Australia: Does your business need a labour agreement?

Last Updated: 4 October 2018
Article by Rebecca Macmillan
Most Read Contributor in Australia, August 2019

Sponsoring an overseas worker has become a little more challenging following the recent changes to the employer sponsored visa legislation. The criteria impacting businesses the most is the introduction of the short term and medium to long term occupation lists where many in demand occupations do not appear on the list. If a business needs to sponsor an overseas worker but the occupation is not on the appropriate list, or the overseas worker doesn't have the required minimum two years work experience then sponsorship is not available under the Temporary Skills Shortage (TSS) visa. This is where labour agreements come in handy.

What is a labour agreement?

A labour agreement is a formal agreement between the Australian Government and approved businesses to sponsor skilled overseas workers.

A labour agreement can be requested where:

  • the business can demonstrate that there is a genuine labour market need for an overseas skilled worker to fill a position in Australia
  • there is no standard visa pathway available
  • the proposed labour agreement is not inconsistent with Australia's national interests.

Once a labour agreement is successfully negotiated, businesses can nominate overseas workers under the TSS visa program with the labour agreement being used instead of the standard business sponsorship approval.

Company specific labour agreements

A company specific labour agreement is one which is between an Australian business and the Australian government. This type of agreement will only be considered where:

  • a genuine skills or labour shortage exists for an occupation which is not already provided for in an industry agreement
  • a designated area migration agreement or project agreement is not already in place.

To request a labour agreement the business must prepare an evidence based submission demonstrating that it has a genuine labour market need to utilise the labour agreement program.

To request a labour agreement a business must:

  • be an Australian registered business with good standing
  • have been operating in Australia for at least 12 months
  • be seeking to fill skilled occupations that are not available under the TSS visa program
  • demonstrate a labour market need including recruitment efforts
  • demonstrate how the business will reduce its reliance on overseas workers
  • undertake consultation with industry stakeholders.

In addition to requesting sponsorship of specific occupations, businesses can also request concessions to the following criteria:

English language

  • skills, qualifications and work experience
  • salary and employment conditions.

While labour agreements offer some concessions, businesses must ensure Australian workers get priority. In addition, businesses must ensure that overseas workers are provided with the terms and conditions of employment that are no less favourable than an Australian citizen or permanent resident performing equivalent work. A concession to the Temporary Skilled Migration Income Threshold ($53,900) may be requested however this must be agreed to by the minister personally.

It is important to be aware that labour agreements are considered on a case by case basis and the Department of Home Affairs is under no obligation to enter into a labour agreement.

Alternative labour agreement pathways

Template labour agreement arrangements are in place for particular industries. These arrangements provide for fixed terms and conditions agreed to by the minister in consultation with key industry stakeholders specific to an industry sector.

Templates are currently available for the following industries:

  • dairy
  • fishing
  • meat
  • pork
  • restaurant (fine dining)
  • Minister of religion
  • on-hire.

The benefit of an industry wide labour agreement is that much of the hard work demonstrating the labour market need has already been completed and businesses operating in any of these industries can request access.

Designated Area Migration Agreements (DAMA) are negotiated by state or territory governments or statutory authorities. Again, those agencies do the hard work of demonstrating the skills and labour shortages in the specific region.

The Northern Territory is currently the only region to have a DAMA in place however we are aware that other areas particularly regional Queensland and Western Australia are currently negotiating a DAMA.

Is a labour agreement appropriate for your business?

If your business answers yes to the following questions, then a labour agreement may be appropriate:

  • do you have multiple vacancies that you cannot fill within the local labour market?
  • are these vacancies for the same position?
  • do you expect to nominate the position for a skilled visa more than three times in a calendar year?
  • is the position highly specialised or niche and not able to be found in the Australian labour market?

Processing times

Currently labour agreements are taking up to 12 months to negotiate with the Australian government however the Department of Home Affairs is introducing streamlined processes in an effort to reduce that time to six months.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.

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