Important Note: The training benchmark requirement has been replaced by the Skilling Australia Fund levy.
One of the requirements that a sponsor needs to satisfy in order to obtain Standard Business Sponsorship and sponsor Subclass 457 visa applicants is the ‘training benchmark’ requirement.
If the business has been trading in Australia for 12 months or more, in order to satisfy the ‘Training Benchmark’, it needs to satisfy one of the following pathways:
If a business does not employ any Australian citizens or permanent residents, then it will only be to apply by satisfying pathway 2 by contributing to an industry training fund that is in the industry that it is operating in. An industry training fund is statutory authority which is responsible for providing funding for training of eligible workers in certain industries.
The business will need to provide evidence of contributing to such funds such as through receipts or a letter from the relevant fund.
What types of expenditure can be counted towards the Training Benchmark?
You can only count the expenditure of the business entity. You cannot count the training expenditure of a related entity.
You will firstly note that you can only count training expenditure for employees who are Australian citizens and permanent resident. The following are examples of training expenditure which the business can count towards the Training Benchmark:
You cannot count the wages of the Australian citizens or permanent residents that the business pays while these employees are attending training (except where the staff are apprentices, trainees or recent graduates).
The actual expenditure on training has to be quantifiable. For instance, where training is provided by a franchise head office, the applicant needs to show exactly what percentage of the franchise fee is attributed to training. We cannot count the whole franchise fee nor can we accept an estimate of the training component; there would need to be some evidence from the franchisor confirming the actual percentage.
The same principle applies to all the training expenditure that the business is including.
Definition – Payroll Expenditure
Payroll refers to the amount of money which 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/Territory.
A business can assess whether this requirement is met by calculating its total expenditure on training of Australian citizens and permanent residents and its total expenditure on payroll for the last 12 months, and determining whether total expenditure of training equates to at least 1% of payroll.
Commitment to Continued Satisfaction of Training Benchmark
This commitment is made as part in the application form for SBS. Depending on how the business satisfies the Training Benchmark, the business will need to certify/provide evidence demonstrating one of the following:
Training provided by a third party
If the business is including the cost of training that is provided by an external party, then the business will need to submit invoices and receipts which confirm the cost of the training and that the training occurred within the last 12 months prior to lodgement of the SBS application. If available, the business should also submit documents relating to the training provided (e.g. handouts, slides etc.). These documents will allow DIAC to better understand the purpose of the training and the intended learnings and professional development outcomes.
Inclusion of on-the-job or internal training
Expenditure on on-the-job or internal training can be counted towards the Training Benchmark if this training is part of a formal, structured course with identified learning outcomes that contribute to the upgrading of skills of employees.
Inclusion of salaries of Apprentices & Trainees
Apprenticeships and traineeships are, by definition, training positions. Consequently, if the business employees apprentices and/or trainees, 100% of these employees salaries can be counted towards satisfying the 1% of payroll Training Benchmark.
The business needs to show that there is a formal apprenticeship or traineeship agreement in place (known as a Training Contract) which has been lodged with the relevant State or Territory government authority. The Training Contract should be submitted as supporting evidence in the SBS application.
You can count expenditure for hiring apprentices and/or trainees which the business has hired via a third party such as a recruitment agency or Group Training Organisation (GTO).
Inclusion of salaries of Recent Graduates
A recent graduate is considered as someone who has completed their higher education studies within the last 24 months prior to the lodgement of an application for approval as a standard business sponsor. Furthermore, the role which the graduate is working in needs to be relevant or related to the subject of their recently completed qualification (although DIAC is likely to give this a broad interpretation).
A recent graduate’s salary can only be counted towards the Training Benchmark if the graduate will be participating in a formal, structured graduate program for up to two years, or is completing a professional year following their graduation. If this is satisfied, then 100% of the graduate’s salary can be counted.
If the graduate is not participating in a formal, structured graduate program or completing a professional year following their graduation, then the business can only count the expenditure on the graduate position that is part of the formal training aspects of the graduate position. While the graduate is undertaking formal training, you can count the wages that the business to this employee during the course of the formal training.
Final note before lodgement
As with presenting any information to DIAC, your should try to ensure that the information is easy to understand and that you are guiding the case officer wherever this is necessary. The DIAC case officer should not need to formulate his or her own interpretation of your application, or the documents and information that you are presenting.
Your case officer will not have nearly the same level of knowledge about your business as you do. Do not assume that your case officer will understand and interpret the various components of your application in the same way you. This is particularly the case with SBS applications because every business is difficult and every business has difficult methods for delivering training to its Australian citizen or permanent resident employees. This is unlike visa applications where generally, every applicant are required to submit a standardised set of documents and information such as his or her passport, resume and qualifications which are relatively straightforward to understand.