New Work Visa Proposal

Yet more change on the horizon for migrants and their employers as Minister proposes a complete re-write of the work visa policy to push burden back onto employers.

Breakdown on Proposals for Employment-based Temporary Work Visas

The Minister of Immigration is proposing a complete rework of all employer-centric temporary work visa categories, with the proposal currently under consultation until 18 March. The proposed changes are marked and will mean significant changes, particularly for employers of migrant workers.

In a nutshell, the proposal is to replace the multiple different categories with one framework that has three application stages. These are summarised in the figure below.

Perhaps the most significant aspect of the proposal is that all employers seeking to hire migrants will need to apply for some sort of accreditation. Three classifications are proposed: standard accreditation, labour hire accreditation and premium accreditation.

Standard Accreditation

The requirements to obtain standard accreditation appear similar to those needed to be granted accreditation under the current scheme, but with an increased focus on employer compliance.

  • Some reasons for exclusion of a company will include if any key person:
    • was involved in no asset procedures or bankruptcy
    • is on the banned directors list
    • has an employer related offence, or
    • has been found to have provided false and misleading information which is material to immigration decisions within the last five years.
  • Employers will need to have an induction process that provides migrants with information for settling in New Zealand and which informs migrants of their rights and entitlements.
  • Employers will also need to prove that they are actively training and upskilling New Zealanders and working with new job seekers
  • INZ also expects employers to demonstrate that wages for any migrant are increasing at an amount at least equivalent to any increase in the median wage and that their health and safety policies actively consider any additional risks or needs associated with hiring migrants, such as language barriers.

Labour hire and premium accreditation

In addition to the above standard requirements for accreditation, labour hire companies and those seeking or required to hold premium accreditation will also be required to demonstrate that they:

  • Provide pastoral care policies that include providing assistance with accommodation, helping partners find employment, and guidance on enrolling children in school.
  • Are involved in a Workforce Development strategy and an active graduate and apprenticeship program.
  • Are increasing wages and conditions.

If they have been operating for less than two years they must also have independently verified evidence of sufficient revenue to employ any migrant for at least the next 18 months.

It is suggested that premium accreditation could carry with it some of the perks of the existing scheme such as renewal every two years, the ability to offer ‘work to residence’ pathways, and in limited circumstances, the ability to offer 3-year visas to low skilled workers.

However, the threshold for ‘work to residence’ is proposed to increase to $37.50 per hour/$78,000 per annum and the Minister wishes to implement this from April 2019. With no mention of a transitional policy for existing accredited employers who may have only just obtained or renewed their accreditation, many employers may shortly find themselves unable to utilise their accreditation to assist employees onto a ‘work to residence’ pathway, if they cannot offer the higher level of remuneration.

Impact for Employers

Employers should be striving to fulfil most of the above requirements anyway, and enhanced induction processes can be easily implemented.

However, imposing preferential conditions for migrants, such as mandatory wage increases, could lead to an increased disparity in entitlements and wages between migrants and New Zealanders where employers are already facing tensions due to the minimum income thresholds imposed in the 2017 policy changes.

What will also concern employers is the level of forward thinking this proposal places on them. Employers will need to plan well in advance should they wish to hire a migrant; they cannot simply support said migrant for a visa application. They must first attain accreditation, but in many cases will still also need to meet labour market testing for the migrant’s application.

Employers also need to be aware that the intention is to redistribute the cost of visa applications onto the employer, with the suggestion being that the fee the migrant will need to pay at Gate 3 will be around $250-300, a drop from $440-600, but that employers will need to pay $600-2000 at Gate 1 for accreditation (plus annual or biannual renewal costs). No mention is made of whether the employer will also face a fee at Gate 2.

The Minister suggests that the goal with this proposal is to provide employers with better access to skilled workers while minimising exploitation and ensuring that migrants are not employed for low skilled jobs unless there is a genuine labour shortage that cannot be addressed through domestic labour supply. The Minister believes that over time, domestic labour supply mechanisms should be adjusted to address identified shortages through training education and job matching.

