Standard Business Sponsorship – Training Benchmark

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:

  1. Pathway 1 – Demonstrate that in the last 12 months prior to the lodgement of the SBS application, the business has allocated payments to an industry training fund and these payments equate to at least 2% of the payroll of the business. The business must be operating in the same industry as the industry training fund. Furthermore, The business must make a commitment that it will maintain such payments (i.e. 2% of total payroll) in each fiscal year for the term of the SBS approval; or
  2. Pathway 2 – Demonstrate that in the last 12 months prior to the lodgement of the SBS application, expenditure on the training of Australian citizen or permanent resident employees of the business equates to at least 1% of the payroll of the business. The business must also make a commitment that it will maintain such expenditure (i.e. 1% of total payroll) on training in each fiscal year for the term of the SBS approval.

Pathway 1

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.

Pathway 2

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:

  • Evidence of expenditure on external training.
  • If the business employs an individual and a key part of this person’s role is to train the business’ employees who are Australian citizens or permanent residents.
  • Employment of apprentices, trainees or recent graduates in on-going roles. The number of these individuals needs to be proportional to the size of the business. In relation to the hiring of recent graduates, only the formal training aspects of the graduate position can be included (see below for further information)
  • Funding a scholarship in a formal course of study approved under the Australian Qualifications Framework where this is part of the business’ training strategy. If your business does fund scholarships, then a key consideration in DIAC assessing whether this formal course of study is part of the business’ training strategy is the relevance of the course of the business. In any case, relevance is given a broad interpretation.
  • Structured internal on-the-job training. Such training needs to have clearly defined goals that are aimed at increasing the employees’ skills and experience with progression through the various stages of the training. For such internal training, the business should to evidence the following:
  1. The learning outcomes of the employee at each stage;
  2. How the progress of the employee will be monitored and assessed;
  3. How the program will provide additional and enhanced skills;
  4. The use of qualified trainers to develop the program and set assessments; and
  5. The number of people participating and their skill/occupation.

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:

  1. Certify that the contribution to the industry training fund will be made each fiscal year; or
  2. Demonstrate that the training provided Australian citizens or permanent residents employees is part of an ongoing organisational training strategy; or
  3. Demonstrate that the employment of apprentices, trainees or graduates is part of an ongoing organisational training strategy.

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.

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32 thoughts on “Standard Business Sponsorship – Training Benchmark

  1. David

    The use of qualified trainers to develop the program and set assessments;

    So the qualified trainers have to be third party which offering training program?

    Reply
  2. Douglas

    Hi Peng,

    Just going through the process of ‘gathering all possible forces’ to meet the distressing 1% training benchmark. I have a question I was wondering you could help us with..

    When I first applied for sponsor back in 2010, the training given to a post-graduate counted as training. Now, he’s finished in Dec 2011, so I can only try to use his wages as he continued working with us.

    But does wages paid to a post-graduate who was funded training by the company before and continued working for the same company count? Are graduates considered people who finish higher education of any sort or only the standard 4 years of Uni?

    Really appreciate the help.

    Cheers,

    Reply
    1. Peng Cheng Post author

      Hi Douglas
      No for the wages of your graduate question since he completed his studies while ago, and I assume that he is no longer working in a graduate program.
      PC

      Reply
  3. Charles

    Hi Peng,

    This is a really interesting post. I have a question regarding the assessment of a nomination by the DIAC.

    If the company doesn’t meet the training requirement on a lodged nomination, for example, they have 0.5% of the payroll spent in training instead of 1%.

    Is the DIAC give a bit of time to the company to fix the problem? Or is the company will see its nomination cancelled without any notice. Thus the DIAC will also cancelled the visa application lodged by the employee as well.

