10 November, 2022
The Fair Work Commission has published its first of three decisions in relation to an increase to minimum wages for certain aged care workers by 15%. The Fair Work Commission’s decision can be read here, and a summary of the decision can be read here. As of the date of this EMA Note, the Commission has not yet decided when the increase will be implemented.
In this EMA Note we briefly summarise the decision, the reasons for the decision, and what this means for employers.
The Wage Value Case involves a claim by, namely, three union groups that aged care workers should have a 25% increase to their award-minimum wages based on historic undervaluation of the work they perform.[1] This claim follows the Royal Commission into Aged Care Quality and Safety, where the Royal Commission found there was a wage gap for aged care workers and recommended increasing those wages.
The Commission’s decision is to provide an interim 15% increase. This is ‘stage 1’ of the decision, with stage 2 being determining when and how the increase should be implemented, and stage 3 being an analysis of classifications and the employees not covered by stage 1 (see below), as well as any further increases that may be justified in addition to the 15% interim increase.
The interim increase applies only to ‘direct care workers’, being registered and enrolled nurses in the aged care industry, and certificate III and below personal care workers.
Throughout the Wage Value Case, the Commission received over 650 documents (including published research, working papers, and reports) and heard from just over 100 witnesses (including six expert witnesses).
In consideration of this evidence, the Commission’s interim decision was based on various factors including the following:
(a) the workload in the industry;
(b) changes in service requirements and the increase in complexity of work required by workers in the aged care industry;
(c) the culturally diverse needs that workers in the aged care industry need to meet;
(d) gender-based undervaluation (on the basis that the aged care industry is comprised of a predominantly female workforce); and
(e) aged care workers undertake work that utilises a number of under-defined or under-specified (‘invisible’, as the Commission has characterised it) skills that are not easily observed.
At this stage, there is no indication about when the interim increases will be made. The Commission has listed a mention on Tuesday, 22 November 2022, after which we expect the Commission will publish deadlines for submissions related to stage 2 of the Wage Value Case (described above). This will, in the least, provide parties with a bit more an indication about the timeframes before which the increases may be implemented.
While the Commission has not indicated what any final increase may be, it did observe that the 15% interim increase needed to be ‘comfortably below’ any finally determined increase.
In any event, the government has committed to funding any increase handed down by the Commission such that there will be no negative impact to businesses, submitting instead that the overall impact to businesses will be a positive one.[2]
At this stage, this interim decision will mainly have an impact on enterprise agreements and enterprise agreement bargaining. As a default, if the base rate of pay in a modern award exceeds that in an enterprise agreement, the base rate of pay in the award will apply,[3] so employers with enterprise agreements will need to confirm what effect the award increase will have on their enterprise agreement rates. Employers currently negotiating enterprise agreements can expect substantially higher claims by unions (to cover off both the wage value increase and any additional increases sought).
Separately to the aged care industry, Justice Ross issued a statement identifying other industries that had predominantly female workforces, which could also be subject to gender-based undervaluation in wages.[4] While his Honour indicated that the Commission would be unlikely to undertake the task of varying any of these industries’ modern awards on its own initiative given the amount of evidence required to make a determination, his Honour did state that the Commission could facilitate discussions between parties considering making another wage value application. This may result in similar applications being made in other industries with a predominantly female workforce, such as those identified by Justice Ross, where there is evidence that the work in that industry may be historically undervalued.
This EMA Note is not comprehensive advice about your situation and does not cover all your obligations. If you require further information or advice, please contact your Consultant.
[1] We note that submissions were made that a 35% increase may be appropriate for registered nurses.[2] Commonwealth, ‘Submissions of the Commonwealth’, Submission in Work Value Case – Aged Care Industry, AM2020/99, 8 August 2022 [200]–[201].n[3]Fair Work Act 2009 (Cth) s 206.n[4] Justice Ross, ‘President’s Statement: Occupational Segregation and Gender Undervaluation’, Fair Work Commission, 4 November 2022.
EMA Consulting is not a law firm and therefore does not provide legal advice or services. The information contained within this document and associated material is general in nature and should not be relied upon. If you require specific advice on a particular matter, we recommend that you contact EMA Consulting on 08 8203 1700. Subject to the matter at hand, your EMAC Consultant may recommend that you obtain formal legal advice. If formal legal advice is required, upon your written instruction EMAC will brief your matter to a legal practitioner for this purpose. The contents of this document and associated materials do not represent legal advice.
