Tough new labour market testing guidelines for work visa applications

As predicted in our recent articles, webinars and comments, Immigration New Zealand (INZ) has now issued specific advice and guidance to their visa processing staff on ‘labour market testing’ (LMT) and ‘employment sustainability’ requirements for Essential Skills work visa applications.  This guidance applies to applications that have already been lodged with INZ and are still being processed as well as for any future applications, so everyone is caught by this, even people who submitted their applications weeks before New Zealand entered lockdown.

Labour market test requirements

Most readers will be aware that one of the most commonly used visa categories in New Zealand is the Essential Skills category which relies on employers testing the local labour market, usually via advertising, interaction with Work and Income (WI) and other appropriate measures, in order to ascertain whether suitable New Zealanders (citizens or residence class visa holders) are either available or readily trainable to perform the role offered to a migrant worker. The onus here lies on the employer who must make a genuine attempt to attract and recruit suitable New Zealanders and through that process ensure that a New Zealander is not available before supporting a migrant’s visa application.

To date, INZ’s approach to such applications, specifically to the LMT part of the process, has been relatively ‘balanced’ with the category generally being used successfully to supplement the regional and national workforce with migrant labour where low unemployment levels made it difficult for employers to attract skilled staff. This is clearly about to change in a major way.

The internal directive released by INZ, on the face of it, appears fairly “stock standard” although the devil is clearly in the detail and confirms our prediction that all employees seeking a work visa under this category, as well as their employers, face significantly increased uncertainty when making an Essential Skills work visa application in this post COVID-19 immigration landscape.

The underlying premise for this directive is also very clear. As New Zealand businesses lay off staff, the pool of unemployed skilled labour increases and consequently the prospect of an employer finding New Zealanders to perform work previously undertaken by a migrant worker should also increase.  In addition this is enhanced by the thousands of New Zealanders who have returned home after living overseas and are now also looking for work. This means that if there is a chance that a suitable New Zealander is either available, or readily trainable, to perform a role on offer, they must be given preference and significantly increased consideration over a migrant even if the migrant has been working for the employer for a number of years. In short, applicants and employers should brace themselves for much greater scrutiny on the LMT part of the application process and consequently an increased likelihood of Essential Skills work visa applications being declined, especially if the application process (and the supporting documentation) is not managed carefully at the very outset.

We summarise some key aspects of INZ’s new approach to the LMT below with some thoughts on how to manage potential risks and other factors to consider.

INZ’s directive states that immigration officers must be satisfied, at the time of assessing applications, that there are no suitable New Zealanders available to perform the role. To do this, they may (most likely will) ask employers for updated information about the availability of New Zealanders for the role on offer.

In the past the LMT undertaken by an employer was valid for the purpose of supporting a work visa application for three months from the date a position was advertised. Going forward, INZ will be undertaking what seems to be a ‘real time’ assessment of the LMT process and will likely not be satisfied with the results of a LMT completed more than a few weeks prior to the date of assessment. The rationale here is that the conditions of the local labour market may have changed since the original LMT was undertaken and due to COVID-19 a new assessment is now required.

Practically this means that in some situations employers may have to undertake another LMT to support the application. This can include, but is not limited to, posting a new advertisement, obtaining a new ‘Skills Match Report’ from WI and obtaining up to date advice from relevant stakeholders within a particular industry including unions etc.

INZ explains that the type of evidence or information requested by them will vary according to the role offered, the region of employment and the circumstances of the employer. Note however that immigration officers are not permitted to specifically request the employer to re-advertise a role but have carefully suggested instead that employers may choose to do this if the officer is not satisfied with the LMT already undertaken.  In our view an employer would be foolish not to re-test the labour market if questioned by INZ.

The messaging here is clear. Keep on top of your LMT. Actively test the labour market so you have up to date information on hand to demonstrate that there are no New Zealanders available or readily trainable for the role on offer. We have even advised some of our clients who have an Essential Skills application pending with INZ to complete another round of advertising in case this is requested by INZ when the application is ultimately processed. The reality is that unemployment rates across New Zealand are quickly increasing and the situation is only going to get worse when the Wage Subsidy Scheme ends. Therefore, it is quite likely that an LMT undertaken now will be more favourable than one undertaken two months later and will therefore benefit the application significantly.

