For standard business sponsors, the obligation to ensure equivalent terms and conditions of employment will mean that you must pay your workers the market salary rate. This requirement has been designed to protect skilled overseas workers from exploitation and to ensure that skilled overseas workers are not used to ‘undercut’ local employment conditions and wages.
If you are a party to an approved labour agreement, you must pay your overseas workers in accordance with the terms of the labour agreement.
The way you can demonstrate the market salary rate depends on whether:
there is an Australian performing equivalent work in the workplace
there is no Australian performing equivalent work in the workplace.
There is an Australian performing equivalent work in the workplace
You can demonstrate the market salary rate by referring to the terms and conditions that apply to an Australian worker, as follows:
If the terms and conditions of the Australian performing equivalent work are directly set by an industrial instrument (such as a modern award or enterprise agreement) then this may be used to demonstrate the market salary rate. If you are referring to an award to demonstrate the market salary rate you must provide evidence that Australians performing equivalent work are being paid the award rate.
If the Australian worker is not covered by an industrial instrument because they are employed under a common law contract, then the terms and conditions in the common law contract may be used to demonstrate the market salary rate.
There is no Australian performing equivalent work in the workplace
You can demonstrate the market salary rate by referring to an industrial instrument (such as a modern award or enterprise agreement) that directly sets the terms and conditions of Australians performing equivalent work.
Applicable industry awards may be used to demonstrate the market salary rate where the awards directly set the terms and conditions of Australians performing equivalent work.
If there is no equivalent worker or relevant industrial instrument, you must demonstrate the market salary rate. Some relevant evidence may include, but is not limited to:
data from reputable remuneration surveys
published earnings data (for example data from the Australian Bureau of Statistics)
evidence of what employees performing equivalent work are paid in similar workplaces in that location.
You must satisfy the department that the proposed terms and conditions of employment are appropriate for that location and industry.
Exemption from demonstrating market salary rates
A standard business sponsor is not required to demonstrate payment of market salary rate if the proposed annual earnings of the worker is at least AUD180 000 (the exemption rate).
The Temporary Skilled Migration Income Threshold
The Temporary Skilled Migration Income Threshold (TSMIT) ensures that your workers will have enough money to be self reliant while they are in Australia.
You must demonstrate that the market salary rate for the position you are seeking to fill is greater than the TSMIT. If the market salary rate for the position you wish to fill does not exceed the TSMIT, you will not be able to access the subclass 457 visa program.
At present the TSMIT is set at $53 900 and is reviewed from time to time.
If the market salary rate for the position you want to fill is below the TSMIT, you can not pay the overseas worker the TSMIT or more simply to access the program. The TSMIT does not determine the salary you should pay your worker from outside Australia.
Should subclass 457 visa holders be paid the TSMIT?
The TSMIT has no bearing on what the subclass 457 visa holder should be paid in the workplace and should not be considered as the applicable market salary rate if you do not currently employ an equivalent Australian citizen or permanent resident. It is the market salary rate for the nominated occupation, not the nominated worker’s proposed salary, which is compared to the TSMIT. Therefore, it is not possible for a 457 sponsor to inflate a nominated worker’s proposed salary in order to meet the TSMIT requirement.
Example: If the market salary rate for an occupation is $39 500 – that is, the market salary rate amount that is paid to an equivalent Australian in the sponsor’s workplace – then the nomination is likely to be refused, as the market salary rate is below the TSMIT and the position is deemed not to be highly skilled. Even if the sponsor decided to offer the nominated worker a salary of $53 900, then the nomination would still be refused, as it is the market salary rate for the nominated position that the department compares to TSMIT, not the actual salary proposed.