By Zoe He (RMA)
Client Service Manager
Australian Immigration Law Services
'Training Benchmarks' must be a phrase many of our readers are familiar with. For a business to be approved as a Standard Business Sponsor (SBS) under the 457 program, the business must continue to meet the training benchmarks.
There are two types of training benchmarks, Training Benchmark A and Training Benchmark B.
Training Benchmark A requires businesses to pay the equivalent of at least 2% of recent payroll expenditure to an industry training fund for the training of Australian citizens or permanent residents.
Training Benchmark B requires businesses to spend the equivalent of 1% of payroll on training for their employees who are Australian citizens or permanent residents. It is important to note that the DIBP is not interested in training expenditure on temporary visa holders.
We are not going to expand on how to meet training benchmarks in order to obtain a SBS approval rather, we will talk about fulfilling training obligations as a Standard Business Sponsor and the repercussions if you don't.
Once a business becomes a standard business sponsor they must meet the training benchmark A or B in each 12 month period within which a sponsored visa holder is employed. Each 12 months period starts from the SBS approval date or the anniversary of it. If the sponsor approval period is less than 6 years (i.e. standard business sponsorship - 3 years; start-up business sponsorship - 1 year) the obligation ends 3 years after the SBS approval day. If the sponsor approval period is at least 6 years (i.e. Accredited business sponsorship - 6 years), the obligation ends 6 years after the SBS approval day.
There are two important rules in understanding the training obligations better.
- Training is only required when there is at least one sponsored visa holder employed.
- Compliance with training benchmarks is assessed on an annual basis, commencing on the day on which the sponsor is approved or the length of existing sponsorship is extended. It is not assessed on a pro-rata basis.
Example A: Business X obtained SBS approval on 15/07/2013, but has never employed any 457 holders since. Business X does not need to meet training obligation yet.
Example B: Business X obtained SBS approval on 15/07/2013, but only employed a 457 holder from 01/08/2014. In this case, Business X does not need to meet training obligation for the first year after SBS approval (15/07/2013 - 14/07/2014), but must meet training obligation from 15/07/2014 on.
Example C: Business X obtained SBS approval on 15/07/2013. It paid 2% of its payroll expenditure to an industry training fund on 15/09/2013. Monitoring of its compliance with the sponsorship obligations is undertaken on 15/10/2014. The business meets its training obligation since from 15/07/2013 to 14/07/2014, it has met Training Benchmark A. (Note: compliance is not assessed on a basis of any random 12 month period such as a 12 month period immediately prior to the date when monitoring is undertaken.)
Example D: Business X obtained SBS approval on 15/07/2013. It employs one 457 visa holder who commences employment on 15/06/2014 and ceases on 15/08/2014. In this case, although the 457 holder only works for the business for 2 months, the business still needs to meet training requirements for two assessment years (15/07/2013 to 14/07/2014 and 15/07/2014 to 14/07/2015) because the employment period of the 457 visa holder stretches over two assessment years.
Meet your obligations
When it comes to fulfilling training commitment after SBS approval, many businesses do not see it as equally important as meeting training benchmark before SBS approval, the reason simply being: the business has already got what it needs, i.e. SBS approval so why wasting money on training anymore? In reality, it is not rare to see sponsors fail to meet training obligations. Some may not have even spent a cent on training if they obtained the sponsor approval (SBS) as a new business (operating for less than 12 months) with only a training plan. These businesses may think that they are being smart by doing so, but are they really?
Failing to fulfill training commitments
This may cause two major problems. Firstly, the SBS approval may be cancelled or the sponsor may be barred from sponsoring more people or making future SBS applications. Secondly, the business may not meet the requirement as a Nominator under ENS/RSMS Temporary Residence Transition Stream. This more likely to concern individual visa applicants, especially those who are planning to get PR after 2 years of employment on a 457 visa.
The first problem above is self-explanatory but the second one is complicated and requires a deeper look.
Migration Regulations 1994 stipulates that one of the requirements for nomination under the ENS/RSMS Temporary Residence Transition Stream is that the nominator must have met the training requirements for the purpose of approval as a standard business sponsor under the 457 program. The nominator must demonstrate that they have continued to meet the training requirement throughout the validity of their recent sponsorship, unless it is reasonable to disregard this requirement.
Example E: Business X obtained SBS approval on 15/07/2013 for 3 years. On 15/11/2013, a 457 visa was approved for 2 years (15/11/2013 to 14/11/2015) for its nominated employee. On 01/12/2015 the business nominates the 457 visa holder under ENS Temporary Residence Transition Stream. The business must demonstrate it meets Training Benchmark A or B for the periods of 15/07/2013 to 14/07/2014, 15/07/2014 to 14/07/2015 and 15/07/2015 to 14/07/2016, that is each year of its sponsorship approval in which a 457 holder is employed.
Q: What if the nominator's SBS approval has ceased when they nominate a 457 holder under ENS?
A: They will need to provide evidence they met the training requirements for each year in which they were an approved sponsor.
Example F: Business X obtained SBS approval on 15/07/2013 for 3 years. On 01/03/2015, a 457 visa was approved for 2 years (01/03/2015 to 30/02/2017) for its nominated employee. On 01/03/2017 the business nominates the 457 holder under ENS Temporary Residence Transition Stream. In this scenario, the SBS approval has already ceased when the ENS nomination is applied for. The business therefore needs to demonstrate it has met Training Benchmark A or B for the periods of 15/07/2014 to 14/07/2015 and 15/07/2015 to 14/07/2016. It does not need to demonstrate training from 15/07/2016 to 15/07/2017 although the 457 visa holder is still employed during this period because its SBS approval has ceased on 14/07/2016.
Q: What if the nominator did not strictly meet the training benchmark for each assessment year, but did contribute to training to some extent. Do they still have a chance?
A: DIBP case officers do have the discretion power to disregard the training requirement mentioned above, but only if they are satisfied the nominator has not failed to maintain their commitment to the ongoing training of Australians in their industry.
Two scenarios are given by the DIBP in the Procedural Advice Manual (PAM) to illustrate under what circumstances such discretion may be exercised.
Scenario 1: the nominator has demonstrated meeting a combination of both Training Benchmark A and B in a required year during the term of the most recently approved sponsorship (for example, an amount equal to 1.5% of payroll was placed in an industry training fund and an amount equal to 0.5% of payroll spent on internal training to make up 2% of payroll spent on training)
Scenario 2: the nominator has an aggregate expenditure on training over the term of their most recently approved sponsorship commensurate with the total training commitment for that period.
Of course the above two scenarios are not the only cases where discretion can be exercised. Each nomination application is assessed on its own merits, but businesses should not rely too much on this discretion policy unless they want to try their luck.
With all the above said, the purpose of this article is not to advocate for DIBP on how important maintaining training commitment is, but to simply point out the fact that failing to fulfill training obligation does cause problems.
We advise to all potential 186 visa applicants (under ENS Transition Stream) to check if your company continues to meet the training requirements if they intend to sponsor you for permanent residency in the future.