This may be a somewhat idealistic view of things, as we’ve yet to see it happen in many industries despite initiatives such as pay equity and free tertiary study. Most employers obviously aren’t against INZ seeking to stamp out exploitation and most aren’t opposed to hiring New Zealanders preferentially. Instead, anecdotally we find that employers believe the issue of staffing comes down to:

  • Locating New Zealanders willing to undergo training or seek employment in particular industries, or
  • Locating unemployed New Zealanders of a calibre that aligns with the employer’s expectations. Short of taking a video, which INZ interfaces wouldn’t allow to be submitted anyway, the difficulty in this instance comes with the employer being able to demonstrate to INZ that an individual simply isn’t employable due to their presentation, personal hygiene, reliability or communication skills; i.e. the ‘failure to impress’ issue.

Neither of the above problems are issues this proposal is likely to resolve and meanwhile, there is a risk that timelines on employers being able to recruit migrants into positions they cannot fill will blow out even further. Putting the onus on employers to attain accreditation or premium accreditation when they seek to support just 6 or more applications, while well-intentioned, will likely just see employers redirect their recruitment focus even more towards those with open work visas (all those new open post study visa holders spring to mind), in order to circumvent the need to engage with INZ around accreditation or compliance, and in doing so, also circumvent the resulting additional costs, time and wage increases they will experience as part of the proposed changes.

Gate 2 – The Job Check

The ‘job check’ will see jobs needing to meet one of four possible criteria before a migrant can apply for a visa for that job:

  • Having a high wage threshold, which doesn’t require a labour market test;
  • Being on a regional skills shortage list for skill level 1, 2 or 3 occupations, which doesn’t require a labour market test;
  • Being in an industry and role captured by a sector agreement, for high need industries, which will require labour market testing; or
  • Being a role for which the employer has completed regional labour market testing that supports the need for a migrant worker.

High Wage Threshold

The high wage threshold is proposed to be set at 150% of the national median income for premium accredited employers or 200% for standard or labour hire accredited employers.

This would make processing straight forward for high income earners. However, it comes with the risk that, with other pathways becoming more difficult, fake job offers or manipulated wage rates are likely to rise as migrants and employers seek to avoid, or cannot overcome, more stringent labour market checks.

Regional skills shortage lists

This will essentially mirror the existing process whereby vacancies for occupations on one of the lists are exempt from further labour market checks if the specified criteria are met.

The regional skills shortage lists are due to be published in April 2019 and should better facilitate visas for migrant workers where the need is greatest.

Sector Agreements

This is an entirely new avenue by which a job can be seen to meet labour market tests, targeted at low-skilled roles.

It is proposed that the Minister will enter into talks with industry bodies in sectors identified as having a heightened reliance on migrant labour, such as aged care, farming and tourism, and will negotiate the terms on which visas will be granted for migrants to work in the industries, in exchange for agreement from those sectors on steps to be taken to reduce reliance on migrant labour in the long term.

The final agreement would then be binding on any employer in that sector who seeks to hire migrants. It would prescribe the occupations covered, accreditation standards, the necessary labour market tests employers must undertake, the required wages and conditions given to migrants, caps on the total number of migrant workers, and training commitments. The agreements would be renewed every 3 years.

While the Minister has commented that this will address situations where the ANZSCO framework doesn’t fit the skilled occupation structure of the sector, we fail to see how it does so. The sector agreements would only give short term relief to the sectors through the grant of low skilled visas. Visas will still be classified as low skilled, the 3 year stand down period will still apply in these industries, and there has been no indication of an adjustment to ANZSCO or the policy to allow workers in these industries a pathway to remain in New Zealand, meaning the industry will face high rates of attrition as employees are subjected to stand down periods.

Essentially therefore, it appears that sector agreements, once negotiated, will simply provide employers within those sectors greater clarity around what steps they need to take in order for migrants to be granted visas to work for them. Whether those steps increase or decrease the burden those employers currently face will depend on what terms are negotiated.

