Who Can Sponsor Foreign Employees – Eligibility Requirements for Employers

To sponsor foreign employees, your business must meet strict eligibility criteria set by the Australian Department of Home Affairs. The system is designed to fill genuine labour shortages with workers who cannot be sourced domestically.

Your company must be a legitimate, operating business with an Australian Business Number (ABN), current tax file number, and demonstrated employment history. Sole traders and partnerships can sponsor, but the business structure must be genuine and active.

Financial viability is non-negotiable. The Department assesses whether your business can afford to employ a skilled worker at market salary rates. You’ll need to provide recent financial statements, tax returns, and evidence of sustainable turnover and profitability. Businesses operating at a loss face rejection. New companies may still have options to pursue a sponsorship option. However, there will be additional hurdles to overcome and show the Department that you are financially viable.

Compliance history matters significantly. Outstanding tax debts, undisclosed liabilities, or previous migration law breaches make sponsorship difficult or impossible. The Department conducts background checks on directors and owners; criminal convictions involving fraud or dishonesty can disqualify you entirely.

The position itself must be genuine. You cannot sponsor a foreign worker simply because they’re cheaper. The role must exist within your actual operations, require genuine skills, and represent a real vacancy you’ve attempted to fill locally.

The Three-Stage Sponsorship Process Explained

Sponsoring a skilled worker involves three distinct stages, each with its own approvals, timelines, and documentation requirements.

Stage 1 – Sponsor Status

Before nominating any individual worker, your business must become an standard business sponsor (SBS).

The SBS application requires your ABN, financial statements covering the last two financial years, current workforce details, and information about directors and owners. You’ll also provide details of workplace policies and previous recruitment practices.

Processing times typically range from four to eight weeks* for straightforward applications, with complex cases taking three to four months. Once approved, accreditation is valid for five years, though the Department can conduct audits at any time if non-compliance is suspected. You must maintain records, notify the Department of significant business changes, and comply with all employment law requirements.

*As of August 2026, may vary at different times

Stage 2 – Nominating a Skilled Worker

Once your SBS is approved, you can nominate specific workers for sponsorship.

The nomination must include detailed job information: position title, duties, required qualifications, experience level, and salary. You must demonstrate labour market testing, genuine attempts to recruit Australian workers through at least four weeks of advertising, documented applications, and clear explanations of why candidates were unsuitable.

The nominated worker must meet skill requirements, with qualifications matching the position and relevant experience. English language proficiency is required for most skilled workers. Nomination approval usually takes six to ten months, with approval valid for 12 months before a visa application must be lodged.

Stage 3 – Visa Application by the Employee

The final stage is the employee’s visa application. While their responsibility, your role as sponsor continues through providing employment contracts and confirming position details.

The visa application can be lodged immediately after the nomination application is submitted. However, the Department must make a determination on the nomination application before the visa application will be considered.  

Labour Market Testing Requirements and Genuine Position Obligations

Labour market testing is mandatory and must be conducted before nominating the worker. You cannot retroactively claim testing after hiring someone overseas.

Advertisements must be genuine and professional, posted on at least two mainstream job boards (Seek, Indeed, LinkedIn) for at least four weeks and include specific detail about the job. The Department expects to see documented evidence: job advertisements, applications received, interview notes, and written explanations of why Australian applicants were unsuitable. Generic dismissals won’t satisfy the Department; be specific about experience gaps or qualification shortfalls.

Your business must actually need this worker to perform real duties contributing to your operations. The role must be documented in your business structure and aligned with your activities. Salary must meet the market rate for the occupation in your location; significantly below-market rates raise red flags suggesting the position isn’t genuine.

Understanding Employer Sponsorship Obligations and Compliance

Becoming a sponsor creates ongoing legal obligations extending far beyond initial approval. Non-compliance can result in penalties, loss of sponsorship privileges, or legal action.

You must provide the sponsored worker with promised employment conditions.  Changes to employment terms usually require Department notification and in some cases, new nominations.  You must also pay the employee the minimum wage required by that specific visa, which is updated annually by the Department.

Record-keeping is extensive. Maintain documentation about employment, including payroll records, tax filings, superannuation contributions, and any performance management. Records must be kept for at least five years. The Department conducts audits; incomplete or inconsistent records result in penalties.

You must comply with all Australian employment law, including the Fair Work Act. Sponsored workers have identical employment rights as Australian citizens. Underpayment, failure to provide superannuation, or unsafe working conditions breach the law.

Notification obligations require informing the Department of significant changes: role changes, redundancy, unpaid leave, or employment cessation. Failure to notify can result in sponsorship cancellation and future disqualification ranging from months to several years.

