Skilled Migrant Category Resident Visa policy changes – August 2017

Significant changes that are technically challenging to apply in practice have been introduced by Immigration New Zealand (INZ).

By way of a general summary, the new Instructions clearly demonstrate a shift from attracting younger qualified migrants to New Zealand, to older more experienced and higher skilled migrants.  This is evidenced in the following changes:

  • Increasing the points available to migrants in the age band of 30-39 years of age;
  • Bonus points being awarded for skilled employment in New Zealand where the individual is being remunerated at or above $46.98 per hour (or the equivalent annual salary of around);
  • Maximum available points and quantum of points available have increased significantly across the full range of work experience claimable from two years experience to 10 years experience.

These are obvious changes to suggest a shift in focus to more people who are middle aged and have better qualifications as well as life (work) experience in roles that are paid at a higher remuneration level, as compared to the current policy that is not acutely focused at this middle age band.  Good news for applicants who are 30+ but bad news for applicants who are younger, especially those who have recently completed international tertiary study in New Zealand.

Turning our attention now to some of the more substantive changes, we outline below the changes that are the most material to consider as well as some of the fishhooks that are going to apply to this policy in practice.

Definition of skilled employment

 In order for an applicant to claim points for skilled employment, the applicant must hold either an offer or current skilled employment in an Australian and New Zealand Standard of Classifications (ANZSCO) occupation at:

  • Skill level 1, 2 or 3 and be remunerated at a rate of a minimum of $23.49 per hour (or the equivalent annual salary); or
  • Skill level 4 or 5 and be remunerated at a rate of a minimum of $35.24 per hour or (or the equivalent annual salary).

While it appears straightforward, there is much more to the ANZSCO skill assessment that needs to be considered.

Discretion has now been built into the policy to allow INZ officers to further concentrate on the overarching description of the occupation, rather than specific tasks listed under the applicable ANZSCO.  This means that more discretion and interpretation can be applied by the immigration officer considering the skilled nature of the role, rather than assessing what is usually quite a straightforward and simple objective list of tasks that will confirm visa eligibility.  Of more concern is the note placed in the assessment criteria that advises the following:

“Determining whether an applicant’s employment substantially matches ANZSCO occupation description may require consideration of the scope and scale of the employer’s organisation and operation (the size of the operation, the number of staff and managers, and whether the management functions are centralised in head office or undertaken by other managers).”

This is a clear warning to both smaller employers who do not have significant operational scale to claim that the role in question is at the skilled level indicated, and large employers where there is substantial management overlay where an inference could be drawn that the management skill claimed for in certain occupations is actually held by others further up an inline management structure.

There is going to be significant disputes and litigation over this particular area of the policy, and our view is that we are simply going to be inundated with complex visa arguments and declines that need to be appealed until this particular part of the policy has been worked through from both sides. Employers need to be very careful about simply concluding that a person meets the ANZSCO title and as the pay rate matches their employee will qualify for residence.  There is much more to the process than meets the eye, and we are in for a long period of inconsistent and incorrect decision making.

Remuneration calculation

The second point to note in relation to the skilled nature of employment and the rate of pay that applies, is how INZ will calculate the rate of pay.  Some employees may well believe that they meet the rate of pay required under the particular ANZSCO concerned, but ultimately find out that, based on the structure of the remuneration, certain value cannot be claimed as anticipated, therefore, their hourly rate may well fall below the level required.

Generally, if the employment agreement specifies payment by salary, the payment per hour is calculated by dividing the annual salary by 52 weeks, followed by the number of hours that will be worked each week.  Importantly, however, if the employment agreement specifies payment other than by hour (including payment of salary) and the hours of work are “variable”, then the immigration officer may request evidence of the range of hours to be worked to determine whether the variance in hours worked would result in the per-hour rate of pay being below the applicable remuneration threshold.

Hours of work per week will be considered “variable” if the employment agreement contains a provision allowing the employer to request or require the employee to work additional hours from time to time.  Where this is determined to be the case, or where the agreement otherwise specifies a range of hours, the maximum hours will be used to calculate whether the relevant payment threshold is met.

