Training Benchmarks for 457 Sponsors from July 2017
A new instrument (IMMI17/074) outlining the ‘training benchmarks’ came into effect on 1 July 2017. The training benchmark requirements are now specified in the instrument rather than just in policy.
The training benchmark applies for the following visas:
Applicability and overview
This section, applies to all ENS applications under the Direct Entry stream.
A nominator whose business has operated for at least 12 months must meet the requirements for training Australian citizens and permanent residents that are specified in the regulation
A nominator whose business has operated for less than 12 months must provide an auditable plan for meeting the requirements specified in the regulation.
Assessing period of operation and applicable training benchmark
If a business claims to have operated for less than 12 months, can be verified by working out the period between the time the business commenced “active operation” and the date on which the nomination was lodged.
A business would be considered to have commenced active operation once the entire infrastructure necessary for the activities of the business is in place and the business has commenced providing services to customers.
The evidence that will be required to establish the date of commencement of active operation will be dependent on the type of business activity undertaken. Two examples are:
- a person operating a restaurant would be taken to have commenced active operation on the day on which the restaurant was officially opened to the public and
- a person providing a consultancy service would be taken to have commenced active operation on the day they were awarded their first consultancy contract.
Who has to meet the training requirement
Only training expenditure relating to the nominating entity is considered. Training expenditure incurred by related or associated entities cannot be considered because the construction of the regulation specifically requires the nominator to satisfy the requirement.
For the purposes of this regulation, the training expenditure incurred must relate to current active operations of the business.
A sole trader had previously operated a restaurant for 10 years. After selling this restaurant, he purchases a new restaurant and opened his business to the public 6 months ago after extensive refurbishments.
In this instance, even though the sole trader had been continuously operating a business for more than 10 years, the business in question is considered to have been actively operating for less than 12 months and therefore, is required to meet the less than 12 months requirements.
ABC Pty Ltd has been operating for 3 years under ABN of 12 345 678 876. All shares in the company are held by Fred Smith. Joe Bloggs purchases all the shares in ABC Pty Ltd and 6 months later lodges a nomination. ABC Pty Ltd retains the ABN 12 345 678 876. In this instance the business (ABC Pty Ltd) has been in operation for 3 years and 6 months and is therefore required to meet regulation +12 months requirements as it is considered to have been operating for more than 12 months. The change of ownership in this instance is irrelevant because a company is a legal entity separate from its shareholders and the change in ownership of shares is irrelevant.
ABC Pty Ltd is a subsidiary of XYZ Pty Ltd. ABC Pty Ltd is the nominator. In this situation, any training provided by XYZ Pty Ltd cannot be considered in assessing the nomination by ABC Pty Ltd for the purpose of assessing whether ABC Pty Ltd meets the training criterion. This is because the construction of the regulation specifically requires the nominator to satisfy the requirement. The fact that the 2 entities may be related bodies corporate under s50AAA of the Corporations Act is irrelevant.
Mr A operates an Indian restaurant as a sole trader under the business name of “Curry Spice”. He is also involved in a partnership with Mr B that operates another Indian restaurant under the business name of “The Taj”. The partnership of Mr A and Mr B lodges a nomination for an Indian chef to work in partnership. Training information relating to the business operated by Mr A as a sole trader cannot be considered in assessing the nomination by the partnership. This is because the construction of the regulation specifically requires the nominator to satisfy the requirement. The fact that the 2 entities may be associated entities under s50AAA of the Corporations Act is irrelevant.
Training Benchmarks – Overview
The training benchmarks are specified in a legislative instrument (IMMI 17/074) – with nominators required to meet the training benchmarks outlined in paragraph A (referred to as ‘Training benchmark A’) or in paragraph B (referred to as ‘Training benchmark B’).
10.5.1 Training benchmark A
To meet training benchmark A, the nominator must provide evidence of having made the following contributions:
Recent expenditure, by the business, to the equivalent of at least 2% of the payroll of the business, in payments allocated to a specified type of training fund that operates in the same or a related industry as the business.
Expenditure must be made to one of the following types of funds to meet the requirements for this benchmark:
• an industry training fund – that is, a statutory authority responsible for providing funding for training of eligible workers in certain industries;
• a fund managed by a recognised industry body who provides training opportunities in their industry and quarantines contributions to the fund for training purposes only; or
• a recognised scholarship fund operated by an Australian university or TAFE college only.
As outlined in the relevant legislative instrument, contributions to training funds operated by Registered Training Organisations (RTOs) or private individuals are not acceptable for the purposes of meeting Training Benchmark A, nor are funds that allocate a percentage of the contributions received to commissions or offer refunds for failed immigration applications.
• Evidence could include a receipt for the payment or a letter from the relevant type of training fund.
• The terms ‘recent expenditure’ and ‘payroll’ are explained in the relevant legislative instrument.
• Additional guidance on the types of funds listed above is provided below.
• There is no requirement that the monetary contribution made to an industry training fund directly benefit employees of the business that is making the contribution. The intention of this option is that the business for nomination contributes to the training of Australian citizens or permanent residents to meet skill needs in the industry, not necessarily in the nominator’s business.
