An On-Hire Industry Labour Agreement is a specialised labour agreement that allows an approved labour hire business to sponsor overseas workers and legally place them with third-party host employers.
Under standard employer sponsorship arrangements, visa holders must work directly for their approved sponsor. On-hire arrangements, where a worker is supplied to another business, are generally not permitted unless specifically authorised under a Labour Agreement. This is why on-hire businesses must operate under a dedicated agreement negotiated with the Commonwealth.
Legislative Basis Under the Migration Act and Regulations
On-Hire Industry Labour Agreements operate under the Migration Act 1958 (Cth) and the Migration Regulations 1994 (Cth).
The agreement requires strict adherence to the classification of occupations ANZSCO and the standard classification of occupations, ensuring that nominated roles and tasks align with official standards. Employers must ensure that sponsored overseas workers fulfill the tasks outlined in the Australian and New Zealand Standard Classification of Occupations (ANZSCO) for their nominated position.
They enable sponsorship through the Labour Agreement stream of employer-sponsored visas, subject to strict regulatory and policy controls. Approval is discretionary and requires detailed evidence of genuine labour market need and appropriate worker protections.
Role of the Department of Home Affairs
The Department of Home Affairs:
- Assesses and negotiates the Labour Agreement
- Determines approved occupations and nomination caps
- Monitors sponsor compliance
- Enforces sanctions where breaches occur
Approved sponsors under the On-Hire Industry Labour Agreement have the ability to nominate occupations for the TSS 482 visa program and adjust nomination ceilings as needed. Each nomination application must be accompanied by signed copies of contracts between the employer, the skilled overseas worker, and the third-party host employer.
Given the higher compliance risk in labour hire models, applications are scrutinised closely.
Skills in Demand (Subclass 482) and ENS (Subclass 186) Visa Pathways
Approved on-hire sponsors may access:
The Subclass 482 is the primary visa subclass available under the On-Hire Labour Agreement, allowing employers to sponsor skilled overseas workers for periods of up to four years for most occupations.
Availability depends on the terms negotiated within the agreement.
How On-Hire Labour Agreements Differ from Standard Sponsorship
What Is an On-Hire Arrangement?
An on-hire arrangement occurs where:
- A worker is sponsored by one entity (the labour hire company), and
- The worker performs duties at, and for the benefit of, a separate host business.
Under the On-Hire Labour Agreement, the labour hire company remains the direct employer of the sponsored skilled overseas worker, even when the worker is assigned to a third-party host. This ensures compliance with Australian labour laws and industry agreements.
This model is common in sectors such as construction, manufacturing, logistics, healthcare, and resources.
Why Standard Sponsorship Does Not Permit Labour Hire
Under standard Subclass 482 sponsorship, a visa holder must work only for their approved sponsor in the nominated position.
Labour hire arrangements are generally prohibited because:
- They create additional risks of worker exploitation
- Monitoring employment conditions becomes more complex
- Accountability between sponsor and host may be unclear
An On-Hire Industry Labour Agreement addresses these concerns through additional safeguards and conditions.
Policy Rationale and Worker Protection Safeguards
The Government imposes stricter requirements to ensure:
- Workers receive lawful wages and conditions
- Host employers comply with workplace law
- There is no cost recovery from visa holders
- Employment terms match nomination details
Fair compensation is ensured by requiring annual earnings for skilled overseas workers to be at least $65,000 AUD for a standard 38-hour week and not less than what an Australian performing equivalent work in the approved workplace would receive.
Enhanced compliance and monitoring provisions are central to these agreements.
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Key Requirements for an On-Hire Industry Labour Agreement
Employer Eligibility and Business Model Requirements
To qualify, a labour hire business must demonstrate:
- Lawful operation and financial viability
- A genuine labour hire business model
- Strong compliance history
- Transparent contractual arrangements with host employers
- Capacity to monitor worker conditions at host sites
Labour Market Testing (LMT) Requirements
Sponsors must conduct labour market testing in accordance with legislative requirements. Employers must provide evidence of labour market testing when applying for an On-Hire Labour Agreement. Labour Market Testing (LMT) is required before accessing industry labour agreements and demonstrates that efforts were made to find suitable Australian workers before seeking overseas sponsorship. Employers must advertise the position for at least 28 days within the four-month period preceding the nomination application, and the advertisement must include the employer's name, a complete job description, and the offered salary or salary range. This typically includes:
- Advertising roles nationally
- Providing evidence of unsuccessful recruitment
- Demonstrating ongoing workforce shortages
LMT obligations apply to each nomination unless an exemption is available.
Salary Thresholds and Market Salary Rate Requirements
Sponsors must pay:
- The Annual Market Salary Rate (AMSR), and
- The applicable migration income threshold
Annual earnings for skilled overseas workers must not be less than 20% above the Temporary Skilled Migration Income Threshold (TSMIT) and must be comparable to what an Australian worker performing the same role in the same location would receive.
Workers must not be paid less than equivalent Australian employees performing the same work at the host site.
English, Skills, and Experience Criteria
Workers must meet:
- Approved English language standards
- Skilled overseas workers must meet the English language requirements of the short-term stream of the Temporary Skill Shortage visa (subclass 482), with no exceptions or concessions regarding English language proficiency.
- Skills and qualification requirements
- Nominees must possess at least two years of relevant work experience, in addition to the qualification and experience requirements specified in ANZSCO for the occupation.
