Labour agreements: A small but growing part of Australia’s skilled migration program

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Australia’s work visa program has without a doubt undergone the most amount of consistent refinement over the last decade. From 8 February 2010 when the General Skilled Migration visa occupation list was cut considerably through to the introduction of two new regional visas this month, no other program has been tinkered with more.

Economic circumstances and recent turbulence beginning with the Global Financial Crisis has been a big driver in the need to be responsive to labour market needs as unemployment has ebbed and flowed to varying degrees in regions and according to business needs. The political landscape has no doubt been a big accelerant to reform as these visas tend to attract its fair share of controversy and media attention.

As such, skilled visas are heavily regulated. Many regulations must be met under the standard business sponsor regime for a business sponsorship, nomination, and ultimately for a Subclass 482 – Temporary Skill Shortage (TSS) visa to be granted.

Outside of this “standard” pathway are labour agreements, which have been utilised significantly by the current government. Labour agreements are separately negotiated agreements between organisations and the Department of Home Affairs (Home Affairs) to enable businesses to sponsor overseas workers outside of the standard business sponsor regime. For example, so they can nominate workers in occupations that are not on the approved occupation list. Approved sponsors can nominate overseas workers for 482/TSS visas, and now Subclass 494 – Skilled Employer Sponsored Regional (Provisional) visas. There is also scope for employers to negotiate transitioning these workers to permanent Subclass 186 - Employer Nomination Scheme visas.

There are few types of labour agreements:

  • Industry labour agreements – templated, non-negotiable agreements for businesses in certain industries for a select number of occupations. This also includes on-hire labour agreements, which allow businesses to recruit and on-hire staff to other businesses in skilled occupations;

  • Global talent employer sponsored labour agreements – for start-up and established businesses needing to attract highly-skilled workers in niche occupations;

  • Designated Area Migration Agreements (DAMAs) – negotiated between the federal, state and local governments for which typically smaller businesses can utilise;

  • Project labour agreements – for major construction, resource and infrastructure projects. There are currently none that have been executed;

  • Company specific labour agreements – when a labour shortage cannot be covered by any of the above, an employer can request access to one by negotiating directly with Home Affairs.

The regulations for labour agreements are purposefully relaxed. This is because the regulations must accommodate all manner of possibilities, including concessions for English, salary, skills and even to on-hire employees to other businesses, which is prohibited under the standard business sponsor regime. In general, however, concessions are limited and sponsor obligations are a minimum to safeguard overseas workers. Furthermore, it is highly doubtful Home Affairs would consider an application for access to a labour agreement without recent and sustained labour market testing.

Nevertheless, labour agreements are continually being utilised according to a recent FOI request on the composition of labour agreements at the end of the 2018 financial year. Key insights include:

  • Labour agreements make up 4.5 per cent of total Subclass 482 – Temporary Skill Shortage visa grants and 2.8 per cent of total Subclass 186 – Employer Nomination Scheme visa grants;

  • A 9.2 per cent increase in the number of agreements at the end of the 2018 financial year (332 agreements) compared to the 2017 financial year. The current register shows 388 executed labour agreements;

  • The most popular labour agreement is the minister of religion (21 per cent of total), followed by company specific (19 per cent of total) and DAMA agreements (18 per cent of total);

  • Processing times for 76 per cent of labour agreements were longer than 6 months, with 85 on-hand (yet to be decided) labour agreements as of July 2018;

  • On-hire labour agreements have the highest total remuneration ($87,692) followed by company specific ($73,304). Fishing and meat industry labour agreements average base salary would be below the Temporary Skilled Migration Income Threshold (TSMIT) after deducting minimum compulsory superannuation from the total remuneration average.

Since this publication, the labour agreement landscape has changed considerably. DAMAs were in their relative infancy, and it would be expected that should updated statistics become available, the proportion of DAMA labour agreements would increase significantly considering there are now seven approved DAMAs compared to one in 2018. Their share of labour agreement approval would likely increase as well.