Remuneration of 457 visa holders
Written By Will Aldous | Tue, Oct 28, 2014
There are two mechanisms that govern what a visa holder is paid. Both of these mechanisms need to be adhered to, in order to be compliant with Immigration and workplace law.
1/ Department of Immigration and Border Protection (DIBP) legislation, that specifies both an income threshold, and an obligation to always remunerate at a market salary rate. These are explained in more detail below.
2/ Relevant State workplace legislation, award, agreement etc. that will govern the terms and conditions (hourly rate, hours of work, overtime, penalty rates, allowances etc) of employment of all employees, whether they are visa holders or Australian Citizens.
In instances where staff (both Australian Citizen / Permanent Visa holders and intended nominees for a temporary visa) will consistently work more than 38 hours and or where hours will fall into overtime or penalty rate wages, there is an opportunity to include these additional hours and additional wages paid, into the guaranteed earnings, so as to reach or exceed the required income threshold.
Temporary Skilled Migration Income Threshold (TSMIT)
In September 2009, the Department of Immigration and Border Protection introduced the Temporary Skilled Migration Income Threshold (TSMIT). This threshold (Currently $53,900) sets the minimum guaranteed annual earnings for an employee nominated for a 457 visa. This amount is exclusive of superannuation.
The TSMIT replaced the previous Minimum Salary Level (MSL) in 2009, which was calculated on a 38 hour week. TSMIT is not based on a 38 hour week. However, earnings which are indicated in a nomination application, for the purposes of 457 visa, must be guaranteed.
DIBP may review TSMIT at any time. Increases in the TSMIT have previously been approximately 4.5% per annum. However, following an independent review of the 457 visa program, the panel recommended that there be no increase in 2014, until a further review takes place in 2015.
Base salary is the standard salary paid to employees on a regular pay cycle and is exclusive of Superannuation. However, where the base salary is below TSMIT, it is still possible to meet the requirement of the TSMIT, providing additional earnings are guaranteed, thereby raising annual income above TSMIT.
Guaranteed Earnings include base salary plus all agreed & guaranteed allowances.
To be included as part of guaranteed earnings, allowances need to be clearly defined in the employment contract. They also need to have a defined monetary value.
Guaranteed earnings could include:
- Housing/rental assistance
- Company car
- Guaranteed overtime/penalty rates
- Rotating rosters for businesses which operate 7 days week; day and night.
TSMIT & Guaranteed Earnings
In cases where the guaranteed earnings exceed $53,900, but the base salary is below, it is still possible to be successful with a 457 nomination application.
Guaranteed overtime and penalties
Where it is standard workplace practice for employees to be paid overtime and penalty rates, then these can be taken into account when calculating annual income for Immigration purposes.
In the hospitality industry it is often standard workplace practice for employees to work more than 38 hours per week. This is accepted by Immigration and can be taken into account when calculating annual earnings.
Where this is useful is when you remunerate under an award or agreement that specifies a rate of pay per hour. If you guarantee enough hours at the relevant rate of pay to then calculate out to an annual figure above TSMIT, then this will satisfy Immigration requirements for the purpose of a nomination application for a 457 visa.
Market Salary Rate
Prospective Australian Business (employer) Sponsors should note that while a sponsored worker must be paid above TSMIT, whatever the sponsored worker is paid, must be equivalent to that which would be paid to an Australian worker, performing the same role. DIBP introduced this concept, so that they could be satisfied that the ‘terms and conditions of employment’, including remuneration, are at the same rate and equivalent for both Australian workers and sponsored overseas workers.
To provide evidence that Australian workers, performing the same role, are employed under equivalent ‘terms and conditions’, including remuneration, the relevant section of an Award or Collective Agreement which applies to a particular industry or workplace, may be provided.
In addition a payslip or employment contract (with identifier removed) of an equivalent Australian worker may be provided, so that the Market Salary Rates principle is met.
This information has been prepared as general information only, and does not constitute specific advice. If specific advice is required, please contact the Registered Migration Agents at TSS Immigration.
One of our migration agents will be in contact as soon as possible.