Fair Pay on The Frontline: Aged Care Wage Increase

In November 2020, the Health Services Union (HSU) initiated a landmark work value case with the Fair Work Commission (FWC), advocating for a 25% wage increase across all roles in the aged care sector. This case encompassed three critical applications targeting adjustments to minimum wages outlined in: 

  • The Aged Care Award 2010;  
  • The Nurses Award 2020; and 
  • The Social, Community, Home Care and Disability Services Industry Award 2010 (SCHADS Award).  

On March 15, 2024, the Fair Work Commission delivered a historic decision, resulting in a substantial pay increase of up to 28.5%. This decision addresses wage adjustments for both direct care employees, including personal care workers and nurses, and indirect care employees, such as head chefs/cooks and recreational activities officers/lifestyle officers, within the applicable awards.

Gender Equality in Wage Determination 

The recent decision by the Full Bench, comprising an expert panel, marks a significant step towards rectifying historical gender-based wage disparities within the aged care sector. The panel’s thorough examination revealed that assumptions rooted in gender inequality had led to undervaluation of the work performed by aged care sector employees, particularly impacting female workers. Common misconceptions, such as the belief that certain roles were naturally suited to women or that female employees lacked dependents, contributed to unjust wage fixations.  

Furthermore, the Decision highlighted how minimum wage rates in key awards were influenced by these outdated gendered assumptions, perpetuating inequality. The expert panel’s findings underscore the necessity for wage adjustments based on work value grounds, devoid of gender bias, and signal a crucial shift towards equitable compensation practices within the aged care industry. 

Direct care employees 

Direct care workers are set to receive a significant pay increase beyond the initial 15% interim raise. This decision emphasises the establishment of a benchmark pay rate for key classifications and the development of a new uniform structure based on it, aiming to eliminate gender assumptions. The identified benchmark rate, $1223.90 per week for Certificate III-qualified employees, reflects considerations of previous equal remuneration orders.  

The decision also outlines the need for separate classification structures in the Aged Care Award, harmonisation of rates and structures for certain roles, and the transition of AINs from the Nurses Award to the Aged Care Award. Additionally, technical and grandparenting provisions are detailed to accommodate wage increases, resulting in a substantial impact on direct care workers’ pay, with hourly wages set to rise between 18 and 28%. 

In establishing the new classification structure(s) for direct care employees, the expert panel emphasised several key points: 

  1. Recognised the fundamental difference in work value between direct care employees and other roles in residential aged care, advocating against a single integrated classification structure in the Aged Care Award; 
  2. The purpose of the classification descriptors in awards is to identify which categories of workers are entitled to the minimum rates, not to serve as comprehensive ‘position descriptions; and 
  3. Recommended inclusion of a supervisory level within the classification structure(s). 

Indirect care employees 

Indirect care employees in the Aged Care Award are categorised under ‘General and administrative services’ or ‘food services’ streams. While acknowledging the importance of their contributions to residential aged care facilities, the Expert Panel determines that their work does not equate in value to that of direct care workers, thus justifying disparate pay rates. 

However, the Panel acknowledges notable changes in work value, particularly in infection prevention, dementia care, and compliance with Aged Care Quality Standards. Consequently, a 3% pay increase is recommended for these workers. Further recommendations include aligning pay rates for SCHADS Award healthcare workers with those for personal care roles and elevating the classification of laundry hands, cleaners, and food services assistants to reflect increased resident interaction, resulting in a total pay increase of 6.96%. Notably, Head Chefs/Cooks are not proposed for further increase. These adjustments aim to improve conditions for support service workers, with an anticipated 6.8% increase in employment. 

Additional conclusions for indirect care workers include: 

  • Harmonisation of pay rates for SCHADS Award HCWs performing non-personal care work with those applicable to personal care HCWs; 
  • Recognition of the increased interaction with residents by laundry hands, cleaners, and food services assistants, warranting their elevation from Level 2 to Level 3 in the Aged Care Award classification structure, resulting in a total pay increase of 6.96 percent; 
  • No further increase is proposed for Head Chefs/Cooks. 

Future Trends & What This Means for Your Workplace

Employers should take note of the decision by the Fair Work Commission regarding wage increases in the aged care sector. While these new rates will not come into effect until the commission releases a finalised report, they are expected to be applicable by July 2024. The Fair Work Commission has provided in its decision the classification of wage rises within three different awards. The decision entails a significant increase in wages for direct care employees, ranging from 15% to 28.5%, and for indirect care, wages are anticipated to rise by up to 6.8%. However, employers with existing Enterprise Bargaining Agreements (EBAs) in place will not be affected by these increases. 

On the other hand, employers without EBAs and those in the process of negotiating them should consider the potential impact of the raised rates. The rate rise will affect employers who are currently contemplating the EBA process, as they will need to factor in the increased rates until their EBA is approved. Additionally, employers will have to review how they are paying their staff, and those who will be renegotiating their EBAs will need to factor in additional rates due to this rise. The Albanese Labor Government has expressed support for the Fair Work Commission’s decision on the aged care work value case.  

In early April, the Commission will also consider the Australian Nursing and Midwifery Federation’s application to increase wages by up to 35% for an estimated 250,000 nurses, nursing assistants, and midwives. It is anticipated this ‘work value claim’ will build on the landmark findings in the Decision and extend the recognition to other healthcare employees. 

An obvious concern for employers in the aged care sector will be how these increases are to be funded. Given the existing financial constraints on aged care providers, it seems appropriate that Government funding be increased to cover these additional costs. In light of the recent recommendations by the Aged Care Taskforce, greater co-contributions by care recipients with sufficient financial means may also play a role in the future. 

We’re here to help you respond to industry trends, legal compliance and meet your operational and people challenges so that you can continue to deliver vital services across the aged care sectors.

Workplace Wizards is proud to have worked with a number of clients across the aged care industry, acting as strategic advisers and providing customised support  so that  organisations can function effectively and efficiently while meeting current regulatory standards.

Compliance is vital for business operations but can be tricky to navigate on your own! We can give you a helping hand to ensure that you’re ready to meet these new changes or any other challenges – reach out to us at any time to have a chat!

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