In addition, INZ have also stated that no work visas will be granted under the Essential Skills category for ANZSCO skill level 5 (lower skill level) occupations unless the employer is able to demonstrate to the satisfaction of an immigration officer that no New Zealanders are able to be trained to do the work. This is a clear message that the importance of the requirement to consider those New Zealanders who are ‘readily able to be trained’ will have increased significance in this new labour market.  In essence it is going to be exceptionally difficult (if not impossible) to secure a work visa for an occupation in ANZSCO skill level 5 unless one is issued as an exception to the Instructions.

It is also important to note that if a visa applicant is based onshore, INZ must provide the applicant with an opportunity to comment and provide any information the applicant considers relevant before a final decision is made. Offshore applicants will often not get this opportunity for a response and a final assessment can be made on the information INZ have on hand at that time. It is therefore extremely important for applicants to provide accurate, full and detailed relevant information at the outset when the application is submitted, in order to reduce the risk of decline and mitigate the associated expense, stress and uncertainty created by the process.

Similarly, those employers who are familiar with the LMT will quickly see that this new enhanced ‘LMT on steroids’ approach requires a carefully considered and technically sound strategy from the very outset of the application process.  The old approach will simply not cut it. Some of our employer clients have voiced concern that their old ‘tried and tested’ approach to the LMT may not work going forward and we absolutely agree. We have already started working with employers on factors to mitigate this risk going forward and are actively advising on things like the wording of advertisements, timing and duration of placing advertisements, interacting with relevant stakeholders and reviewing recruitment and screening and selection processes, resulting outcomes and employment documents.  This includes assisting our applicant clients by engaging with their employers and assisting those employers too with improving their support documentation and processes.

Ongoing and sustainable employment

In addition to the enhanced LMT approach, INZ has also said that they will also place greater emphasis on assessing whether an offer of employment is genuine, sustainable and full-time for the duration of the employment offered. They explain that the fact that an employer receives funding from the COVID-19 Wage Subsidy Scheme does not by itself indicate that the employment offered is non-genuine, unsustainable or full time, however to mitigate any uncertainty, the directive to immigration officers is that they must ask employers to confirm genuineness and sustainability. While not stipulated in the directive specifically, this confirmation could potentially take many forms including, but not limited to, providing financial information such as annual reports, bank statements, tax records, company office records, and information like whether the employer has taken the wage subsidy and whether any redundancies have been made.

To reiterate our earlier advice, now is a good time for both prospective visa applicants and their employers to get a good understanding of the changing immigration landscape and to set realistic expectations as to the likelihood of securing further work visas. In our experience new or updated immigration policies are usually applied by immigration officers more stringently and conservatively when they are first released with the approach easing over time as both the applicants and the officers adjust to the assessment process and lawyers like us challenge decisions to get the bar down to a reasonable level.

Clearly the post COVID-19 immigration environment is unprecedented and with the anticipated longer term ‘hit’ to New Zealand’s economy and resulting unemployment rate, the adverse impact of a toughened LMT may last a lot longer than previous labour market contractions we have advised on. Practically, this means all of those pursuing an Essential Skills work visa must be prepared for increased scrutiny and potentially a higher chance of a declined application.

It is not all ‘doom and gloom’ however as it will still be possible to secure work visas with careful planning/preparation and correct advice sought right at the beginning of the application process. It is better to invest the time and effort to get it right from the outset as it is much more difficult to address concerns once INZ has challenged an application.

If you require assistance or guidance with an application, whether you are a migrant employee or employer, please reach out to us.  We have extensive experience in dealing with tight labour markets and are already pooling our large team’s capability in preparing precedent documents and approaches that meet the new challenge head on at lodgement.  It is always easier approaching an application like this at the start, rather than coming in half way to try and fix an issue at that stage, but if you find yourself in that position contact us and we will advise as to whether we can assist in securing that challenged visa.