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Equal Remuneration Decision

Anthony Massaro, Libby Pallot and Abbey Burns

Our Employment team discuss equal remuneration.

On 1 February 2012, Fair Work Australia handed down another important decision in the long running equal remuneration case for social and community service workers. The decision is a significant win for employees, but is certain to cause additional administrative burdens on employers.


Background

On 11 March 2010, the Australian Municipal, Administrative, Clerical and Services Union, on its own behalf and on behalf of the Health Services Union, the Australian Workers’ Union of Employees, Queensland, United Voice and the Australian Education Union (Applicants), lodged an application with Fair Work Australia (FWA) for an equal remuneration order. The application covered employees of non-government employers in the social, community and disability services industry (SACS industry) throughout Australia. The basis of the ASU’s application was that the SACS industry is a female dominated industry, that the work in the industry is undervalued and that there is a causal relationship between those two things — the undervaluation arises because it is a female dominated industry. The application sought an equal remuneration order applying to employees in the SACS industry nationally, based on the wage rates and classification structure in the Queensland SACS award.

In a landmark decision handed down on 16 May 2011, the Full Bench of FWA indicated its intention to make an equal remuneration order for employees in the SACS industry. FWA found that these employees do not receive equal remuneration for work of comparable value when compared to state and local government employees, and that gender is relevant to this inequity. FWA invited submissions on the extent to which gender has contributed to this unequal remuneration, and the form that any equal remuneration order should take.


The recent decision

After hearing a significant number of submissions from industry groups, unions, employers and governments, FWA handed down its decision regarding the equal remuneration order on 1 February 2012 (“Decision”). The Decision confirms that the equal remuneration order, when it is drafted, will take the form of an additional percentage rate to be added to the existing rates of pay contained in the Social, Community, Home Care and Disability Services Award 2010 (Award). However, rather than varying the Award directly, the order will be sit alongside the Award rates, and be independent of the Award.


Who will be covered by the order and how much will wages increase?

The Decision sets out the percentage increases that will apply to the minimum wage rates for Social and Community Services stream (SACS stream) employees found in clause 15 of the Award. Importantly, the Decision appears to only increase the wage rates for employees classified under the SACS stream of the Award. It is not clear whether the Decision covers employees under the Crisis Accommodation stream. The remaining two classification streams in the Award, namely the, Home Care, and Family Day Care employee classification streams, will apparently not receive any increase in wage despite working in the SACS industry and being covered by the Award.

The Decision provides for the following percentage increases to the minimum wage rates in the SACS stream of the Award:

Level 2—19%

Level 3—22%

Level 4—28%

Level 5—33%

Level 6—36%

Level 7—38%

Level 8—41%

The Decision also provides for an additional 4% loading on top of the wage increases at each level to recognise impediments in bargaining in the industry and to provide national consistency with the position in Queensland. The result is that the wage of a SACS stream employee will increase by approximately $8,000 to $27,000 per annum.

To enable employers and funding governments to adjust to the new rates, the increases will be implemented in equal instalments over an eight year period commencing on 1 December 2012 and concluding on 1 December 2020.


What does this mean for employers?

Apart from the obvious implications that higher wages impose on employers, the Decision provides a further administrative burden on employers to accurately calculate the wages for their SACS employees. In practical terms, it is likely that calculating a SACS employee’s minimum wage will now require reference to both the Award and the equal remuneration order, as well as calculations in relation to transitional arrangements.

Employers who receive funding from State or Commonwealth governments will need to check their funding agreements to ensure that they reflect FWA’s Decision, and that any funding increases will be sufficient to cover all staff. The Commonwealth government has indicated that it will provide $2 billion to employers in the SACS industry over the 8 year implementation period to cover the increased costs. The Victorian government has not confirmed whether it will meet the full value of the additional costs arising from the order.
The final form of the order has not yet been decided, with FWA giving the Applicants 21 days to file draft orders.

The Workplace Relations, Employment and Safety team at Russell Kennedy will continue to monitor the progress of the equal remuneration decision. If you have any questions about the impact of the decision on your business, you can speak to a member of our team by contacting (03) 9609 1555.


Changes made to transitional wage provisions of the Social, Community, Homecare and Disability Services Award 2010

In response to the increased wage rates for social and community services employees under the Equal Remuneration Order, FWA recently changed the method for calculating the transitional phased in rates of pay under the Social, Community, Home Care and Disability Service Award 2010.

On 19 January 2012, Fair Work Australia (FWA) further amended the transitional arrangements for employees classified under the Social and Community Services and Crisis Accommodation classification streams in the Social, Community, Home Care and Disability Services Industry Award 2010 (Award). The transitional provisions for employees classified under the Home Care and Family Day Care streams have not been changed.

The effect of the January FWA amendment is that payment of the rates of pay set out in the modern award for employees who are employed in the Social and Community Services and Crisis Accommodation classification streams has been deferred to 1 July 2012. This means that employees will continue be paid at the rate specified in the award that would have covered their employment prior to the commencement of the modern award system (i.e. the award that existed on 31 December 2009). From 1 July 2012, the modern award rate will apply to these employees (without phasing in).

It is important to note that these changes only affect the minimum wage rates of employees in the Social and Community Services and Crisis Accommodation streams. Loadings and penalty rates for these employees will still be phased in, commencing from 1 July 2012.
For employees engaged under the Home Care and Family Day Care streams of the Award, phasing in of minimum wages, loadings and penalty rates commenced from 1 February 2012.

The Workplace Relations, Employment and Safety team at Russell Kennedy is able to advice on all aspects of employee entitlements and compliance with modern awards. Please contact one of our team members on (03) 9609 1555 if you would like assistance with minimum rates of pay or employee entitlements in general.

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