What is the change?

As outlined in our news alert of 11 November 2013, the Department of Immigration and Border Protection (DIBP) may require labour market testing (LMT) prior to nominating overseas workers for Subclass 457 visas. The new rule becomes effective 23 November 2013. LMT may be required for both standard and accredited sponsors. LMT is not required under a labour agreement.

DIBP has now released a detailed LMT policy. The policy includes exemptions from LMT as they apply under Australia’s international trade obligations, occupations exempt from LMT by way of gazette notice, when LMT is required, what will suffice as an effort in LMT and additional requirements when a business has retrenched workers.

Exemptions Under Australia’s International Trade Obligations

  • If the worker is a citizen of Chile or Thailand, or is a citizen/permanent resident of New Zealand
  • If the worker is a current employee of a business that is an associated entity of your business that is located in an Association of Southeast Asian Nations (ASEAN) country (Brunei, Myanmar, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand and Vietnam), Chile or New Zealand
  • If the worker is a current employee of an associated entity of a business which operates in a country that is a member of the World Trade Organization (WTO), where the nominated occupation is an “Executive or Senior Manager” and the nominee will be responsible for the entirety or a substantial part of the company’s operations in Australia. A list of occupations that qualify as ‘Executives or Senior Managers’ in member countries of the WTO is available here –
  • If the business currently operates in a WTO member country and is seeking to establish a business in Australia, where the nominated occupation is an “Executive or Senior Manager”
  • If the nominated worker is a citizen of a WTO member country and has worked for the business in Australia on a full-time basis for the last two years.

This is particular welcome news for “Executive or Senior Manager” nominated roles, and for individuals who have already resided in Australia on a subclass 457 visa for at least two years, who are being nominated by the original sponsoring entity for a further subclass 457 visa.

What Occupations are Exempt from Labour Market Testing?

All occupations have been exempted by the government from labour market testing apart from the occupations listed here.

It is evident that all professional positions apart from engineers and nurses have been exempted. It is clear that most semi-professional and trade occupations will require LMT.

Labour Market Testing – What Will Suffice?

It is evident that LMT will only be required when a nomination is not exempt under Australia’s international trade obligations or when a position is not exempt under the government’s list of exempt occupations.

When LMT is required, the following steps must be taken:

  • Advertising for the nominated occupation must have occurred at any time within the preceding 12 months prior to the nomination being lodged. There is no specific time frame for the duration of LMT. It may be as short or as long as deemed appropriate by the business
  • There is no mandated requirement where the advertising must be placed. All the following will suffice as an accepted form of advertising:
    • Newspaper advertisements
    • Paid online job boards
    • Advertising on the business’s own website
    • Internal recruitment processes
    • Trade publications
    • Social media – including but not limited to Facebook, Google+, LinkedIn and Twitter.

DIBP encourages the use of the ‘Summary of Domestic Recruitment Efforts’ Form. The form is attached here. The form is a form of self-compliance. If the form is completed in full by the nominator, this should suffice and no further evidence of LMT should be required. It should be noted that penalties will apply if misleading or false information is provided on the form.

Some positives to take out of the actual mechanisms of LMT:

  • The process is largely a form of self-compliance and largely a light touch
  • Advertising may take the form of many different formats
  • There is no mandated length of time for LMT. The only requirement is that it must have occurred in the 12 months preceding lodgement of the nomination application
  • Unpaid advertising is treated as favourably as paid advertising
  • It is not necessary to provide details of the recruitment process, such as copies of job applications received
  • It is not necessary to maintain records of LMT after the visa has been approved
  • The same LMT may be used in support of multiple nomination applications, assuming that the LMT was completed in the 12 months prior to the lodgement of the nomination.

Additional Requirements for a Business With Recent Retrenchments

If an Australian citizen or permanent resident has been retrenched or made redundant in your business, or an associated entity of your business, within the four months prior to lodging the nomination, the business must also provide information about those redundancies or retrenchments.

The business must undertake LMT after those redundancies or retrenchments.

Policy confirms that this requirement only relates to the same or similar occupations to the nominated occupation. For example, if a construction company made a bricklayer redundant prior to nominating a carpenter, this would not be relevant to the nomination. However, if the same company is nominating a bricklayer, LMT must be conducted prior to lodging the nomination and evidence provided with the nomination.

This is a common sense approach to redundancies.

BAL analysis: The current Australian Government inherited LMT from the previous government. The current government did not support the introduction of LMT, but because of legislative complexities, it is currently unable to rescind the LMT legislation.

It appears that the government has attempted to introduce a LMT ‘light touch’ which will largely be in the form of self-compliance when required. The fact that many occupations have been exempted and some individuals will be exempt under Australia’s international trade obligations ensures that LMT is welcome. When LMT is required, we welcome the large number of advertising options available and the flexible nature in the self-assessment approach.

BAL Australia is holding a webinar to further examine the introduction of LMT, on Friday 22 November 2013, 11.30 am Australian Standard Eastern Time.

This alert has been provided by BAL Australia. For additional information, please contact

MARN: 9683856

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