If you are an international student or a skilled worker looking at permanent residency through employment in Sydney, the Employer Nomination Scheme (subclass 186) is the direct-entry, employer-sponsored visa that grants permanent residence. In the three financial years from 2019 to 2022, the Department of Home Affairs recorded a 16% refusal rate for all 186 applications processed. That means one in six nominations did not succeed—often for reasons that could have been addressed before lodgement. The data points to a handful of recurring refusal triggers, and understanding them before your employer offers a nomination can save a year or more of waiting only to receive a s.57 natural justice letter.
The 186 visa in Sydney operates against a specific labour market. The city absorbs around 38% of Australia’s skilled migrants each year, with industries such as ICT, engineering, healthcare, and construction consistently listed on the NSW Skilled Occupation List. Study NSW reports that international education contributes $9.6 billion to the state economy, and roughly 40% of skilled migrants in Greater Sydney originally entered Australia on a student visa. Many of these graduates move through the 186 pathway after a 482 or directly from a student visa if they secure a willing employer and a positive skills assessment. But market realities and strict evidentiary requirements create friction points that show up repeatedly in refusal notices and Administrative Appeals Tribunal (AAT) files.
This article draws on aggregated patterns from publicly available Departmental data, case notes shared by Sydney-based immigration practices, and institution-level employment reports from the University of Sydney, UNSW, UTS, Macquarie University, and Western Sydney University. It examines the top five refusal reasons with real-case narratives, then provides a practical FAQ for applicants and employers navigating the 186 in Sydney.
The Sydney Context: Numbers Behind the Refusals
Before breaking down the refusal reasons, it helps to understand the volume and outcomes. According to the Department of Home Affairs’ annual report, almost 60% of all 186 visa grants in 2022–23 went to applicants in NSW. Processing times have stretched: the median duration from nomination lodgement to visa grant sits at 14 months for the Direct Entry stream across the 2022–24 period. In an internal review of 180 refusal decisions by NSW-based Registered Migration Agents, certain themes emerged:
- 34% of refusals involved an employer failing to demonstrate compliance with the training levy or previous training benchmark requirements.
- 27% were refused because the Department was not satisfied the nominated position existed or was genuinely required.
- 19% were rejected due to concerns about market salary rate evidence—a figure that rises in Sydney’s high-cost labour market where benchmarking against outdated data can quickly lead to an adverse assessment.
- 11% of refusals related to the applicant’s skills, English ability, or health not being met at time of decision.
- The remaining 9% clustered around adverse information about the employer or sponsorships cancelled for business restructuring.
The University of Sydney’s 2025 Graduate Outcomes Survey notes that while 72% of international graduates in STEM fields find employment within six months, only one in three of those roles meets the skilled migration income threshold for a permanent sponsorship at the outset. Employers, especially small and medium enterprises that form the backbone of Sydney’s tech and startup ecosystem, often underestimate the administrative and evidentiary load required for the nomination stage—and that mismatch is where refusals begin.
Refusal Reason 1 – Training Benchmark and Skilling Australians Fund Non-Compliance
For employers seeking to sponsor, meeting the training requirement is a two-stage test: historical training expenditure (if the business has been an approved sponsor previously) and current commitment through the Skilling Australians Fund (SAF) levy. The SAF levy must be paid at nomination, and the amount varies based on business turnover. For a business with less than $10 million in annual revenue, the levy is $3,000 per year for each 186 nomination; for larger businesses, it is $5,000. But the compliance pitfall often lies in the documentary evidence of past training, not the levy itself.
A Sydney structural engineering firm learned this the hard way. In 2023 it lodged a 186 nomination for a civil engineer who had worked for the firm for two years on a Temporary Graduate visa followed by a 482. The firm had an annual turnover of $4.2 million and had been a standard business sponsor since 2019. The Department requested proof that the firm had expended at least 1% of its payroll on training Australian employees in the last sponsorship term. The firm submitted receipts for a single conference attendance and an online course subscription. The delegate refused the nomination, noting that the expenditure was $2,440 against a payroll of $680,000, falling short of the $6,800 benchmark. The refusal letter cited Regulation 5.19(5)(f) and emphasised that incidental or one-off expenses do not demonstrate an ongoing commitment to training unless they meet a structured program that is benchmarked against the industry training fund model.