Industry training funds
Industry training funds are statutory authorities responsible for providing funding for training of eligible workers in certain industries. Immigration has no authority to register or establish industry training funds.
These training funds generally source revenue through levies from businesses operating in that industry.
The responsibilities of an industry training fund may include, but is not limited to, paying for training provided to existing and entry level workers, and working with employers and training organisations to assist in the employment of apprentices and trainees.
Note: Some State/Territory governments have construction industry training funds established by Acts of Parliament to support the training of eligible persons in the building and construction industry – for example, the ACT Building and Construction Industry Training Fund that is administered under the Building and Construction Industry Training Levy Act 1999.
Funds managed by a recognised industry body
To meet the requirements of training benchmark A, a recognised industry body must have established procedures in place to accept contributions towards the provision of training for Australian workers in their industry sector. Contributions received for this purpose should be quarantined for training purposes only, with no percentage of contributions being allocated to commissions, as specified in legislative instrument (IMMI 17/074).
Governance of the funds received by a recognised industry body should be administered by a committee overseen by an independent Chairperson and that includes industry representatives (employers and employees). The processes of this committee should be impartial and well documented so as to be transparent and accountable. Monies should be allocated under established guidelines that:
- allow any potential recipient involved in the industry to apply for funding;
- detail the application process;
- outline industry training priorities; and
- specify the attributes that need to be met for funding to be approved.
Recognised scholarship funds operated by Australian universities or TAFE colleges
To meet the requirements of training benchmark A, the nominator has to show evidence of having made a contribution to a recognised scholarship fund that is operated by an Australian university or TAFE college.
The scholarship fund should support education or training for Australian citizens or permanent residents in a course related to the business of the nominator, with no percentage of the contributions being allocated to commissions.
Training benchmark B
To meet training benchmark B, the nominator must provide evidence of having made the following contributions:
Recent expenditure, by the business, to the equivalent of at least 1% of the payroll of the business, in the provision of training to employees of the business, who are Australian citizens or Australian permanent residents (‘Australian workers’).
As outlined in legislative instrument (IMMI 17/074), expenditure that can count towards this benchmark includes payments made:
- for Australian employees to undertake a formal course of study, including any reasonable and necessary associated costs (e.g. costs of travelling to the training venue or access an online training programme);
- to RTOs to deliver face-to-face training to Australian employees that will contribute towards an Australian Qualification Framework qualification;
- to purchase an eLearning platform or standalone training software; or
- to cover the salary of:
- Australian employees engaged by the business as apprentices or trainees under a formal training contract; or
- Australian employees who have completed an undergraduate or higher degree in a university within the last 2 years; and
- Australian employees participating in a formal, structured graduate program for up to 2 years, or completing a professional year following their graduation
- to a person whose sole role is to provide training to Australian employees
- to attend conferences for continuing professional development.
As outlined in legislative instrument (IMMI 17/074), expenditure that cannot count towards this benchmark includes costs associated with:
- on the job training that is not otherwise identified above as applicable expenditure for Training Benchmark B;
- training that is not relevant to the industry in which the business operates;
- training undertaken by persons who are principals in the business or their family members;
- training that has a very low skill level having regard to the characteristics and size of the business;
- induction training;
- staff salaries apportioned to time spent undertaking online or other training courses;
- purchase of software for use in normal duties;
- membership fees;
- purchase of books, journals or magazine subscriptions;
- attending conferences for purposes other than continuing professional development; and
- hiring a booth at a trades show, conference or expo.
- Evidence of expenditure on training activities could be a receipt for the relevant payment(s) or a contract for employment of the relevant individual for whom salary payments are being included within expenditure to meet the benchmark
- The terms ‘recent expenditure’ and ‘payroll’ are explained in the relevant legislative instrument.
Auditable plan to meet the training benchmarks
For businesses seeking nomination approval that have been trading in Australia for less than 12 months, rather than meeting the training benchmarks, they must provide an auditable plan that clearly identifies how the nominator intends to meet one of the prescribed training benchmarks.
The auditable plan should:
- relate to the immediate future (within the next 12 months);
- clearly articulate the forecast payroll for the next 12 months;
- clearly articulate the intended expenditure towards the training benchmark; and
- show a clear intent to implement the plan and be accompanied by clear evidence of:
- the type of training
- the duration of the training and
- o the anticipated costs associated with delivering the training.
The auditable plan may include, but is not limited to:
- a documented training program with an identified increase in work competencies of the participants;
- course outlines/documentation;
- scheduled attendance sheets;
- contracts with an external training provider;
- financial statements that show expenditure for a future training event; and/or
- funding quarantined in the budget especially for training.
Documents or ‘quotes’ from external training providers (irrespective of whether they are a RTO or not) that indicate they will deliver X course and / or Y course and will charge 1% of the client’s payroll for providing this service are not auditable plans and therefore do NOT satisfy this requirement. Even if they include the words ‘auditable training plan’ somewhere in the document. Such documents may, however, be used in conjunction with a document that indicates the client has accepted the ‘quote’, in support of an auditable plan as evidence of the nominator’s intention to implement the plan relating to training.