On 15 March 2024, the Fair Work Commission handed down a major decision in the “work value case,” leading to a significant wage increase of up to 28.5% for aged care workers. This decision came after years of legal proceedings and affected direct care employees across the sector.
The ruling resulted in increases to the minimum wages of aged care workers covered under three key awards:
- Aged Care Award 2010
- Nurses Award 2020
- Social, Community, Home Care and Disability Services Industry Award 2010 (SCHADS Award)
This wage rise reflects the recognition of the value and demands of work in the aged care sector, improving compensation for workers such as caregivers and nurses who provide direct care services.
History
In November 2022, the Fair Work Commission’s Full Bench found that the minimum wage rates for ‘direct care employees’ in aged care were insufficient. As a result, the Commission ordered a 15% interim wage increase for:
- Personal care workers (PCWs) under the Aged Care Award
- Home care workers (HCWs) in the aged care sector under the SCHADS Award
- Registered nurses (RNs), enrolled nurses (ENs), assistants in nursing (AINs), and nurse practitioners in aged care under the Nurses Award
In February 2023, the Commission confirmed the need for this Interim Increase and expanded it to include head chefs/cooks and recreational activities/lifestyle officers under the Aged Care Award.
The Decision
Direct Care Employees: The Fair Work Commission’s expert panel found that the value of work for aged care employees justified a pay increase beyond the initial 15% Interim Increase. For some workers, the total pay rise could reach 28.5%. The Commission set a benchmark pay rate and developed a new classification structure based on this rate. While the increases were necessary and overdue, the Commission emphasized maintaining a stable award system, avoiding excessive wage increases and ensuring gender fairness in wage adjustments.
Indirect Care Employees: The expert panel concluded that indirect care workers, such as those in administrative and food services, do not perform work of equivalent value to direct care workers, thus equal pay was not justified. However, a 3% pay increase was awarded due to changes in work value related to infection control, dementia care, and training. Additionally, laundry hands, cleaners, and food services assistants will move from ‘level 2’ to ‘level 3’ in the Aged Care classification, resulting in a total pay increase of 6.69%. Head chefs/cooks will not receive any further increase beyond the Interim Increase.
Gender Inequality: The panel examined whether aged care workers were historically underpaid due to gender bias. They found that wages in the sector had been undervalued because of outdated assumptions about gender roles, such as:
- Male workers needed higher wages to support families.
- Female workers were assumed to be without dependents and did not need higher pay.
- Wage increases for young, unmarried women were believed to harm the economy.
- Aged care work was considered to involve “inherently female traits,” implying that the work was “unskilled” and predominantly female.
The decision acknowledged that these gender biases contributed to the undervaluation of work in the aged care sector.
Recommendations:
The Fair Work Commission’s decision, a significant ruling, will have major impacts on the aged care and retirement living sectors. Employers are advised to:
- Review workforce classifications.
- Update employment contracts.
- Implement further wage increases cautiously, ensuring they don’t perpetuate gender pay gaps.
- Manage differing pay increases between staff categories to maintain retention and satisfaction.
Key Takeaways:
- Correctly interpreting workplace rules is essential for payroll compliance.
- In Aged Care, it is crucial to apply allowances, shift penalties, and other loadings correctly and ensure part-time staff are paid as per agreements.
- Small payroll errors can lead to large liabilities if left unresolved.
- If errors are found, early action and cooperation with regulators can help achieve better outcomes and avoid court. Seeking advice before making disclosures is recommended.
If you would like further information and advice, contact one of our professionals at Accru Melbourne.