Cost of Sponsoring a Foreign Worker – What to Budget

The financial commitment extends beyond salary. Understanding all costs helps determine whether sponsorship is viable.

Nomination fees vary by visa subclass. Visa application fees (paid by the worker) typically cost $3500-$4500 for temporary visas and exceed $9000 for permanent residency. Skills assessment fees range from$1,000 – $3,000, while health and police checks cost $500-$800.

Recruitment and advertising costs during labour market testing range from $500-$2,000. Professional migration agent fees typically cost $3,000-$6,000, though many employers find this investment worthwhile to avoid costly errors with an incomplete or incorrect application.

Salary obligations are the largest ongoing cost. You must pay at least the market rate plus superannuation contributions (currently 11.5% of ordinary time earnings).

Pro Tip – Many employers underestimate total sponsorship costs. Calculate salary, associated fees, compliance costs, and management time. Compare this to recruiting and training an Australian worker to determine whether sponsorship is genuinely cost-effective.

Common Mistakes to Avoid When Sponsoring Skilled Workers

• Inadequate labour market testing is the most common error. Posting a generic advertisement for two weeks with no applications suggests the advertisement wasn’t attractive or salary wasn’t competitive. Genuine testing involves professional advertising, documented review of all applications, and clear reasoning for rejections.
• Underestimating salary requirements triggers investigation and rejection. If you cannot afford the market rate, sponsorship isn’t viable.
• Poor documentation delays processing. The Department bases decisions on submitted materials; vague labour market testing documentation, incomplete financials, or lacking employment contracts trigger clarification requests.
• Misunderstanding the genuine position requirement leads to failure. Roles must reflect actual business needs and exist in your organisational structure. Fabricated positions are quickly identified.
• Failing to plan for ongoing compliance is another mistake. Sponsorship obligations continue after visa approval. You must maintain records, pay correct salaries, comply with employment law, and notify the Department of changes.

Watch Out – Attempting to circumvent labour market testing or misrepresenting a position’s genuine nature breaches migration law and can result in criminal charges. The Department takes fraud seriously. Always be honest and thorough in applications.

Sponsoring a foreign skilled worker is a structured, regulated process requiring careful planning, accurate documentation, and genuine business need. The pathway is clear: establish accreditation, nominate the worker, support their visa application, and maintain compliance throughout employment.

At FC Lawyers, we’ve guided many Australian businesses through this process. Our migration law expertise helps employers navigate accreditation requirements, prepare thorough nominations, and understand ongoing compliance obligations. If you’re considering sponsoring a skilled worker, FC Lawyers’ migration team can help assess whether sponsorship is viable and guide you through each stage.

For detailed guidance on your specific situation, contact FC Lawyers on 1800 640 509 or visit our website to book a consultation. Understanding your obligations from the outset protects your business and ensures a smoother sponsorship process.

Frequently Asked Questions

How much does it cost to sponsor a foreign employee?

The cost of sponsoring a foreign worker varies depending on visa subclass, application complexity, and whether you engage a migration agent. Nomination fees and visa application charges apply at different stages. Pricing depends on your business structure, the worker’s occupation, and labour market testing scope. For accurate costs specific to your situation, contact FC Lawyers for a tailored quote.

What are the key eligibility requirements for employers to become an SBS sponsor?

To become an sponsor, your business must demonstrate business viability, comply with employment law, maintain proper record-keeping systems, and meet financial requirements. You’ll need to show you can meet sponsorship obligations, including providing genuine positions and complying with work rights standards. The Department of Home Affairs assesses your application against these criteria. FC Lawyers can guide you through the accreditation process.

What is labour market testing and why is it required?

Labour market testing requires you to demonstrate that no suitable local workers are available for the position before sponsoring an overseas worker. You must advertise the role, document recruitment efforts, and show genuine attempts to hire locally. Testing requirements vary by visa subclass and occupation list status. This protects local employment opportunities while allowing skilled worker visas when genuine labour shortages exist. We assist clients with a review of advertising prior to posting to help ensure you meet Department requirements.

What happens if I fail to meet my employer sponsorship obligations?

Failing to meet sponsorship obligations can result in cancellation of your accredited sponsor status, financial penalties, and reputational damage. Breaches include not providing genuine positions, failing record-keeping requirements, or not meeting market salary rates. The Department of Home Affairs conducts compliance audits. Serious breaches may prevent future sponsorships. Proper record-keeping and understanding your obligations from the start prevents costly compliance issues.

Contact our team today to discuss your options when sponsoring foreign employees or any other immigration questions you may have.