Another case from the Parramatta area involved a medical billing company that attempted to rely on quarterly subscriptions to an industry news portal as “training.” The Department rejected the claim because the spending was not linked to accredited courses, nor was it an arrangement with a registered training organisation. The two-year delay before the nomination was finally refused cost the applicant an expiring skills assessment from Engineers Australia; he eventually left Australia and applied for a skilled independent visa offshore.
By 2024, the Department had tightened its interpretation of training evidence. A UTS-sponsored research project on migration pathways, drawing on interviews with immigration lawyers, found that 41% of small businesses in Sydney had never conducted a training audit before lodging a nomination, and that among those who had a refusal, half had not kept payroll records in a format that satisfied the processing officer. The lesson from Sydney cases is simply this: training expenditure must be accrued across the sponsorship period, clearly attributable to Australian citizens or permanent residents, and capable of being mapped to nationally recognised courses or structured workplace learning.
Refusal Reason 2 – Position Genuineness and Organisational Need
The Department of Home Affairs wants to see that the nominated position actually exists, is consistent with the nature of the business, and is not created solely to secure a migration outcome. When case officers review a 186 nomination, they often request organisational charts, financial statements, project contracts, and evidence that the role has been or will be performed on an ongoing basis for at least two years after visa grant.
In a 2022 refusal that reached the AAT, a Sydney-based digital marketing agency with 12 employees nominated a Marketing Specialist. The business had operated for five years but had never employed a full-time marketing specialist; marketing tasks had been handled by the founder and a part-time assistant. The applicant was a recent UNSW Master of Commerce graduate who had been working as a volunteer for the agency. The AAT affirmed the Department’s decision, noting that the addition of a six-figure-salary role in a small business that had demonstrated no prior need for a dedicated marketing function, and whose revenue had declined in the previous quarter, raised questions about whether the position would survive an economic downturn. The Tribunal also considered that the director’s personal friendship with the applicant undermined the arm’s-length nature of the employment offer—a warning sign described by Sydney migration specialists as “wishful hiring for a visa outcome.”
Another refusal pattern involves hospitality roles in Sydney’s CBD. A restaurant group attempted to nominate a Café or Restaurant Manager for a venue that had been operating for six months. The wage proposed was $70,000 plus superannuation, aligning with the market salary rate for the occupation. However, the Department issued a request for further information after noting that the venue had fewer than 30 seats and that the owner-manager was present full-time. The employer could not demonstrate why a second managerial role was necessary. The business pulled the nomination before a formal refusal, but the applicant lost the application fee and 10 months of processing time. These cases illustrate that even when wage thresholds are met, the Department scrutinises whether the business has a genuine, ongoing structural need for the role, independent of the applicant’s immigration goals.
Refusal Reason 3 – Market Salary Rate Evidence and the Sydney Premium
Under the Migration Regulations, the nominated salary must meet both the Temporary Skilled Migration Income Threshold (currently $73,150) and the market salary rate for the occupation in the same location. In Sydney, many occupations attract a premium above the national average. A software developer in the Sydney market, for example, is typically paid between $105,000 and $140,000 depending on specialisation and years of experience, according to the 2024 Hays Salary Guide. When an employer lodges a 186 nomination with a salary of $80,000, the delegate compares it to data from the ABS, job advertisements, and reputable salary surveys. A gap of $25,000 or more often triggers market salary concerns.
Seven out of twenty case files reviewed by a Sydney-based consultancy were refused because the market salary evidence was insufficient or not current. One fintech startup in Barangaroo nominated a Developer Programmer at $78,000, arguing that the position was entry-level and that the candidate had only one year of experience. The Department obtained a job advertisement for an equivalent role at $95,000 from a competitor startup and asserted that the nominated salary did not reflect what an Australian worker would be paid. The employer appealed on the grounds that its advertisement was placed on a university careers board and targeted recent graduates, but the AAT upheld the refusal, finding that the benchmarks must consider the broader metropolitan market, not a narrow employer-defined subset.
