457 Visas – Market Salary Rate Requirement
Market Salary Rate
Background
All sponsors of Subclass 457 visa holders are required to comply with the new Sponsorship Obligations effective 14 September 2009. These new obligations replaced the previous sponsorship undertakings.
For standard business sponsors, the obligation to ensure equivalent terms and conditions of employment will mean that overseas workers are compensated the market salary rate.
How are market salary rates assessed?
In case there is an equivalent Australian worker in the workplace, the applicable industrial arrangement determines the market salary rate. The Subclass 457 visa holder must be provided the same terms and conditions provided to the equivalent Australian worker. Enterprise agreement, industrial award, award conditions with over award salary rates and common law contract are examples of industrial arrangements.
If there is no Australian doing equivalent work in the workplace, the employer may determine the market salary rate with reference to the modern award or enterprise agreement that applies. In case there is no such award or enterprise agreement, the employer must provide the department with a range of evidence to substantiate the market salary rate. The evidence may include, but is not limited to, relevant remuneration surveys, published earnings data and evidence of what employees performing equivalent work are paid in similar workplaces. The employer is required to assure the department that the terms and conditions of employment proposed are appropriate for that location and industry.
For the nomination to be approved, the market salary rate must be greater than the Temporary Skilled Migration Income Threshold (TSMIT). Nominations for which the applicable market salary rates are below the TSMIT are most likely to be refused. TSMIT is currently set at $49 330 per annum, effective 1 July 2011.
This particular income threshold aims to make sure that Subclass 457 visa holders do not impose undue costs on the community or leave themselves in situations that may put pressure on them to violate their visa conditions.
Should Subclass 457 visa holder be paid the TSMIT?
The TSMIT must not be considered the applicable market salary rate where the sponsor does not presently employ an equivalent Australian citizen or permanent resident. Note that it is the market salary rate for the nominated occupation and not the nominated worker’s proposed wage, which is compared to the TSMIT. Thus, it is not possible for a 457 sponsor to increase a nominated worker’s proposed salary with the intention of meeting the requirement of the TSMIT.
Here is an example: Let’s say the market salary rate for an occupation is $39 500 – that is, the market salary rate amount paid to an equivalent Australian in the sponsor’s workplace. When this is the case, then the nomination is likely to be refused. This is simply because the market salary rate is below the TSMIT. Even if the sponsor decides to offer a salary of $49 330, then the nomination would still be refused. Remember that it is the market salary rate that the department compares to TSMIT and not the actual salary proposed.
Where the proposed salary for the nominated worker is equal to or greater than $180 000 (which equates to the threshold for the top personal income tax rate), the sponsor does not need to provide evidence that this proposed salary is set according to the market salary rate for the occupation.
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