has expended significant costs in recruiting and sponsoring the worker.
• Overseas students will now have a better opportunity to seek and obtain an employer-sponsor whilst holding a Graduate visa.

If you require assistance in relation to SID visas, please contact Lester Ong or Melissa Phan.