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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188 thoughts on “Standard Business Sponsorship – Training Benchmark

  1. Dinh

    Hi Mr Cheng,

    Could you please give some advice. I lodged visa 457 in December 2016 after the nomination approved. Then I was required to take Skill Assessment through Vetassess. After twice interviews I got Positive result and submitted to Immigration in August. I got response few days ago (in October), they said , the employer’s sponsorship has expired in July?? however, the nomination is still valid until this November. I think that it is unfair because it is not my fault , I have submitted everything in December 2016 and the nomination has been approved.
    Could you please give me some advice on my case? Thank you very much.

    Dinh.

    Reply
    1. Peng Cheng Post author

      Hi Dinh,
      Sorry but I can’t provide advice just based on your comment information.
      Please see Contact Us page and in relation to our Consultation Service – feel free to contact us if you need advice in relation to your visa options.
      PC

      Reply

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