Training Benchmark

The Temporary Work (Skilled) (subclass 457) visa training benchmark requirements

What is the training benchmark?
The Australian Government is encouraging all employers to invest in training for Australian workers. Whilst immigration plays a role in addressing short term skill and labour shortages, the government is committed to training Australians to address longer term skill and labour shortages. The current training benchmark requirements ask employers to demonstrate they are investing in training for Australian employees before they are permitted to sponsor overseas workers.

How can my organisation meet the requirements?
Employers must continue to meet the prescribed training benchmarks for the programme in any year in which they employ a subclass 457 visa holder for any portion of the year and must maintain records of training expenditure. Organisations have two options for meeting the interim training benchmarks requirements.

Organisations only need to choose one of the following:
Training Benchmark A:
Recent expenditure by the business, to the equivalent of, at least 2% of payroll of the business, in payments allocated to an industry training fund that operates in the same industry as the business
Training Benchmark B:
Recent expenditure by the business, to the equivalent of, at least 1% of payroll of the business, in the provision of training to employees of the business, who are Australian citizens or Australian permanent residents

*Please note there are different requirements for start-up organisations in their first year of operation. Please see point 8.

How is payroll defined?
Payroll is the amount of money an employer pays in wages to their employees, in the 12 months prior to application lodgement. Payroll expenditure includes any wages, remuneration, salary, commission, bonuses, allowances, superannuation contributions (mandatory or otherwise) or eligible termination payments that are defined as wages in the Act relating to payroll tax in the relevant state or territory. Payments to contractors or sub-contractors count as payroll if the contractor provides some labour services in fulfilling the requirements of the contract. For example, if your contractor is a bricklayer or a carpenter, any payments you make to them should be included as payroll expenditure.

If I’m using Training Benchmark A, where can I invest the 2%?
Monetary contributions may be made to a variety of industry training funds in the same sector that the employer operates in. Industry training funds are statutory authorities responsible for providing funding for training of eligible workers in certain industries, such as construction and mining. The contributions do not need to directly benefit employees of the business, but rather contribute to training to fill skills needs within the industry more generally.

Where there is no relevant training fund, the applicant may invest the monetary contribution to a recognised scholarship fund in a university or TAFE that supports education or training for Australian citizens or permanent residents, in the same or a similar industry as your business, or to a recognised industry body that provides training opportunities for its members, provided they reserve the funds contributed for training.

If I’m using Training Benchmark B, what can be counted towards the 1%?
You can show you meet the training benchmarks in relation to your Australian or Australian permanent resident employees by:

  • expenditure for a formal course of study for the business’s Australian or Australian permanent resident employees
  • expenditure for funding a scholarship in a formal course of study approved under the Australian Qualifications Framework for the business’s Australian or Australian permanent resident employees
  • expenditure relating to the employment of apprentices, trainees or recent graduates on an ongoing basis. (100% of the salary provided to any apprentices, trainees may be counted. Sponsors wanting to count expenditure on a graduate position towards meeting the training benchmark must only attribute expenditure that is for the formal training aspects of the graduate position. This may include the costs of administering the graduate programme.)
  • expenditure on the employment of a person who trains the business’s Australian or Australian permanent resident employees
  • expenditure to external providers to deliver training for Australian or Australian permanent resident employees
  • expenditure for on-the-job training that is structured with a timeframe and clearly identified increase in the skills at each stage and demonstrating all of the following:
    • the learning outcomes of the employee at each stage
    • how the progress of the employee will be monitored and assessed
    • how the programme will provide additional and enhanced skills
    • the use of qualified trainers to develop the programme and set assessments and
    • the number of people participating and their skill/occupation.

Please note:

  • Costs associated with training such as travel and logistics may be counted where the costs are reasonable and
  • Necessary costs can include: facility or equipment hire, printing of training material, travel to venue, domestic flights if courses are conducted in locations where employees are not residents, international flights where a high profile training course is conducted overseas and senior staff attend.

If I’m using Training Benchmark B what cannot be counted?
You can show you meet the training benchmarks in relation to your Australian or Australian permanent resident employees by:

  • any expenditure for training delivered to employees, who are not Australian residents or citizens
  • informal training delivered on-the-job, other than on the job training which meets the requirements outlined above
  • any training confined to only one or a few aspects of the business’s broader operations, unless the training is in the primary business activity
  • any training only undertaken by people within the business who are principals and/or family members
  • any expenditure for training only relating to a very low skill level having regard to the characteristic and size of the business
  • wages paid to staff for the time they spend at training.

What evidence must be provided in the application?
The Department of Immigration and Border Protection encourages all organisations to lodge complete applications using the free document checklists available. If it is necessary to lodge an application that is not complete, a cover letter can be included that details:

  • the outstanding information and documentation
  • the reason(s) it is outstanding
  • the date it is expected to be available.

Evidence must be provided to substantiate the payroll of the business. This may include but is not limited to one or a combination of the following:

  • business activity statements (BAS) for the past 12 months
  • business tax returns for the most recently concluded financial year
  • recent financial reports (profit and loss statements for the most recently

concluded financial year)
Evidence must also be provided to substantiate the training expenditure of the business. This may include but is not limited to one or a combination of the following as appropriate:

  • submission to explain the relevance of documentation submitted
  • receipts and/or invoices detailing expenditure
  • copies of training contracts for apprentices and trainees
  • evidence of graduate programmes for recent graduates
  • copies of qualifications to evidence use of qualified trainers
  • receipts detailing contributions to a recognised scholarship fund or Industry Training Fund (appropriate for Training Benchmark A).

What if my organisation has been trading for less than 12 months?
Organisations that have been trading for less than 12 months are not required to meet Training Benchmark A or B, rather organisations in their start-up phase are required to present an auditable training plan to the department.
The auditable plan must clearly identify how the applicant intends to meet one of the prescribed training benchmarks. The auditable plan must:

  • 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
    • the anticipated costs associated with delivering the training

I have lodged a sponsorship application with the department but know my organisation cannot meet the 1% or 2% training benchmark requirements. What should I do?

The department adopts a flexible approach to assist Australian employers contribute to training for Australian employees and satisfy the legislative requirements to hire overseas workers.

If you have already lodged a sponsorship application, but have not satisfied the requirements of either Training Benchmark A or Training Benchmark B, the department may contact you, offering your organisation additional time to provide more information.

During this time, Australian employers are permitted to make financial investments in training, either directly through the booking and payment of direct training for employees to the value of 1% of payroll, or indirectly through a 2% contribution to an industry training fund.

The organisation can satisfy the training benchmark requirement by providing the department with evidence of this expenditure, by way of receipts and/or invoices within the timeframe advised in the request letter. The training is not required to be delivered within this time.

A failure to provide the satisfactory evidence of meeting either Training Benchmark A or B may result in the department refusing the sponsorship application.