As most employers will understand, this has quite significant and far-reaching consequences for salaried employees and other employees where hours vary from time to time, rather than being completely fixed. We do not think INZ has considered this carefully. It is easy to imagine a professional service employee being engaged to work a standard 37.5 hours per week, but those hours would vary from 37.5 hours per week to 60 + hours per week.  If the maximum variable hours of employment are taken, it would not take substantial variation for the hourly rate to fall below the standard required.

While INZ have subsequently clarified this part of the policy by advising that they are “not interested in going after” employers whose salaried staff work over contracted hours on occasion to complete urgent work (like lawyers for example), and they will disregard “sporadic increases in hours”, it is difficult to determine where the line will be drawn as the policy does not make that allowance.  They have advised that they will want to know range of hours “normally” expected for an employee, although for many busy professionals working 60+ hours per week would be common place.

It may well be that employment agreements and terms of employment need to be adjusted to align with this policy issue to avoid migrant employees being prejudiced by this application of policy.  It is important that employers are now aware of this particular issue, especially with existing employees who are already on employment agreements which may attract this unfortunate application of remuneration determination when they apply for residence (or their next work visa extension).

Apart from the hourly rate calculation, what else do INZ include and exclude from this calculation?

For the purposes of calculating an applicant’s remuneration over and above wage/salary, this includes:

  1. The agreed value of any reasonable deduction from the applicant’s salary from wages for goods or services; and
  2. In the case of accommodation provided in connection to the employment:
  • The agreed value of any reasonable deduction of the applicant’s salary or wages for that accommodation; or
  • If accommodation is provided by the employer, and there is no deduction from the applicant’s salary or wages for that accommodation, the market rental value of the accommodation provided; or
  • If an accommodation allowance is provided, the amount of that allowance.

In relation to remuneration that is excluded, this is simply referenced as “other employment-related allowances”, for example tool or uniform allowances, and importantly, bonuses which are dependent upon performance.  The latter is very important to note as we suspect a fair number of employers may be caught out by this particular policy requirement.  It may well be, in due course, that such bonus arrangements are negated in favour of a higher hourly rate and kpi’s around that performance to assist you to manage employee output.

Recognition for work experience

The policy has also been shifted to create difficulty for migrants to claim points for all of their work experience. Previously, all work experience could be claimed for points if it could be demonstrated that the work experience in question was (generally) related in some form to the offer of skilled employment the migrant held. This is no longer the case. Work experience points can now only be claimed where the immigration officer is satisfied that work experience was in itself skilled, and the applicant was suitably qualified by training experience for that work experience. For example, the ANZSCO for a lawyer advises that a lawyer is considered to be suitably qualified and/or experienced if they hold five years of relevant work experience. Under the new system, if the applicant in question did not hold the required qualification and worked as an intern for three years, a paralegal for two years, and a solicitor for three years (as at the date they are applying), they will only be able to claim points for the latest three years as a solicitor, not the work experience points for the paralegal or intern roles because they would not be considered skilled.

This particular policy will create significant confusion among applicants and will also miscalculate their point eligibility assessments, as it is very difficult to understand and apply in practice.  Quite significant points are on offer for work experience, therefore, it is likely that this particular area will result in increased litigation and visa declines/appeals for applicants who have not understood this particular area accurately.

There are many more changes that have been implemented to the policy, although in order to keep this article down to a reasonable length we have focused on the main significant aspects we have identified (thus far).  What is quite clear is that applying for residency under the SMC has now got to a point where it is so technically complicated it will be very difficult for most applicants to determine their own eligibility with certainty prior to the submission of an application.

We are not afraid to admit that we have found it very difficult ourselves to get our heads around these changes, even with a finer understanding of the existing policy that has been derived from many years of combined experience in this area.  The short of it is, many migrants who are under the age of 30 and are around two-to-five years into their careers, are going to find it increasingly difficult to qualify for residency under this policy.  Therefore, employers  who have traditionally supported and obtained residency for a number of employers who are under the age of 30, may well find it very difficult to convert those applicants into a residence position now.  They now may wish to look at the Employer Accreditation process as a way to create a residency pathway for those younger applicants.  However, changes have been made there too.

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