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If you want to hire a skilled migrant to work for your business, you can normally pursue the standard business sponsorship route. This involves ensuring that you employ the worker in an eligible role under the skilled occupation lists published by the Department of Home Affairs (DOHA). However, standard business sponsorship may not be a suitable solution if your foreign worker does not have the required skills, qualifications and experience. In these situations, you can apply for an exception to the existing visa schemes through a labour agreement. This article explains:

  • what a labour agreement is; 
  • when you should use one; and 
  • the different streams available to you.

What Is a Labour Agreement? 

A labour agreement allows you to sponsor skilled overseas workers when the usual temporary or permanent visa programs are unavailable. This enables your business to side-step the rigid visa criteria set out by DOHA if you want to hire an employee from overseas.

Importantly, you must be able to prove that you:

  • need to fill this role for your business to operate; and
  • cannot find an Australian worker with the necessary skills.

While the existing sponsor schemes to hire skilled workers would require you to fill out various application forms, a labour agreement involves a single standalone contract with DOHA as to the criteria you need to meet.

When Should I Use a Labour Agreement?

You may seek to use a labour agreement when the existing visa schemes do not meet your needs as a business. This includes when:

  • the job you want to fill is not on the skilled occupations list; or
  • your business is seeking concessions to certain requirements.

The Job Is Not on the Skilled Occupation List

Generally, you can only sponsor foreign workers to fill a role on the skilled occupations list. This is a selection of clearly defined employment positions for which DOHA will grant a permanent or temporary working visa. At present, this is set out by the:

  • medium and long-term strategic skills list (MLTSSL);
  • short-term skilled occupation list (STSOL); and
  • regional occupations list (ROL).

You can employ workers on the MLTSSL for up to four years, with options to access the employer nominated permanent residency scheme. Those in occupations listed on the STSOL can only be employed for a period up to two years, with no pathway toward permanent residency.

If you need to fill a role with a foreign worker but their occupation is not covered by these lists, you should consider forming a labour agreement.

Gain Concessions to Certain Requirements

There may be some circumstances in which the occupation of the worker you want to hire is on the list, however, you wish to waive some of the specific skills and experience requirements. 

Indeed, each occupation contains certain standards for visa eligibility, such as the employee’s:

  • age;
  • english language competency;
  • education qualification; and
  • years of experience.

Each of these factors contribute to the employee’s desirability, as calculated under the Australian migrant points system. The employee must have a minimum of 65 points, however, they may require greater scores for more in-demand roles. You can use the Australian Government’s points calculator to determine eligibility.

If you have found a worthy candidate who does not meet these eligibility requirements, you may seek concessions to the occupation criteria under a labour agreement. The Minister for DOHA will only approve these concessions if:

  • there is a strong justification that it will benefit your business; and
  • minimum standards are met in relation to qualification and experience.

To meet these minimum standards, the employee must meet Certificate III under the Australian Qualification Framework. This means that the employee has the necessary skills to carry out independent work or further learning. They also need to have three years of relevant experience.

What Is the Timeframe for Getting a Labour Agreement?

Unfortunately, the process of securing a labour agreement can be time consuming. It typically takes four or five months to prepare a labour agreement, which involves: 

  • negotiations with DOHA; and 
  • drafting a written agreement.

It then takes another six months for the agreement to be processed by the Department. Importantly, the Australian Government is under no obligation to enter into a labour agreement.

However, once you have entered into the agreement, it will generally last for five years. 

How Does a Labour Agreement Work?

A labour agreement replaces the process of standard business sponsorship. It is the foundational document which identifies the eligible occupation for which a business can hire. You can then choose the appropriate visa program to cover the foreign worker. 

Specifically, a labour agreement may permit your business to secure a visa for a foreign worker through four programs, including the:

There are four unique labour agreement streams available. Which one you choose will depend on your specific situation. These options include:

  1. company specific labour agreements;
  2. industry labour agreements;
  3. designated area migration agreements; and
  4. project agreements.

