In this guest post, Stephen Roebuck, Associate Director of Consulting at Peninsula Australia outlines the Fair Work Commission’s final decision on aged care worker pay, set to begin in January 2025. The new pay rates will vary based on employee classification and qualifications, with important considerations for employers to ensure compliance.
After months of uncertainty for aged care providers and their employees, the Fair Work Commission (FWC) handed down its final decision in the aged care work value case on 11 September 2024.
The FWC confirmed that from 1 January 2025, the benchmark rates of minimum pay for aged care employees covered under three industry awards will change, depending on the employee’s classification level and qualifications.
Employers must understand these changes to ensure compliance with the new pay rates, as well as with the Fair Work Act 2009, to avoid penalties associated with underpayments.
This is particularly relevant considering new national wage theft laws are expected to commence in January 2025.
The aged care work value case explained
The aged care work value case has been in the works for two years now as part of a fight from unions to overcome historical gender-based undervaluation of aged care work, and to recognise changes to the nature of the work performed.
In their application to the Fair Work Commission (FWC), the unions sought wage adjustments as well as new classification definitions and structures for certain employees covered by the Aged Care Award 2010 (Aged Care Award), the Nurses Award 2020 (Nurses Award) and the Social, Community, Home Care and Disability Services Industry Award 2010 (SCHADS Award).
The first change came in November 2022, when several types of employees working in the aged care industry secured an initial 15% increase to awards rates. This increase came into effect on 30 June 2023. The employees impacted by these changes included registered nurses, enrolled nurses and assistants in nursing (AINs), home care workers (HCWs), as well as personal care workers (PCWs), head chefs, and recreation and lifestyle officers.
The Full Bench of the FWC found that the increases were “plainly justified by work value reasons”, noting that the workforce had been “historically undervalued” because of “assumptions based on gender.”
Subsequently, in March 2024, the Full Bench set new benchmark rates with increases as high as 28.5% for direct care workers, including PCWs, AINs, HCWs. This is inclusive of the first 15% increase.
Additionally, indirect care workers, such as those engaged in the “general and administrative services” stream or the “food services’’ stream, received a 3% increase.
By introducing varied wage rises, depending on the level of employee, the FWC is increasing the value of aged care work based on the idea of relative complexity. This is not a new concept – it has done the same in the past, with a key example being qualified trades versus apprentices in construction.
In June 2024, the FWC confirmed that the higher minimum wage for direct care workers and assistants in nursing would be applied in two stages for direct care workers. The first half of the total additional amount will apply from 1 January 2025, while the second half will come into effect from 1 October 2025, with some exceptions.
Meanwhile, indirect care workers, including cleaners and administrative staff, will receive the full increase starting January 2025.
As a final step, these new classifications and other relevant changes were confirmed by the FWC on 11 September 2024, thereby concluding the aged care industry work value case.
This was with the exception of aspects relating to RNs and ENs, with hearings listed later this month.
The changes will take effect from 1 January 2025. In relation to a particular employee, the changes will commence on the employee’s first full pay period on or after 1 January 2025.
The changes coming in 2025
Two definitions are being added to the Aged Care Award to improve clarity around which employees should be covered by it.
An “aged care employee – direct care” is defined as an employee whose primary responsibility is to directly provide either personal care services to residents under the supervision of a registered or enrolled nurse, or recreational and lifestyle activity services to residents.
The second definition is “aged carer experience”, which will be understood as “previous employment experience as an aged care employee – direct care under this award or as a home care employee in aged care”. This definition will also be added to the SCHADS Award.
The Nurses Award will also receive a new clause clarifying that the award does not cover employees working as AINs who provide care services to aged persons in either the aged care industry or the home care sector. The coverage of these employees will be moved from the Nurses Award to the Aged Care Award, meaning that the latter will solely cover the work of PCWs and AINs.
These are just a few of the changes being implemented in these Awards – numerous clauses are being renamed, classifications are being translated, and other employee definitions are being updated.
Therefore, it is wise to seek professional advice as an aged care provider if there is any confusion or uncertainty about the changes that will come into effect early next year.
