Make sure you (or your employer!) are meeting the new training benchmark requirements!
On 1 July 2017 a new legislative instrument came in to effect regarding training benchmarks. Meeting the one of the Training Benchmarks is critical for both employers and employees.
Training Benchmarks – What Employers Need to Know
Meeting the training benchmark is critical to you if:
- You are an employer who is currently approved as a Standard Business Sponsor for subclass 457 visas because:
- Meeting the training benchmark you said you would meet when your business became a Standard Business Sponsor is one of your key obligations as a Standard Business Sponsor. If you haven’t met the training benchmark in each 12 month period you were approved as a sponsor (and employed someone on a subclass 457 visa) and your business is monitored by the Department of Immigration, then your business may be fined or it may be prevented from being a sponsor for a period of time.*
- If you aren’t meeting the training benchmark, then it may cause problems if you are looking to help your subclass 457 visa holder employees transition to permanent residence under the Temporary Residence Transition Stream** of the subclass 186 (Employer Nomination Scheme) visa or the subclass 187 (Regional Sponsored Migration Scheme) visa.
- You are an employer who is looking to become an approved Standard Business Sponsor for the first time. If you haven’t met one of the training benchmarks in either the financial year or the 12 calendar months immediately before you apply, then your application is unlikely to succeed. (The rules are different for start-up businesses and overseas companies who are looking to become an approved).
- You are an employer who is looking to renew the business’ approval as a Standard Business Sponsor. If the business hasn’t met the training benchmark during its previous approval, then it is unlikely to be able to be reapproved as sponsor.
*The obligation to meet the training benchmark can actually continue after the business’ approval as a Standard Business Sponsor ends if the business continues to employ a subclass 457 visa holder after the expiry of the business’ approval as a Standard Business Sponsor. Hopefully an example will help to explain what I mean!
On 1 October 2014, XYZ Pty Ltd was approved as a Standard Business Sponsor for a period of three years (so until 1 October 2017).
XYZ Pty Ltd must meet the training benchmark in the periods 1 October 2014 to 30 September 2015 (if it employs a subclass 457 visa holder during that period), 1 October 2015 to 30 September 2016 (if it employs a subclass 457 visa holder during that period), 1 October 2016 to 30 September 2017 (if it employs a subclass 457 visa holder during that period). Let’s imagine that XYZ Pty Ltd applied to sponsor Fred Smith on a subclass 457 visa and that visa was approved on 15 August 2017. Fred’s visa is granted for four years. If Fred stays with XYZ Pty Ltd, then XYZ Pty Ltd Will need to continue to meet the training benchmark all the time Fred is with them on a subclass 457 visa, even after the Standard Business Sponsorship approval expires on 30 September 2017.
Training Benchmarks – What Employees Need to Know
Making sure that your employer is meeting the training benchmark is critical to you if :
- You are looking to apply for permanent residence using the Direct Entry Stream*** of the subclass 186 (Employer Nomination Scheme) visa. If your employer hasn’t met the benchmark in the 12 calendar months or the financial year immediately before your application is submitted, then your employer’s nomination application is unlikely to succeed.
- You are looking to applying for permanent residence using the Temporary Residence Transition Stream of either the subclass 186 (Employer Nomination Scheme) visa or the subclass 187 (Regional Sponsored Migration Scheme) visa.
** the temporary residence transition stream may be available to employees who have worked for that 457 sponsor for a full two years before applying for permanent residence.
*** the direct entry stream maybe available to applicants who have either never worked for their nominating employer while holding a 457 visa or who have worked for their nominating employer on a subclass 457 visa for less than two years when making the application for permanent residence.
What are the Training Benchmarks?
There are two training benchmarks, Training Benchmark A and Training Benchmark B.
Training Benchmark A
This benchmark requires the business to have paid at least 2% of gross payroll into an Industry Training Fund, a fund managed by a recognised industry body or a recognised scholarship fund operated by an Australian university or TAFE college.
Training Benchmark B
This benchmark requires the business to have spent at least 1% of gross payroll on training its Australian citizen or permanent resident employees.
What is gross payroll?
The definition of gross payroll was clarified on 1 July 2017. Gross payroll is specified to include either:
- the total amount of the two payments specified below:
- any wages, remuneration, salary, commission, bonuses, allowances, superannuation contributions or eligible termination payments, defined as wages in payroll tax legislation for the relevant State/Territory, that the applicant has paid to their employees during the same period; and
- payments made to contractors or subcontractors during the same period if work provided by the contractor is related to the service/product provided by the applicant,
regardless of whether such payments are included for payroll tax purposes or not; OR
- if the business does not pay either of the types of payments specified above,
- the total monetary values of the director’s salaries, fees and drawn payments; or
- the actual profit of the business
How has Training Benchmark A changed?
Acceptable ways of making contributions that meet Training Benchmark A have been significantly reduced.
Qualifying payments can now only be made to one of the following types of funds:
- an industry training fund– that means a statutory authority responsible for providing funding for training of eligible workers in certain industries;
- a fund managed by a recognised industry bodywho provides training opportunities in their industry and quarantines contributions to the fund for training purposes only; or
- a recognised scholarship fundoperated by an Australian university or TAFE college
Contributions to training funds operated by Registered Training Organisations (RTOs) or private individuals are no longer acceptable for the purposes of meeting Training Benchmark A, nor are payments to funds that allocate a percentage of the contributions received to commissions or offer refunds for failed immigration applications.
How has Training Benchmark B changed?
There are now significant restrictions on the expenditure that can count towards this benchmark. Payments that “count” towards the training benchmark include payments:
- for Australian employees to undertake a formal course of study, including any reasonable and necessary associated costs (e.g. costs of travelling to a training venue) or access an online learning programme;
- to RTOs to deliver face-to-face training to Australian employees that will contribute towards an Australian Qualification Framework qualification;
- to purchase an eLearning platform or standalone training software; or
- to cover the salary of:
- Australian employees engaged by the business as apprentices or trainees under a formal training contract;
- Australian employees who have completed an undergraduate or higher degree in a university within the last 365 days; or
- a trainer responsible for training Australian employees on a full time basis. The trainer must be employed solely as a trainer. This is a significant change from the pre-1 July 2017 position where the trainer could be training as a “key” part of his/her job, i.e. the trainer could undertake other duties as well.
Expenditure that cannot count towards this benchmark includes costs associated with:
- on-the job-training. This is a key change from the pre- 1 July position where in certain circumstances on-the-job training was acceptable;
- induction training;
- staff completing online training courses;
- purchasing software for use in normal duties;
- membership fees;
- purchasing books, journals or magazine subscriptions;
- attending conferences for purposes other than continuing professional development;
- hiring a booth at a trades show, conference or expo;
- training only undertaken by persons who are:
- not Australian citizens or permanent residents;
- principals in the business or their family members (previously it may, in certain circumstances, have been possible to count some of the money spent on training principals of the business towards meeting the training benchmark);
- training that is not relevant to the industry in which the business operates or has a very low skill level having regard to the characteristic and size of the business.
What should I take away from this blog?
Meeting the training requirements can be difficult, particularly for a small business.
If you aren’t sure whether your business (or your employer!) has met those critical benchmarks or whether your business’ (or your employer’s!) training plans for the coming year meet the post-1 July 2017 requirements, it really is sensible to get advice at an early stage.
It is much easier for a registered migration agent to help you put plans in place to ensure that the business complies, rather than to review all the information at application time and to have to tell you that the application is unlikely to succeed.
If you need more information please Contact Us and we will be happy to assist