Temporary Work (Skilled) visa (Subclass 457) Remuneration Requirement

The employer sponsored Temporary Work (Skilled) visa (Subclass 457) has a requirement on the remuneration and terms and conditions offered to an applicant (nominee) that we discussed in our article on 457 nomination applications, the trickiest of all the 457 applications. To protect both local labour as well as to prevent migrant workers from being exploited, the Department of Immigration and Border Protection has strict regulations regarding what is termed market salary rate.

Read: The Nomination Application 

Market salary rate is the average salary that an Australian citizen or permanent resident would receive for performing a very similar role at the same capacity, in the same location as the applicant intends to. It is important and reflects a genuine appointment that the applicant is not offered a rate that does not meet market salary rate.

However, the DIBP has an additional requirement. The base rate of pay under market salary rate cannot be lower than the Temporary Skilled Migration Income Threshold (TSMIT). Base rate of pay is “the rate of pay payable for his or her ordinary hours of work”, excluding any other benefits such as bonuses, commissions or overtime pay.

The TSMIT is the minimum earnings at which is calculated that a migrant worker can be self-reliant and live comfortably in Australia so as not to encourage the possibility that they may turn to breaching their visa conditions to make a living.The TSMIT is usually indexed annually and as of now (December 2016) is $53,900 AUD.

The DIBP will therefore assess carefully what the base rate of pay under the market salary rate is. The DIBP will ask for base rate of pay as well as annual income to determine this. If it does not meet the TSMIT requirement, it will not matter whether the applicant is offered a pay that meets the TSMIT; the application will be refused. In the same way that an applicant is offered a pay too low seems suspicious, an employer willing to pay an applicant significantly more signals foul play.



There is an exception to this rule. Should the base rate of pay under market salary rate be under the TSMIT, it may be considered acceptable if the annual earnings are greater than the TSMIT. Annual earnings here must be guaranteed earnings, again, not an unpredicted amount from bonuses or overtime work. These additional guaranteed earnings outside base rate of pay must also be a standard as provided to another Australian citizen or permanent resident in the same position and the same location. Again, it is not possible to try to persuade the DIBP through an inflation of pay.

For example, the base rate of pay under market salary rate is $25 AUD per hour. The applicant is contracted to work 38 hours a week. The annual base rate of pay will be $49,400. The applicant is however guaranteed an allowance of $400 AUD a month, which is a standard under market salary rate for that occupation. This puts the annual earnings at $54,200, which passes the TSMIT requirement.

Medical practitioners who are to engaged as independent contractors may have the TSMIT requirement disregarded as the base rate of pay is technically $0 AUD. Medical practitioners are generally remunerated by receiving a percentage of the billed amount. The earnings of the nominee must still be above the TSMIT requirement however, but as an independently contracted medical practitioner would not be able to predetermine this amount, the sponsor will need to provide a guarantee that the applicant will receiving an amount at least equivalent to the TSMIT as guaranteed annual earnings.

There is a final exemption available to high income earners. Market salary rate and TSMIT can be forgotten about completely if the applicant is offered remuneration that exceeds $250,000 AUD. It is taken that the likelihood of a candidate being offered such a significant amount would be all genuine intents. DIBP will still assess if earnings that are not guaranteed, such as commissions, bonuses and overtime pay, are being used to inflate pay to the $250,000 AUD mark.

For the most part, pay packages are quite straightforward. If the occupation is a little more complicated, involving other payments not base rate of pay under market salary rate, you may want to be careful when you calculate the applicants pay or how you present market salary rate research. Always consult a migration agent if you may be unsure!