    I will greatly appreciate your help.
    Regards, Charles

    Reply
    1. Peng Cheng Post author

      Hi Charles,
      That is up to the case officer. CO can refuse if the eligibility requirements aren’t met. They can contact your employer and give them a chance to meet the requirements – but CO providing your employer with such a chance is not guaranteed.
      PC

      Reply
  4. Elodie

    Hi peng,
    I have a problem to meet the benchmarking requirement. I have a partnership business, and we do not have any payroll, as we manage ourselves the business (with my husband). We don’t pay any GST either.
    What solution can you recommend to meet the requirement?
    Thanks very much for your help.
    EC

    Reply
    1. Peng Cheng Post author

      Hi EC,
      Based on the below policy, I would say that DIAC would count profits as equivalent to salary – and since you have no employees to train, you will need to use Pathway 1 described above – Demonstrate that in the last 12 months prior to the lodgement of the SBS application, the business has allocated payments to an industry training fund and these payments equate to at least 2% of the payroll of the business:
      If the applicant for approval as a standard business sponsor is a sole trader who has not employed any staff previously and has not drawn a wage from the business himself; decision makers may consider the actual profit of the business for the last 12 months as being equivalent to the payroll of the business for the purposes of regulation 2.59(d).
      PC

      Reply
  5. Syed

    Hi Peng,

    1% training requirement should be equivalent to the Total pay roll of the company nationally or total pay roll for the relevant state or territory u work, If I am based in Melbourne does my company have to show 1% in training for the whole business nationally or equivalent to Victorian pay roll is sufficient?

    will appreciate any assistance.

    Thanks

    Reply
  6. N Patel

    HI PC,

    Could you please suggest me following…
    I m employed as 457…
    if My company did not do contribution for training batch mark A since 2 years…
    Can we paid 2 % training for two years together…at tafe ..is it valid to immigration for ENS application?

    Waiting for your kind and quick reply…

    Thanks,

    Reply
    1. Peng Cheng Post author

      Hi Patel,
      Technically, your employer would not be satisfying the legal requirement even if they pay for the total cost of the required training now. If they pay the total cost now, the case officer can exercise discretion and decide that this requirement is satisfied, however, they can also decide that it is not satisfied and refuse the application.
      PC

      Reply
  7. Rhyme

    Hi Peng,
    Can you elaborate more on the hiring recent graduates with a structured program? Can you give some examples on that?
    Thanks

    Reply
    1. Peng Cheng Post author

      Hi Rhyme,
      For example, large companies often have 12 month rotation programs for new graduates.
      PC

      Reply
  8. Arif

    Hi Peng,

    My partner is on a 457 visa till DEC 2015. After completed 2 years of sponsorship she applied for 186 visa through her employer. I was included in the application as her partner. The nomination by the employer has just been refused and she has been sent an email saying our application cannot be processed as the nomination is refused. It also says that even if we decide not to withdraw our application, if will be refused as the nomination was the basis of this application. Can we request a refund and re-apply ?

    What are the next steps/options for us ? Also, i was on a bridging visa while this application was being processed. What visa do i get now ? Do i need to apply for another type of visa ?
    Please assist.

    Thank You,
    Arif

    Reply
    1. Peng Cheng Post author

      Hi Arif,
      Don’t think that you can request a refund. You can reapply if you want.
      Your 457 visas are still valid so this is what you hold, and you will continue to hold this visa until it expires.
      Your bridging visa will cease shortly after the application is either withdrawn or refused.
      PC

      Reply
  9. Kusum

    Hi,
    Could u please give suggestion….
    M sponsored by the company and has applied for the PR. Now the problem is that the company has totally forgotten to meet up the training requirement for past 12mths.
    But the company has given traineeships to one of the staff and the course is ongoing so is it possible that the company writes a letter saying that the course is ongoing basis n the amount has meet up the training requirement.
    or is there any other solution to meet up the training requirements?

