Permanent Employer Sponsored Visa Reforms Announced

By Mark Webster
9 March 2012

The Minister for Immigration, Chris Bowen, today announced significant changes to the permanent employer-sponsored visa program. This includes changes to the following visa types:

  1. Employer Nomination Scheme (ENS)
  2. Regional Skilled Migration Scheme (RSMS)
  3. Labour Agreement

The changes will come into effect on 1 July 2012, and will cover:

  • Simplifying the current 6 subclasses of Employer Sponsored visas to 2
  • Introduction of 3 distinct eligibility streams - 457 holders, direct applicants and Labour Agreement applicants
  • Increasing the maximum age for ENS and RSMS visas to 50 years
  • Changes to the English language requirements for ENS and RSMS
  • Changes to qualification and skill requirements for ENS and RSMS
  • Creating a single skilled occupation which applies to ENS, 457 and State/Territory Sponsored Points Tested visas
  • Limiting the "exceptional circumstances" grounds for applying for ENS and RSMS visas
  • Introduction of market rate salary for ENS and RSMS
  • Higher training requirements for ENS
  • Introduction of E-lodgement of RSMS and ENS visas

Visa Simplification

From 1 July 2012, there will be only two permanent employer sponsored visa subclasses, down from the six which currently apply.

The ENS Subclass 186 visa will replace both the offshore subclass 121 visa and the onshore subclass 856 visa.

The RSMS Subclass 187 visa will replace both the offshore subclass 119 visa and the onshore subclass 857 visa.

Labour agreement subclass 120 and 855 visas will be subsumed into the new subclasses 186 and 187.

Eligibility Streams

There will be three eligibility streams for the new ENS Subclass 186 and RSMS Subclass 187 visa:
  1. Temporary Residence Transition: where applicants have worked with the employer on a 457 visa for the last 2 years.
  2. Direct Entry Stream: for applicants who have not worked in Australia, or who have worked in Australia on a visa other than a 457 visa
  3. Agreement Stream: for applicants whose employer has a Labour Agreement

Exceptional Circumstances

Currently, a high proportion of RSMS and ENS applicants are granted on the basis of exceptional circumstances for age, skill level and English language ability.

Under the new system, exemptions will be much more restrictive and applied in a much more objective way. Details of the circumstances where exemptions will be applied are discussed below.

English Requirement

The basic English level for Direct Entry stream applicants will increase to Competent English (6 minimum in each component of IELTS). The current level for ENS is 5 minimum (Vocational), whilst for RSMS it is functional (4.5 average).

For Temporary Residence Transition stream applicants, the English requirement will be 5 minimum in IELTS (Vocational) for both ENS and RSMS visas.

If English testing has been conducted for the purposes of obtaining a 457 visa, further English tests will not need to be completed.

Exemptions for English language ability will apply for:

  • Holders of British, US, Irish, Canadian or NZ passports
  • Gazetted occupations - eg Ministers of Religion
  • Temporary Residence Transition Stream applicants who have studied for five consecutive years at a secondary level or higher in English medium

Age Limit

The current maximum age limit for ENS and RSMS is 45 - this will be raised to 50 under the new arrangements.

Age exemptions will apply for:

  • Gazetted occupations such as Ministers of Religion or research scientists
  • Temporary Residence Transition Stream applicants who have been employed with their sponsor for the last 4 years and have a high salary level (currently AUD 118,000)

Skills and Qualifications

Skills assessments will be required for:
  • ENS applicants applying through the Direct Entry stream; and
  • RSMS applicants in trade occupations applying through the Direct Entry stream

In the case of ENS Direct Entry stream applicants, applicants must also show 3 years of work experience in their occupation.

RSMS applicants must show that they have a qualification at the AQF III level or higher.

Skill and Qualification Exemptions will apply for:

  • Gazetted occupations such as Ministers of Religion or research scientists
  • High salary earners (AUD 250,000)

Employer Training Requirements

ENS employers must meet the same training requirement as currently applies to 457 visas, namely either:
  • 1% of payroll spent on formal training activities; or
  • 2% of payroll paid into a training fund

Currently the ENS training requirements are not as strict as the 457 training requirements.

For RSMS, there is currently no training requirement, and this will continue under the new arrangements.

Market Rate Salary and Position Requirements

Employees must be paid at the market rate, similar to the 457 program. The current minimum salary level for ENS ($49,330 for most occupations and $67,556 for ICT occupations) will no longer apply.

The position must be available for the next 2 years.

Occupations List

The occupations list for ENS, 457 and State/Territory Sponsored Points tested migration will be combined to form a single list. This is likely to be composted of most of ANZSCO occupations at skill levels 1-3. This should include managers, professionals, associate professionals and trades. Select occupations will be excluded on the basis of being only available for Australian citizens or where there have been integrity issues in the past.

Most significantly, any applicant with a 457 visa who remains with the sponsoring employer for two years will potentially be able to apply for permanent residence through ENS. This is in stark contrast to the current situation where certain 457 occupations, such as restaurant and catering managers, are not able to apply for ENS visas because their occupation is not on the ENS list.

The occupations list for RSMS will be all ANZSCO occupations at skill levels 1-3.


The changes are likely to have a significant impact on eligibility for permanent residence for many employees.

Some employees will need to look at applying prior to 1 July 2012 to ensure that they are eligible for an ENS or RSMS visa. Others will be better off under the new system.

Feel free to contact us if you need advice on how the changes are likely to impact on you or your employees.

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