Pay rise shock: Gov proposes 3 year phase-in timeline

The aged care pay rise timeline remains unclear after the Australian Government requested that some increases be delayed until as late as October 2027, a far cry from the expected October 2025 date the Fair Work Commission proposed.

The government is concerned introducing increased wages in 2025 would blow out its budget, particularly with additional aged care nurse wage increases on the horizon.

Additionally, the Fair Work Commission (FWC) remains confident that the rates and phasing-in path it has recommended require no changes despite union insistence they are incorrect.

Key points

• On June 27 the FWC recommended that pay rises for relevant workers under the Aged Care Award, Nurses Award and (SCHADS) be implemented on January 1 and October 1, 2025, depending on the wage percentage increase
• This would see workers receiving a total increase of more than 3% receive it in two tranches
• Recent submissions have questioned the proposed timeline with industry stakeholders arguing that aged care providers need more time to plan and implement the wage changes
• Unions also suggest the calculations used by the FWC are incorrect and that direct care staff are not going to receive the appropriate wages despite increases

Government backs significant timeline delay

The government’s request to significantly stagger the pay rise timeline comes hot on the heels of a joint Aged & Community Care Providers Association (ACCPA) and Australian Business Industrial (ABI) submission that asked for the first tranche to be pushed back from January 1, 2025.

The government’s request is far more drastic as new documentation reveals it requested the following:

• For any wage increases up to 3 per cent – on 1 July 2025
• For any wage increases up to a further 3 per cent (i.e. up to 6 per cent total) – on 1 October 2025
• For any wage increases up to a further 7 per cent (i.e. up to 13 per cent total) – on 1 October 2026
• For any wage increases up to a further 7 per cent (i.e. up to 20 per cent total) – on 1 October 2027

“As the Commonwealth has previously submitted, having regard to the Commonwealth’s role as the principal funder in the aged care sector, the Commission can be satisfied that making any aged care nurse wage increases in alignment with the timing of the Commonwealth funding commitment would result in those increases having a non-material impact on business and employer costs,” it added.

It says funding the next round of pay rises will cost between $2.6 – $3.8 billion. Major concerns appear to be around the potential for additional wage increases for registered and enrolled nurses that would be ‘not without cost to the Commonwealth and will require significant additional funding.’

“The Commonwealth is concerned about the effect that commencing substantial wage increases in advance of the Commonwealth’s corresponding funding commitment may have on the financial viability of some aged care providers, particularly ones that are already in financial difficulty,” it added.

The government said it remains committed to funding any wage increase regardless of the timing or phasing in. However, it recognises that ‘implementing funding for wage increases in the aged care sector takes time’ and the FWC cannot force it to fund them more quickly. 

This approach has been criticised by the Australian Nursing and Midwifery Federation (ANMF) as Secretary Annie Butler told the Australian Financial Review (AFR) the proposed timetable was ‘too protracted’ and could anger nurses. 

“Our really big concern is if the commission accepts the Commonwealth’s timetable, there is a risk direct care workers who aren’t nurses could be earning more than some enrolled nurses for some time,” she said.

“We know our members are not going to be happy about that.”

The ANMF, United Workers Union (UWU) and Health Services Union (HSU) want to maintain the January 1 and October 1 phase-in timeline proposed by the FWC.

FWC denies errors 

After the FWC shared its determinations for the Aged Care Award, Nurses Award and SCHADS Award, the three previously mentioned parties submitted a joint note highlighting several errors in the calculations. 

There are several instances where they believe the calculations for new pay rates and classifications resulted in wages roughly $40-$50 short of where they need to be.

Those concerns can be viewed here. 

FWC President Justice Adam Hatcher was not swayed, providing a definitive response this week.

“I have considered the Joint Note from the union parties, which has been the subject of analysis by the Commission’s staff. I am satisfied that the rates published in the determinations are consistent with the Panel’s decision of 27 June 2024,” he said. 

“The Joint Note proposes an alternative phasing-in path to the final outcome determined in that decision but does not, in my view, demonstrate any error in the determinations already published. Accordingly, no amendments to the determinations issued on 11 September 2024 are necessary to be made.”

The government anticipates further nursing wage increases and in its request for some pay rises to be delayed until 2027 said:

“The increased funding needed to fund any wage increases for aged care nurses in residential aged care settings needs to be correctly calculated and applied based on independent pricing advice from the Independent Health and Aged Care Pricing Authority (IHACPA).”

The FWC is expected to deliver its decision and response to the government’s request in the coming weeks.