1. Company Specific Labour Agreements

The company specific labour agreement is a suitable option if you want to develop an individual agreement solely for your business. As the name suggests, this kind of agreement is distinct to: 

  • your business;
  • the particular occupation; and
  • the visa you will use for the workers in question.

These terms should be considered and negotiated with DOHA on a case-by-case basis. You should consider this avenue when the occupation you are looking to fill is not already captured by one of the existing industry labour agreements.

To qualify for a company specific labour agreement, you will need to show that:

  • there is a genuine skills shortage or labour shortage in the Australian labour market that warrants hiring a foreign worker to perform this role; and 
  • you have undertaken labour market testing and extensive consultation with industry stakeholders.

Showing that there is a genuine labour market need for the position that cannot be filled locally is a crucial part of your application. You will need to establish that your need to recruit overseas workers is only a temporary solution. The overseas hire must only be sought to supplement your Australian workforce and the foreign workers cannot form more than one-third of your total workforce.

In your application, you will need to provide evidence that you:

  • are a registered and financially viable business that has been operating for at least 12 months;
  • are seeking to fill skilled occupations that have been omitted from the ordinary occupations lists; and
  • will meet the salary and employment conditions for the occupation.

You will also need to demonstrate that the foreign worker has the:

  • appropriate skills, qualifications and experience to carry out the role; and
  • proficient English language skills, unless the Minister of DOHA provides special permission.

2. Industry Labour Agreements

You can pursue an industry labour agreement for jobs in specific industries with fixed terms and conditions. There are a number of existing industry agreements in place, including for jobs in these sectors:

  • dairy;
  • fishing;
  • meat;
  • religion;
  • on-hire;
  • pork;
  • fine-dining;
  • advertising; and
  • horticulture.

These agreements are negotiated between DOHA and key industry stakeholders, such as unions or industry bodies. 

An industry is typically considered for an industry labour agreement when: 

  • the Department receives similar labour agreement applications from many businesses in one industry;
  • there are clear labour shortages in that industry; and 
  • there has been extensive consultation within the industry. 

Once there is an industry specific labour agreement in place, you cannot continue to negotiate the agreement or apply for any further concessions. Only the specific terms and conditions in the agreement will prevail.

3. Designated Area Migration Agreements (DAMA)

A designated area migration agreement will be relevant to your business if you operate in a geographic region that has a particular demand for labour, with a simultaneous supply of necessary skills or labour supply.

It is a formal agreement between the Australian Government and a regional, State or territory authority. It allows particular regions to respond to their unique economic and labour market conditions.

There are currently a number of DAMAs in place, including:

A DAMA consists of an umbrella agreement between the Australian Government and a particular region. It lasts five years, under which individual labour agreements may be settled with employers from that region. Those individual agreements are guided by the general terms of the DAMA and must be in connection with an occupation specified under the DAMA.

Importantly, you must be endorsed by the designated area’s representative before you can submit a labour agreement request.

A DAMA may be most suitable for smaller businesses that do not have the capacity to enter into a company specific labour agreement.

4. Project Agreements (PA)

Your business may seek a project agreement if you experience or foresee a skills shortage in the midst of the construction phase of a resource or infrastructure project.

Similar to a DAMA, a company involved in the specific project will negotiate an overarching deed of agreement with DOHA. Then, as a business involved in the project, you can negotiate and agree upon individual labour agreements in accordance with the project agreement.

Key Takeaways

If you wish to hire a migrant from overseas, labour agreements offer your business an alternative to the standard business sponsorship schemes. This is particularly useful if you want to hire an employee who: 

  • is not covered by the listed occupations; or
  • does not meet the eligibility criteria.

Depending on the circumstances of your business, you could apply for one of four potential labour agreement options. These include:

  • company specific labour agreements if your business needs a distinct agreement to continue operating;
  • industry labour agreements if your business falls under one of the nine existing sectors;
  • designated area migration agreements if you are geographically positioned in an area with specific needs or labour shortages; and
  • project agreements if your business is working on a specific project.

If you would like legal advice concerning a labour agreement, contact LegalVision’s employment lawyers on 1300 544 755 or fill out the form on this page.


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