The Federal Government’s 2022 changes to the Fair Work Act will have a significant impact on the aged care sector commencing as early as 6 June 2023.
The changes made by the Secure Jobs, Better Pay Act clearly show the Government’s intention to focus increasing wages in low paid sectors, including aged care, as a priority.
The Government believes that increasing pressure on employers to participate in bargaining will increase wages. Much will however depend on how actively the sector unions embrace the opportunities the changes give them.
Importantly, the changes to multi-employer bargaining provisions increase the capacity of sector unions to engage more aged care employers in enterprise negotiations. This will enable unions to use their resources much more efficiently within a framework which diminishes the capacity of employers to resist being party to these negotiations. The amended legislation also creates new opportunities to bind aged care employers to existing agreements between other employers and their employees without their agreement.
Changes to multi-employer bargaining provisions
The changes to the multi-employer bargaining provisions increase the likelihood that aged care providers, who are not the subject of an in-term enterprise agreement will become party to an agreement, to almost an inevitability over time.
The amendments allow unions to make an application to combine aged care employers into a multi-employer agreement under either the supported bargaining stream or single interest bargaining stream.
A union seeking to require multiple employers to bargain together in either stream must show there are clearly identifiable common interests, including some consistency about the nature of the enterprise, and the terms and conditions of employment. Commonality can also be demonstrated by employers receiving government funding in the case of support bargaining and government regulation for single interest employer bargaining.
As the business of providing aged care has obvious commonality of operations and homogeneity of employment terms and conditions, providers might therefore find themselves the subject of an application to be part of a single interest enterprise agreement.
In addition to these factors, aged care providers are within a sector previously determined to be low paid and they receive regulated government funding. On this basis, providers are also likely to be the target of an application to be part of a supported bargaining enterprise agreement.
In short, the aged care sector fits squarely within the requirements for either stream of multi-enterprise bargaining.
The prospects of any individual employer being able to demonstrate that it should be excluded from either a supported or single interest multi-employer agreement would appear to be limited. An employer would need to demonstrate that its business was not ‘reasonably comparable’ (for a single interest application) or otherwise has insufficient common interest (for a supported bargaining application) with the other employers, the subject of the agreement.
This appears to be a very narrow opportunity for exclusion. For example, an employer may try to argue that it has a comparative incapacity to pay wages at the level of other employers participating in the multi-employer agreement. This may not however be sufficient to exclude that employer on the basis that its business is not reasonably comparable.
Changes to commence on 6 June 2023
The Government has indicated that the changes, which expand the reach of multi-employer agreements, will start on 6 June 2023. Until then, employers in the sector remain the subject of the existing provisions focused on enterprise level bargaining. The amendments will also not immediately impact those who have an in-term enterprise agreement.
After 6 June 2023, if an aged care employer becomes party to a multi-employer enterprise agreement, it may be unable practically to resume bargaining at an enterprise level. Additionally, an employer that makes its own enterprise-based agreement may still become subject to a supported bargaining agreement if its reason for doing that agreement was to avoid being party to a supported bargaining agreement.
Putting aside how difficult it may be to prove that this was the employer’s motivation, the desire exhibited by the Government to move industries like aged care into multi-employer agreements is very plain.
Timing
Whether the changes to the Fair Work Act lead to increased wages will also practically depend on whether increases can be afforded without jeopardising the longer-term viability of employers and prioritised without having a detrimental impact on the care of residents.
The changes come at the same time the Government is progressing recommendations from the Aged Care Royal Commission, including legislated initiatives requiring minimum staffing hours for care personnel. The Fair Work Commission has also determined to make an interim 15% wage increase for care personnel on the basis of addressing a realignment of work value in the sector.
Plainly the sector will remain under significant cost and resourcing pressure. The timing and adequacy of promised additional funding from the Government to pay for increased costs would appear to be critical.
Aged care providers should explore what is best for their business between now and 6 June. From then opportunities to bargain for enterprise specific arrangements may diminish, giving way to bargaining with other employers for terms and conditions across multiple workplaces and workplace philosophies. As seems regularly to be the case with the sector, there are significant imminent changes which will impact how providers manage increasingly regulated resources. If you would like more information on how these changes will directly impact your business, contact Tim Longwill or a member of our expert team.