A separate case from Western Sydney University’s recruitment data reveals that marketing specialists in the Parramatta region are frequently remunerated between $85,000 and $100,000. A manufacturer in Penrith offered $72,000 and was refused, despite citing a Western Sydney-specific talent shortage. The Department’s policy guidance makes clear that the market salary rate is not regionally sub-divided within a city—Greater Sydney is treated as one market for most occupations. Employers on the urban fringe must therefore reference city-wide data, which can inflate salary expectations beyond their budget. Failing to re-benchmark salary data before lodgement is one of the most administratively simple but financially costly mistakes, because a salary-related refusal is rarely overturned without a new application.
Refusal Reason 4 – Applicant’s Skills and English Evidence Lapsing at Decision Time
Many applicants assume that having a positive skills assessment and an English test result at lodgement is enough. However, the 186 Direct Entry stream requires that both be valid at the time of decision, not just at lodgement. With a 14-month median processing time, it is not unusual for skills assessments to expire. Engineers Australia’s migration skills assessment is valid for three years, which gives some breathing room, but IT assessments from the Australian Computer Society are valid for only two years. English test results from IELTS or PTE Academic are valid for three years, but applicants who delayed their test to align with application intake can find themselves dangerously close to the expiry date by the time the case officer picks up the file.
A Macquarie University graduate who held a 485 visa and secured a 186 nomination as an ICT Business Analyst encountered this problem. His ACS assessment was obtained 10 months before lodgement, and his PTE scores were achieved 12 months before lodgement. The processing extended to 16 months—two months beyond the ACS validity—and although he had not changed employment and his skills had only deepened, the Department requested a fresh assessment. By the time he booked a re-assessment, the ACS’s turn-around time was 12 weeks. The nomination was refused because the skills requirement was not satisfied at the time of decision. The employer re-lodged the nomination four months later, but the applicant had to leave Australia during the bridging period to reset his visa status, which interrupted the continuity of his employment.
A similar case involved a Registered Nurse nominated by a private hospital in Camperdown. The applicant’s AHPRA registration lapsed during the processing window due to a delay in renewing the registration. The Department wrote to the applicant asking for evidence of current registration but the letter was sent to an old email address. The refusal was procedural, but the consequences were severe. According to the University of Sydney’s International Student Services unit, which tracks visa outcomes for its alumni, approximately 15% of 186 refusals among health professionals stem from registration or licensing documentation not being maintained current during long processing queues. The practical advice from migration professionals: re-sit English tests just before lodgement, and schedule a skills assessment renewal if the processing estimate might lap the three-year window.
Refusal Reason 5 – Adverse Information About the Employer and Business Integrity
The Department has broad powers to refuse a nomination if it holds adverse information about the business or its directors. Adverse information can include a prior sponsorship bar, a significant non-compliance with workplace laws, or findings made by the Fair Work Ombudsman. For smaller Sydney businesses, the most common trigger is unpaid wages or underpayment claims that result in enforceable undertakings.
A construction company based in Alexandria sponsored multiple 457 and 482 visa holders. In 2021, the Fair Work Ombudsman investigated the company after complaints from two sponsored workers and found systematic underpayment, back-taxing practices, and a failure to provide prescribed employment records. The business entered into an enforceable undertaking and repaid $140,000 in back wages. When it later lodged a 186 nomination for a Project Builder, the Department refused it on the basis that the employer had breached its sponsorship obligations and the recent undertaking constituted adverse information that suggested the employer was not a person of integrity. Both the ADR and the AAT affirmed the refusal, even though the applicant was not personally involved in the wage violations. The business lost its standard business sponsorship and the directors were barred for five years.
Adverse information can also be triggered by a change in business structure. A Sydney IT consultancy underwent a company restructure, transferring employees to a new entity but failing to notify the Department. The Department found that the new entity, which was the one lodging the 186 nomination, did not meet the requirements for sponsorship because it could not demonstrate a trading history of at least 12 months, and its predecessor entity had ceased operating. The applicant’s 186 nomination was refused, and the 482 visa held by the applicant was subsequently cancelled because the former employer no longer existed. This case is frequently cited in Sydney migration law seminars as a cautionary tale about corporate restructuring and notification obligations.
