Business groups unhappy with Fair Work Australia’s bumper pay rises for community workers

In a decision that has sparked an angry reaction from business bodies, Fair Work Australia has approved pay rises of between 19% and 41% for workers in the social, community and disability services industry (SACS), having previously found that gender played a role in the sector’s low pay rates compared with pay rates for state and local governments employees performing similar work.

In a majority decision by the full bench of the tribunal, the ruling means that the 150,000 workers in the not-for-profit sector will receive pay levels of between $42,000 and $84,000 – equivalent to rates in a Queensland award – phased in over eight years from December 1, 2012. The pay rises range from $6,324 to $24,346.

The pay rises are in addition to annual wage review increases. The implementation is two years longer than the previously proposed six years.

Kathryn Dent, People, Culture and Strategies director, predicts the ruling will prompt other groups to assess their own circumstances, adding an appeal of a full bench decision is unlikely, unless there is a jurisdictional error.

The Australian Nursing Federation yesterday called for an extra $500 million in Government funding to help bridge the pay gap between staff in aged care and higher paid work in hospitals.

Dent says yesterday’s full bench decision highlights how the Fair Work Act differs from its predecessor, in that it talks more broadly of work of equal or comparable value.

“I wouldn’t agree that the sky is falling in,” Dent says, adding that although costs will rise for employers in the sector, this was considered in the umpire’s decision.

Women account for about four-fifths of the SACS industry, which includes residential care, social assistance, family services, disability, aged and disability care workers, social workers and community services managers. Their employers are about 4,0,00 mostly small not-for-profit organisations, primarily funded by Government funding.

Prime Minister Julia Gillard welcomed the decision, calling for state and territory Governments to commit to funding their share of the increased costs, as the Federal Government did last year with its $2 billion pledge.

“This is a very significant pay rise that will make a real difference to these workers and their families,” Gillard said.

“It is also the first ever successful pay equity claim in the national system, and a significant advance for equal pay for women.”

In May 2011, Fair Work Australia concluded there was not equal remuneration for workers in the SACS industry for work of equal or comparable value compared with workers in state and local Government employment.

“We consider gender has been important in creating the gap between pay in the SACS industry and pay in comparable state and local government employment. And, in order to give effect to the equal remuneration provisions, the proper approach is to attempt to identify the extent to which gender has inhibited wages growth in the SACS industry and to mould a remedy which addresses that situation,” it said.

After yesterday’s ruling, business bodies the Australian Industry Group and the Australian Chamber of Commerce and Industry threw their support behind the dissenting view of FWA Vice President Graeme Watson.

Watson said the case is “seen as a test case of the equal remuneration provisions of the Act.”

“This is a highly unusual case, unprecedented by international standards, in which the applicants are seeking to use the concept of equal remuneration for men and women workers to achieve significant above-award wage increases for both men and women workers in an entire industry.”

“There has not been a satisfactory basis for establishing that public sector work is an appropriate comparator for employees in the not-for-profit SACS industry.”

“In addition there is no basis for a finding that the extent of gender-based undervaluation is 18–41 per cent above award wage levels.”

“Further, the significant impact of the claim on enterprise bargaining in the SACS industry and other comparable industries militates against the claim being granted. The alternative of increased funding for enterprise bargaining in the SACS industry is a far more appropriate course of action.”

AiG chief Heather Ridout added the decision “will lead to a raft of union claims in other industries.”

“The decision … demonstrates that the equal remuneration provisions of the Fair Work Act need be tightened to prevent widespread flow-on to other industries and workplaces, and to ensure that Australia’s award system is not undermined.

“The Act should require that equal remuneration orders are based upon proof that there has been discrimination in the setting of pay rates for men and women for work of equal value.”

The ACCI, meanwhile, said the outcome was “disturbing” and “must be quarantined.”

“The Australian Chamber of Commerce and Industry is concerned about the cost impact this ruling will have, not only on government revenues, but on the myriad of small and medium enterprises in the community services sector,” it said.

“ACCI is seriously concerned about the ability of these enterprises to maintain services at current levels with the burden of this new cost. Some of these enterprises receive government funding, but many do not.”

“Even more alarming is the concern that the unions may try to use this decision as some sort of precedent for similar claims in female dominated sectors.”