- Necessary skills, qualifications, and experience are essential for eligibility, and skills, qualifications and experience must align with the requirements for the nominated occupation.
Concessions may only apply if specifically negotiated and approved.
Pag skilling ng Australian Fund (SAF) Levy
The SAF levy must be paid at the time of nomination, calculated based on business turnover and visa duration.
Concessions and Occupation Caps Under the Agreement
Approved Occupations and Nomination Caps
The agreement will specify:
- Approved occupations
- Any numerical caps on nominations
- Conditions specific to particular industries or roles
Only certain occupations are eligible under the agreement, and sponsored workers must be assigned to occupations listed in the eligible skilled occupations for the Temporary Skill Shortage visa 482 program.
Occupations must be clearly defined and justified during negotiations.
English and Skills Concessions (Where Negotiated)
In limited cases, concessions may be negotiated relating to:
- English language levels
- Work experience requirements
- Age limits (for permanent pathways)
Concessions are not automatic and must be strongly justified.
Pathways to Permanent Residence
Some On-Hire Labour Agreements include access to:
- Subclass 186 (Labour Agreement stream)
Permanent residence pathways are subject to eligibility criteria, employment duration requirements, and continued nomination by the sponsor.
Ongoing Sponsor Compliance Obligations
Reporting and Record-Keeping Requirements
Sponsors must:
- Maintain detailed payroll and employment records
- Keep contracts with host employers
- Notify the Department of material changes
- Monitor working conditions at host sites
Sponsor Monitoring and Civil Penalties
It’s important to be aware that the Department of Home Affairs may conduct:
- Audits
- Site visits
- Document inspections
And that breaches may result in:
- Civil penalties
- Sponsorship cancellation
- Sponsorship bars
- Visa consequences for workers
Fair Work Act Compliance and Wage Protections
Sponsored workers are fully protected under the Fair Work Act 2009 (Cth) and applicable modern awards or enterprise agreements.
Sponsors remain legally responsible for ensuring compliance, even where the worker is placed with a host employer.
Prohibition on Cost Recovery from Visa Holders
Sponsors must not recover:
- Sponsorship costs
- SAF levy payments
- Migration agent or legal fees (where prohibited)
Unlawful cost recovery can attract significant penalties.
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Step-by-Step Application Process
Preparing a Business Case
The sponsor must prepare a detailed submission outlining:
- Business model
- Industry need
- Workforce shortages
- Compliance framework
- Proposed occupations and nomination numbers
The business case must address the following requirements as outlined by the Department of Home Affairs: demonstrating compliance with licensing, occupational, and salary requirements to meet the relevant immigration and employment standards.
Consultation with Industry Stakeholders
Industry consultation may be required to demonstrate sector-wide labour shortages and support.
Negotiation with the Department
The Department may request further information and negotiate:
- Occupation lists
- Caps
- Concessions
- Additional compliance conditions
Nomination and Visa Application Stages
Once the agreement is approved:
- The sponsor nominates an approved occupation.
- The worker lodges a visa application under the Labour Agreement stream.
- The Department assesses eligibility and compliance.
Risks, Benefits, and Strategic Considerations
Benefits:
- Access to overseas labour for host clients
- Structured and lawful labour hire sponsorship
- Workforce scalability
- Enables employers to employ skilled overseas workers and sponsor skilled overseas workers on a temporary basis to address temporary skill shortages and fill positions that cannot be filled locally.
- Allows businesses to employ workers on a temporary basis and access overseas talent and global talent through demand visa programs, supporting workforce scalability.
- The On-Hire Labour Agreement is designed to assist employers in addressing immediate skills needs while ensuring that opportunities for job-ready Australians are protected.
Risks:
- Intensive compliance monitoring
- Increased regulatory scrutiny
- Civil penalties for non-compliance
- Reputational risk
Careful preparation and strong internal compliance systems are essential. At Australian Migration Lawyers, we assist a wide range of companies by structuring compliant on-hire sponsorship models, preparing robust labour agreement submissions, negotiating practical occupation caps, and advising on risk management frameworks. We also assist with internal compliance audits and ongoing sponsor monitoring obligations to reduce exposure to penalties and ensure long-term sustainability of the sponsorship program.
Contact us today.
FAQ
What is an On-Hire Industry Labour Agreement?
It is a specialised labour agreement allowing an approved labour hire business to sponsor overseas workers and legally place them with third-party host employers.
Why can’t labour hire companies use standard Subclass 482 sponsorship?
Standard sponsorship generally prohibits on-hire arrangements. A dedicated Labour Agreement is required to lawfully supply sponsored workers to host businesses.
Which visa subclasses are available under an On-Hire Labour Agreement?
Typically:
- Subclass 482 (Skills in Demand – Labour Agreement stream)
- Subclass 186 (Labour Agreement stream), where permanent residency pathways are included
Is Labour Market Testing (LMT) required?
Yes, in most cases labour market testing must be conducted in accordance with legislative requirements before nomination.
Are training benchmarks still required?
While formal training benchmarks have been replaced in recent reforms, sponsors must still demonstrate a commitment to training Australians and comply with Skilling Australians Fund obligations.
What compliance risks apply to On-Hire Labour Agreements?
Risks include civil penalties, sponsorship cancellation, monitoring audits, cost recovery breaches, and Fair Work non-compliance. Given the complexity of labour hire models, compliance risk is higher than in standard sponsorship arrangements.
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