How Much Does a 186 Refusal Cost? A Real-World Timeline
For an international student turned skilled worker in Sydney, the cost of a refused 186 nomination is not just the $4,640 visa application fee. It includes the bridging visa anxiety, the inability to access Medicare until grant (in many cases), the potential loss of employment if the uncertainty becomes untenable, and the reputational damage with an employer who may not be willing to sponsor again. In the 20-case analysis conducted by a Sydney-based practice, the average total cost of a refusal—including lost wages from job transitions, legal fees for AAT review, and new application fees—was $18,200. The longest gap between refusal and a subsequent successful grant was 38 months, a period that included a remittal from the AAT and a new nomination. For someone paying Sydney rent and trying to build a life, that gap can derail plans for a housing deposit, family settlement, or naturalisation timelines under the five-year eligibility pathway.
Five-Point Pre-Lodgement Checklist
Based on the refusal patterns above, before an employer submits a 186 nomination in Sydney, the following checks are discussed in migration circles:
- Training audit: Has an independent review of payroll records and training receipts been conducted against the 1% benchmark or industry training fund lodgement requirements, and does the evidence span the entire sponsorship period?
- Market salary refresh: Has the employer obtained at least three data sources—such as a salary survey (Hays/Robert Half), ABS occupation profiles, and current Seek/Indeed job advertisements—that confirm the nominated salary sits at or above the market rate for Greater Sydney?
- Documentary proof of position need: Can the employer provide recent organisational charts, financial statements showing revenue stability, new project contracts, or client growth data that demonstrate the role is ongoing and not a visa conduit?
- Applicant validity check: Are the skills assessment and English test both valid for at least the next 15 months, and does the application acknowledge that an expired assessment will lead to a section 57 letter?
- Adverse information screening: Has a director’s declaration been reviewed for any outstanding Fair Work claims, sponsorship breaches, or unresolved ATO audits that could trigger adverse information findings?
FAQ
Does the 186 visa require an employer to prove that they cannot find an Australian worker?
For the Direct Entry stream, there is no labour market testing requirement as strict as the 482 visa. However, the employer must demonstrate that the position is genuine and the salary and conditions comply with Australian workplace laws. In practice, many Sydney employers still run a local advertisement and keep records in case the Department raises concerns about genuineness. If the business has recently made staff redundant, additional scrutiny may apply.
Can a 186 visa be lodged while the applicant holds a student visa?
Technically yes, if the applicant meets all criteria including skills assessment and three years of relevant work experience. But in practice, most international students do not meet the work experience requirement before graduating. A common pathway is student visa → Temporary Graduate visa (subclass 485) to gain local experience → 482 visa to build additional experience → 186 Direct Entry or Transition stream. Sydney university career services report that the entire pathway can take five to seven years.
What happens if an employer withdraws the nomination midway?
If the nomination is withdrawn before a decision, the visa application cannot proceed and the applicant will receive a refund of the second instalment (visa application charge) but not the nomination fee. The applicant must leave Australia or find another sponsor. In Sydney, several documented cases show that a withdrawal is treated more favourably than a refusal for future applications, as it does not create an adverse record under section 48.
Are Sydney’s public universities exempt from the training benchmark?
The sponsorship framework treats educational institutions differently. Public universities and TAFEs in NSW are generally exempt from the 1% training benchmark if they can show that their training expenditure is consistent with their role as an educational provider. The Skilling Australians Fund levy still applies. However, a Macquarie University nomination was refused in 2023 when a subsidiary entity of the university, set up for commercial research contracts, tried to claim the same exemption and was deemed a non-exempt entity by the Department.
How long can one expect to wait for a 186 visa decision in Sydney?
As of late 2024, the published median processing time for the Direct Entry stream is 14 months, with the 75th percentile at 18 months. Cases that are decision-ready—meaning all documents are clear and no requests for further information are needed—can be finalised in 8–10 months in some instances. However, any complexity involving health waivers, character checks, or employer queries adds several months. The AAT backlog in the Sydney registry also means that if a case goes to review, an additional 18 to 24 months is typical before a hearing.
Looking Forward
The 186 visa remains the most direct employer-sponsored route to permanent residence in Sydney. The fact that the refusal rate sits at 16% indicates that the vast majority of well-prepared applications succeed. The key differentiator is whether the employer and the applicant treat the nomination stage as a documentation exercise or as a pre-emptive defence against the five refusal triggers described here. Data from Study NSW shows that NSW’s international student cohort contributes $6.2 billion in living expenditure each year, and more than 15,000 students transition to permanent visas annually across state-sponsored and employer schemes. Those who succeed are typically the ones who engage with the process not when they receive a job offer, but 12 months before they plan to lodge.