    Reply
    1. Peng Cheng Post author

      Hi Kusum,
      The Department would likely ask for evidence to demonstrate this training expenditure, such as an invoice demonstrating the cost of the traineeship course, or payslips demonstrating the wage paid to the eligible trainee employee.
      PC

      Reply
  10. roger

    Hi peng
    Ple suggest me about my ens. I applied in dec 2013 and co assigned 26 of may same day request for more information. Info submit in june since that have not heard anything..my MA sent email for update he didn’t reply.it is already 8 month since I apply for ens. Should I contact to co directly or keep waiting..u answer will be appreciated. Thnx

    Reply
    1. Peng Cheng Post author

      Hi Roger,
      You are allowed to contact the case officer since you have paid the Department and you are one of their clients – but following up probably won’t make any difference.
      PC

      Reply
  11. Monpasha

    Hi Peng,
    This 1% benchmark is proving to be quite the obstacle in my situation.
    My company does training for clients as part of an implementation procedure. Would this count towards the 1%?
    Also, what happens if we only manage say part of the 1% (~0.5%) how would that affect the nomination process?

    Thanks heaps,
    Monpasha

    Reply
    1. Peng Cheng Post author

      Hi Monpasha,
      Training for clients doesn’t count. The Department is likely to refuse the application if this requirement is not satisfied.
      PC

      Reply
      1. Monpasha Mukherjee

        Hi Peng,
        Me again! I have a question regarding the same thing; what’s the likelihood if we meet .3% in external training and can make up the rest (0.7%) through internal training? Also, is it advisable to apply for the nomination if that’s the case? We are able to provide details of previous trainings. Our company is extremely specialised and everyone (senior management and mid level management) has apron. 10 years experience in their field, which is why it makes it tricky for the company to find a training course that would benefit everyone or even a majority of the employees.

        Any help would be appreciated.

        Thanks,
        Monpasha

        Reply
          1. Monpasha

            Hi Peng,
            Just needed to confirm- trainings delivered online(via Skype/conference calls) by a third party (in this instance- Google) to a group of people (all Aus Residents/Citizens) as part of a service that we have recently purchased with them, would that count towards the 1%?

            Thanks,
            Mon

          2. Peng Cheng Post author

            Yes that can count – training provided by third parties that benefit Australian employees can generally be counted.

  12. Masud

    Dear Peng
    Thank you very much for your help in advance,if you have any spare time can you please answare my question.
    My employer got approved his SBS on DECEMBER 2011 and he made a training plan to get his SBS approve.
    on the training plan he proposed that he shows he will spend A$2128 which is 1% of payroll for training from 2012.Then company got SBS approved for three years until 2014 December.But on 2012 he spent more than 1% of payroll which was A$900,on 2013 he spent 1000 and 2014 he spent $1100.
    My question is-he should spend according on training plan what he proposed or he is right because he is spending according on payroll.
    He proposed that $2128 because that time extra more staff used to work but end of the year payroll he was $900 .So is he right according to meet training benchmark ?
    Regards
    masud

    Reply
    1. Peng Cheng Post author

      My question is-he should spend according on training plan what he proposed or he is right because he is spending according on payroll – As explained above, the requirement is to provide training that equates to at least 1% of payroll.

      Reply
  13. Steve

    Hi Peng, I have one question regarding the training benchmak to ask you. i on 457 for two years and thinking to apply 186visa under Temporary Residence Transition. for the training benchmark, do I show one year of training expenditure? lets say my company yearly payroll is $300k, so the training cost to show is $3000 when i apply for 186? thanks.

    Reply
    1. Peng Cheng Post author

      Hi Steve,
      Yes the employer needs to demonstrate that it has complied with the training benchmark requirement.
      PC

      Reply
  14. Mac

    Hi Peng

    My wife has been sponsored and granted 457 visa on 26th of December in 2013. nearly one year now.

    She would like to apply PR after 26/12/2015.

    my question is her company should pay the training fee on each year and when is the due day to pay.

    I guess it is 26/12/2014 for this year but I am not sure. because her company has not paid it yet so far.

    Looking forward to your reply .

    Thanks.

    Mac

    Reply
    1. Peng Cheng Post author

      Hi Mac,
      Yes the employer needs to satisfy the training requirement for each 12 month period from the date that they are approved as a business sponsor.
      PC

      Reply

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