Unpacking the aged care sector minimum wage increase and what providers need to know

The Fair Work Commission (FWC) recently reached a decision in the Aged Care Work Value Case, announcing an increase to the minimum wage for employees under certain awards.

This outcome is a win for these employees that contributes to righting the wrongs of past perceptions of aged care work, which was historically undervalued due to gender-based assumptions surrounding the sector.

Hower, many providers, and small businesses in particular, are still struggling under the financial pressure of last year’s rise.

While it’s yet to be announced exactly how and when the wage increase will be introduced, the potential impact on aged care providers is evident.

Both direct and indirect care workers will be paid more

Aged care workers will receive pay rises range from 13.3 to 28.5 percent, depending on the award that covers their employment.

To clear up any confusion, this figure is inclusive of the 15 percent minimum pay increase for direct care workers introduced in June 2023.

The recipients of the wage increase are direct and indirect care workers under the Aged Care Award, Social and Community Home Care and Disability Services (SCHADS) Award, and Nurses Award.

Direct workers include registered nurses, enrolled nurses, assistants in nursing, personal care workers, and home care workers.

Indirect workers include indirect care employees under the Aged Care Award, home care workers under the SCHADS Award engaged in non-personal care work, as well as laundry hands, cleaners, and food services assistants.

Some classifications in the affected awards have merged and several specific occupations shifted to higher classifications, to outline more clearly which categories of employees are entitled to the new minimum pay rates.

Additionally, a benchmark rate of $1,223.90 a week has been set for Certificate III-qualified employees. This is the figure being used to calculate the minimum wages for other classifications.

At this stage, aged care providers are anxiously awaiting news on when the wage increase will be introduced. Recent research from KPMG found that 64 percent of residential aged care providers are operating at a loss, with more and more smaller providers shutting up shop in part because they cannot achieve financial stability.

Changes aren’t expected to come into effect before 10 May 2024

No date has been set yet for the minimum wage increase in the aged care sector to come into effect and it is not likely to be announced for several weeks. This uncertainty is causing significant concern among aged care providers that are straining to keep their heads above water.

The FWC has delayed a decision about when the pay rise will land or whether it will be a phased approach, giving the government a deadline of 12 April 2024 to provide input.

Other parties have until 10 May 2024 to file any submissions in response to what the government says, meaning that a decision on when the changes will almost certainly come into effect until after this date, as the FWC needs time to review them.

Another key element of the minimum wage increase that is under the spotlight is whether the government will commit to fully funding it in the Budget, which will be released 14 May 2024.

The Government may announce funding in response to the increase

Funding for residential aged care providers was increased in the last Budget to $11.1 billion over four years to account for last year’s aged care minimum wage increase, but it is yet to be seen whether the government will fully fund this latest increase too.

The government has requested a delay for the FWC’s final call around the implementation of the pay rise ahead of the upcoming 2024-2025 Federal Budget, which is hopefully a sign that they are considering providing monetary assistance to aged care providers that softens the financial blow.

If the government decides not to fund the increased costs of wages in aged care, providers will be forced to foot higher bills towards labour costs. If this is the case, many smaller providers will not survive.

For now, all businesses can do is wait for details of the latest aged care sector minimum wage increase to be finalised.

Ryan Price

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Ryan Price, Head of Content and Training at Employsure, is an employment relations professional with practical experience across employment and industrial-relations issues. He leads a team of advisers, researchers and content creators who keep SMEs in Australia up to date on legislation, modern awards, and changes in the employment and industrial relations space, thereby supporting them to build better businesses.

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