Aged care pay concerns prompt government update

The government has released an update on the aged care pay rise implementation process following calls for it to be delayed by four months so providers would have more time to adjust. 

Meanwhile, the Department of Health and Aged Care said providers must remain accountable for passing on funding to their staff. 

Key points

• A joint Aged & Community Care Providers Association (ACCPA) and Australian Business Industrial (ABI) submission urged the Fair Work Commission to delay Stage 3 of the aged care pay rise by four months so providers would have enough time to prepare
• With the current implementation date set at January 1, 2025, they believe there is not enough time to adjust given the lack of government information and support
• The latest round of pay rises also comes with new classification structures for direct care workers, assistants in nursing and general and administration staff 
• The Australian Government committed $3.8 billion to the pay rise in addition to $11.3 billion over four years that was provided for the initial 15% increase in 2023

The department’s latest guidance information said that a valued workforce is critical to reform the aged care system and that the process ‘starts with fair wages for workers, a supportive workplace and recognition of the complex, often undervalued work involved.’

“A more skilled and diverse workforce will deliver safe, consistent, high-quality aged care services for in-home care recipients and aged care residents. Building our aged care workforce will help the sector deliver 24/7 registered nurse care, increased care minutes for residents, culturally safe practices, and increased system transparency,” the department added. 

“In addition, a valued and happy workforce means employees are more likely to stay in their workplace for longer. This helps to improve compliance results and the Star Ratings of residential aged care providers, and provide better outcomes, including meeting the needs and rights of older people.”

The government addressed some concerns over the pay rise, stating that it will work with ACCPA and unions to follow-up complaints about the implementation of government funding related to award wage increases. 

Changes you need to know about

As per the Fair Work Commission’s Stage 3 decision in the Aged Care Work Value Case, a raft of changes are on the way for many aged care workers. 

• There will be award wage increases of 3% for ‘general and administrative services’ employees employed under the Aged Care Award. This will affect relevant employees including cleaners, laundry staff, food services assistants, maintenance staff, gardeners, bus drivers, and administrative staff.
• Level 2 laundry staff, cleaners, and food services assistants will receive a 6.96% award wage increase in total due to being reclassified to Level 3.

• There will be further award wage increases for direct care aged care employees employed under the Aged Care Award and employees under the new Schedule F of the Social, Community, Home Care, and Disability Services Industry Award (SCHADS Award). 
• These increases vary by occupation and classification and are in addition to the Stage 2 interim increase of 15% from 30 June 2023.
• Aged care assistant in nursing/nursing assistants will move from the Nurses Award (Nurses Award) to the Aged Care Award and the new Schedule F of the SCHADS Award, depending on whether they work in residential or home care.
• New classification structures have been introduced into the Aged Care Award and SCHADS Award for aged care employees. 
• The Fair Work Commission has provided additional guidance here and providers must ensure employees are transitioned to the correct new award classifications when passing on pay increases, whether they are award-reliant or covered by enterprise agreements. 

Timeline-wise, most general and administrative services employees will receive their full increase from January 1, 2025, while direct care and home care employees will receive their increases split over two tranches (January 1 and October 1, 2025).

These increases will be in addition to the 3.75% 2023-24 Annual Wage Review increase to award wages that applied to all payments from the first pay period on or after July 1, 2024. 

Utilising the funding

The government also provided guidance on how wage changes are funded following its ongoing commitment to fully fund aged care wages. This includes increases to the Australian National Aged Care Classification (AN-ACC) price, hotelling supplement and Home Care Package subsidy. 

It said providers are required to pass on all additional funding to support the implementation of the Stage 3 decision to their employees through increases to wages and on-costs (superannuation, leave entitlements, etc). 

As for enterprise agreements, the government advised bargaining should continue with periodic wage increases drawn from the provider’s revenue.

“Providers are expected to provide periodic increases, including through enterprise agreements, separately to the additional funding to support the Stage 3 decision. The government does not support absorbing these periodic increases under the funding provided in support of implementing the Stage 3 decision,” it said. 

The usual enterprise bargaining should continue to occur, with periodic wage increases drawn from the provider’s revenue. Providers are expected to provide periodic increases, including through enterprise agreements, separately to the additional funding to support the Stage 3 decision. The government does not support absorbing these periodic increases under the funding provided in support of implementing the Stage 3 decision.

Additionally, it said government-run aged care services providers will receive funding through increased subsidies and it recognises that the state-based industrial relations processes ‘may take some time to update relevant awards and/or enterprise agreements.’

“A provider that decides to increase employees’ wages in response to the Stage 3 decision before 1 January 2025 does so at its own discretion. Providers that increase wages before 1 January 2025 should clearly document and communicate to employees and employee representatives that this increase is occurring and agree with relevant unions and/or employees that these claimed increases were in consideration of the Stage 3 award wages increases,” the government added.

The government was steadfast by insisting that providers involve employees and employee representatives to communicate how funding received for wages will be passed on, what new wage rate staff have and how employees will transition to new classifications. 

“Residential aged care and Home Care Packages providers must continue attesting in the Quarterly Financial Report that all funding provided to support the Stage 3 decision is passed through to employees,” it said.

“The attestation confirms providers have passed on all funding for award wage increases to employees as increases in their wages and on-costs.

“The department will also continue to refer providers to the Fair Work Ombudsman, where hourly wage rates are reported by the provider to be below the minimum pay points in the relevant awards.”

More information, including an easy-to-understand layout of the classification changes, can be found on the Department of Health and Aged Care’s website. All other information on the work value case is on the Fair Work Commission’s website.