Regional Labour Market tests

The regional labour market test pathway is largely the status quo but tailored more specifically to recognise the specific needs of each region. In theory it would mean employers in regions where there is a very low unemployment rate, for example, would find it easier to hire a migrant worker than employers in regions with higher rates of unemployment.

The proposal goes into detail about how a regional approach could be developed and which bodies would be involved in developing regional labour market analyses to work off. One proposal is to have Hubs, similar to the Canterbury Skills and Employment Hub, to provide job matching services and deliver the labour market test for all applications in the region but also to arrange and facilitate suitable vocational training for trainees placed with employers.

The benefit of such Hub initiatives is that employers and applicants have some degree of certainty around whether the labour market test is met prior to submitting an application to INZ. Adding vocational training to the services provided by these Hubs would likely provide additional comfort and reassurance to employers in hiring unskilled New Zealanders.

A regional approach with Hub-based support would undeniably provide a better, more targeted result, provided there is transparency around how the labour market is to be tested in each region, so that employers can structure their recruitment processes accordingly.

Gate 3 – Migrant Check

The migrant check is the stage at which migrants will lodge their application, and will remain largely the same as the current processes specific to the individual, with an identity check, a health check, a character check, and a capability check.

In moving a significant portion of the cost and burden on employers, this proposal is actually very favourable for the migrant applicant. They will know ahead of lodging their application whether INZ deems the employer and the job acceptable, meaning the migrant only need worry about themselves; that is, their health, character and ability to do the job.

The Minister also proposes to reinstate the ability for low skilled workers to bring their family with them to NZ for the 3 years they can work in low skilled employment before being subjected to the stand down. However, partners will only be granted a visitor visa unless they can qualify for a work visa in their own right. Such a step is positive in that it allows for family unity while limiting the impact that open work visas invariably have on lower skilled New Zealanders obtaining employment positions ahead of migrants.

However, where the proposal negatively impacts migrants is in proposing to adjust the wage threshold for mid-skilled employment to align with the Skilled Migrant category (currently $25 per hour) as those migrants between $21.25 and $25 will, upon renewing their visas, be classified as low skilled and thus subjected to annual renewals and a 12 month stand down after 3 years.

Migrants should also be aware that this proposal, if implemented, will likely see a decline in the number of employers willing to support migrants for visa applications.

Best laid plans…

The idea of all employers needing to be vetted before supporting a migrant is commendable, and all but the non-compliant or exploitative would likely support such vetting taking place.

Transferring more of the burden onto the employer also makes sense, and employers should be able to recognise that in taking responsibility for the process, they limit the risk to their business. Too frequently we see employers classified as non-compliant due to misunderstandings caused by migrants lodging their own applications and liaising directly with INZ on points of concern without involving the employer.

Despite this, in our opinion, the current proposal is unlikely to achieve the stated objectives. Most employers will likely balk at the idea of having to guarantee migrants pay increases, as will Kiwi colleagues who don’t have INZ policy in their corner. The cost and time and foresight required for an employer to get to the stage of being able to support a migrant will also make such a process unmanageable for many employers, particularly if they are expected to renew accreditation annually for the sake of just one or two roles.

Instead, employers that don’t require large numbers of migrants would likely simply refuse to engage in the new process at all, and instead target their recruitment to migrants who hold or can obtain open work visas (working holiday, partnership work visas, and WD1-3 visas). This will particularly be the case for those employers with a tendency towards exploitation or favouring cheaper migrant labour over Kiwis, in which case, the proposal’s effectiveness in achieving the Minister’s objectives would be limited.

A mechanism for policing or limiting the number of open visas would likely have a far greater impact on achieving the stated objectives, as presently it is an area of INZ policy that is ripe for exploitation.

 

The consultation process is currently open until 18 March with the expectation being that the government will make a decision on these proposals by mid-year and have any revised scheme operational by mid-2020. If you are likely to be affected by the proposals, you should consider making submissions now. Please contact us if you would like us to assist you with drafting a submission.