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All change! What is happening with New Zealand’s work visa system?

October 7, 2019

Nicola Tiffen Partner

The proposed changes to New Zealand’s visa system, which started out with a government consultation at the end of last year, are now underway.

Work-to-residence visa – significant minimum salary increase

Work-to-residence visas are available for employees of employer accredited under the current accreditation scheme. These visas lead directly to residence, after two years of employment, and are a cost-effective means of progressing migrant employees towards residence.

On 7 October, the minimum level of remuneration for this type of visa increased from NZ$55000 per annum (NZ$26.50 per hour) to NZ$79560 per annum (NZ$38.25 per hour). Further, the entire work-to-residence scheme will be phased out by 2021.

The change is significant. This visa was the only means for many employees to obtain residence. The only remaining option is the Skilled Migrant Category which requires “skilled employment”, which is strictly defined. This category also has a very high English language test requirement.

There was an urgent rush of applications to move as migrant employees into the scheme before the salary levels increased. However, employers should continue to use the scheme while they can, if the increased salary level is commercially viable, of course.

What are the main work visa changes?

From mid-way through next year, the occupation definition and skill rankings system, the Australian and New Zealand Standard Classification of Occupations (ANZSCO) will no longer be as determinative in work visa applications. Instead, the duration and type of visa will be dependent upon remuneration. Interestingly, ANZSCO will remain determinative for Skilled Migrant Category residence visa applications. Therefore, the immigration system is becoming more complex, not simpler as claimed by the government.

Low skilled migrants

Employers wishing to recruit into positions paying less than NZ$25.00 an hour will be required to work with Work and Income to meet labour market requirements. These will not be met if the agency believes it has suitable candidates. This is unless those candidates fail to attend the interview or a drug test. This is a significant tightening from the current system, despite almost record low unemployment in New Zealand.

The government will also institute agreements with select industry sectors, to stipulate what, if any, labour market checks are required for particular occupations. However, each sector will need to offer some reciprocity, such as standardised, industry-wide wage increases. The first agreement will be negotiated in the next few weeks, with the aged-care industry.

Low-skilled employees will continue to only receive a maximum of three years of work visas, before having to spend a minimum of 12-months abroad, referred to as a “stand down period”. This is causing wide-spread concern. The first set of affected employees will be required to leave the country in August 2020. Some estimates indicate that 2000 migrants will be forced to leave the aged care sector alone.

Low-skilled employees will be able to bring their partner or spouse to New Zealand, which they cannot currently do. However, the partner or spouse will not be able to work, unless an employer supports a work visa, which is likely to include a labour-market check process. Therefore, this policy will certainly place additional financial pressure on low-income migrant families.

Higher-skilled migrants

Employers wishing to recruit employees into positions that pay NZ$104,000 per annum will no longer need to meet a labour market test. Also, the employee will be able to progress to residence, after two years. Also, employers recruiting migrants to work outside of the main cities (Auckland, Hamilton, Wellington, Christchurch and Dunedin), where the position pays at least NZ$25.00 an hour, will also no longer need to pass a labour market check. However, there will be no simple pathway to residence, unless the employees earn at least NZ$104,000 per annum.

Employers recruiting into the cities, for roles paying less than NZ$104000 per annum (NZ$50.00 per hour), will need to test the labour market in an approved manner. With the exception of employees earning less than NZ$25.00 per hour, it is unclear how this will be structured. There will be occupation shortage lists for each city, which will inevitably place some reliance back on the current ANZSCO based assessment system.

Compulsory accreditation (employer licensing)

By 2021, all migrant employers will require accreditation. Employers recruiting between one and five migrants will require “standard accreditation” which will simply involve meeting standard employment law and industry standards. Employers recruiting more than five migrants, which will include those currently on the payroll, will need to meet higher standards. These will include specific commitments to upskilling New Zealanders, and improving pay and conditions.

Does this affect pathways to residence?

Yes, one of the main routes towards residence, the work to residence scheme, based on the current employer accreditation regime, is being phased out. Therefore, migrant employees will need to meet strict English language requirements, as well as minimum remuneration and “skilled employment” requirements, to obtain residence through the Skilled Migrant Category. This is unless, of course, they earn at least NZ$104,000 per annum (NZ$50.00 per hour).

Will this affect businesses transferring employees to NZ?

It will not affect employees being transferred to New Zealand, as intra-company transfers, or for specific time-bound purposes, which pose no risk to opportunities for New Zealanders. Therefore, it is still possible to obtain three year work visas for employees that need to be sent to New Zealand to assist a subsidiary here. However, if the business or those employees wish the arrangement to become permanent, there will be less surety of gaining residence, unless the employee is earning over NZ$104000 per annum (NZ$50.00 per hour).

What do the changes mean?

It appears that, like a lot of countries, New Zealand is seeking to create an immigration system geared towards limiting the pathways for lower skilled migrants to settle permanently. This is despite the fact that a lack of labour, both skilled and unskilled, has been identified as a limit on New Zealand’s economic growth.

It is likely that the policy will have significant impact on a number of the country’s highest earning sectors, such as aged care, tourism and hospitality, and also the agricultural sector. Employers operating in these sectors will struggle to retain the employees they need, beyond three years, and potentially even to initially support migrants to obtain visas to fill vacant posts.

However, for those migrants and their employers operating in sectors with higher remuneration levels, such as medical services and the IT sector, the changes may have some benefit, once each employer completes the new compulsory accreditation (licensing) requirements.

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