Employment Hero

New HR Regulations Replace 457 Visa Program: Understand The Impact For Your Hospitality Business

New HR regulations around employing temporary workers may well spell trouble for the hospitality industry. Indeed, leading restaurateurs are claiming that the recent decision to replace the 457 visa program could be disastrous.

Skilled worker shortages

Of course, venues continue to open at a rapid clip, particularly in Sydney and Melbourne. In these cities, a shortage of skilled people means hospitality businesses are critically reliant on the 457 visa program to fill gaps in the local labor market.

As of 31 March last year, there were 97,766 primary 457 visa holders in Australia. Of these, around one in every six (15,260) were from accommodation and food service businesses.

As the most commonly used pathway to sponsor overseas workers on a temporary basis, the 457 visa program has been a key hiring tool for many cafes, restaurants and food service businesses. Many simply could not operate without them.

In fact, data from the Department of Immigration and Border Protection shows cooks topping the list as the single largest occupation class in the 457 visa program. Other hospitality occupations also feature prominently, like cafe or restaurant managers at number four, and chefs at number eleven.

What the new HR regulations mean to you

The 457 visa program will be replaced with a new Temporary Skill Shortage (TSS) Visa program. While the TSS visa scheme doesn’t come into effect until March next year, a new skills list has already been introduced which excludes 216 occupations that were formerly on the list. These occupations include hospitality jobs such as Licensed Club Manager, Bed and Breakfast Operator and Caravan Park and Camping Ground Manager.

The TSS will be made up of two streams: Short term, which is up two years; and Medium term, for up to four years. These two streams come with significant HR regulations. These include compulsory labor market testing for all occupations, a market salary rate assessment, and a new non-discriminatory workforce test. English language requirements will also be tightened and applicants will have to undergo a criminal check.

But, the really big challenge for hospitality businesses, is that many skilled jobs, such as cooks and restaurant and hospitality managers, will now be restricted to a two-year visa, instead of the current four. And holders of the new two-year visa will not be eligible for permanent residency. This is going to be a big blow if you’re wanting to attract great overseas talent to our shores. Many would-be visa holders simply won’t come at all since permanent residency isn’t an option. As if attracting and retaining good employees in hospitality wasn’t already hard enough.

Of course, the new HR laws mean a lot more red tape and a lot more paperwork before you’re deemed eligible to offer temporary migrant workers the opportunity to fill vacant positions. And, along with more stringent paperwork, it’s going to be a lot more expensive too.

Double the expense

The Government is planning to train more local workers which it intends to fund from an increased fee for employers when you bring in temporary skilled foreign workers. The Short-term visa will cost $1,150, while the Medium-term visa will cost $2,400. This is more than double the 457 visa cost of $1,060.

What now?

With the 457 visa program dead and gone, it’s just got a lot tougher for employers hoping to recruit overseas workers to fill skilled jobs for chefs, managers and other roles.

As to how tough, we will have to wait until the Government releases more details. As yet, we don’t know exactly how many places will be available, what the mandatory labor market testing entails, or even which criminal offenses will disqualify someone from getting one of the new visas. We’ll be sure to update you on all the details as soon as the Government publishes them.

With these surprise changes coming into force, it’s important to get to grips with the new scheme so you can use it to your advantage. Remember, in all areas of HR compliance, it’s not the cost of compliance that’s expensive. It’s the cost of non-compliance. Download our essential HR compliance guide to make sure you’re getting it right.

Know the HR compliance essentials and avoid a costly mistake. Get your free guide here.

Employment Hero is an all-in-one HR and payroll system, built to facilitate compliance with Australian employment law and company policies for small to medium sized businesses. Our team of lawyers make sure that any new changes to Australian employment law are applied in the system. Additionally, Employment Hero allows employees to upload their certifications and licenses, and alerts both of you when they are expiring. Stop wasting time with spreadsheets, and request a demo today.

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