The Community Sector IR Landscape: Key Issues Michael Pegg & Jen Forward Jobs Australia Launch of the ACT Community Sector IR Service 23 November 2011

Community Sector IR Jobs Australia is the peak industry body for nonprofit organisations assisting people to get and keep jobs Community Sector Industrial Relations (CSIR) is a service we offer to the wider nonprofit community sector Act as specialist employer organisation, part of our commitment to enhancing capacity in the sector Day to day IR and HRM advice, consultancy and training Active involvement in award modernisation and equal pay cases, working with other peak organisations such as ACTCOSS, ACOSS, and National Disability Services.

Overview Award modernisation – transitional processes Update on the Equal Pay Case Bargaining options Emerging issues from the Fair Work Act: Adverse action claims

The Hierarchy of Conditions National Employment Standards (NES) Modern award Enterprise agreement Contract of employment HR policies

Fair Work Act Award modernisation About 4000 federal awards reduced to 122 modern awards Social, Community, Home Care & Disability Services Industry Award 2010 (SCHCADS) created SCHCADS replaces 47 awards from the industry Award conditions generic across industries

Other sources of conditions Contracts – Employment contracts typically set out conditions specific to employee (eg job title, specific hours) – Contracts cannot cut award or NES conditions Policies – Deal with matters not covered by NES or awards – Explain how NES and awards are implemented Enterprise agreements – Better off overall test

Moving to the new system DateFederal system (ACT & NSW NAPSA) Former state system (NSW) 1 January 2010 NESNES prevails where more generous than state award SCHCADS (except wages, classifications & loadings) Preserved state award 1 February 2011 SCHCADS (except wages, classifications & loadings) NAPSA rates NES applies in full Not before 1 Feb 2012 Translation to new classifications 1 st instalment phasing in new wages & loadings

Transitional Arrangements Schedule A provides transitional arrangements for phasing in changes to – Classifications and wages and – Penalty rates and loadings – From 1 February 2012* Some state based award conditions such as accident pay and redundancy severance are preserved until 2014 where more generous than SCHCADS * This date replaces 1 July 2011 which was the date previously set. Fair Work Australia granted a postponement following an application by ASU and Jobs Australia. There may be a further delay depending on progress in the equal pay case.

How does phasing in work? For changes to wages and loadings, in most other modern awards: – 20% of the difference (as at January 2010) applies from July 2010, additional 20% instalments each July until 2014 But SCHCADS is different: – 40% of the difference applies from Feb 2012 – Further 20% instalments each July from Detailed rules apply for doing these calculations Phasing should not result in reductions in take home pay

Reductions in Conditions Not obliged to reduce if modern award sets less generous entitlements – awards only set minimum conditions Award modernisation not intended to reduce take home pay - Take home pay orders available Contractual entitlements may still apply National wage cases may offset some reductions Practical HR management considerations – Consider maintenance of conditions – Consider effects on commitment, employee relations Existing policies

Equal Remuneration Equal remuneration order available under previous federal legislation for nearly 20 years No cases successfully arbitrated to deliver equal remuneration orders Requirement to identify discrimination or male comparator State legislation based on work “of comparable value”

Fair Work version of Equal Remuneration Adopted similar criteria to legislation in states such as Qld and NSW Created prospect of flowing on the Qld pay equity decision for the Qld Community Services and Crisis Accommodation Award 2008 Qld decision granted pay increases of 18-37% for SACS workers, phased in over 3 years

National Equal Pay Case Union claim that work in the SACS sector – Is undervalued, – For reasons related to gendered cultural assumptions about caring work as “women’s work” Public sector comparators

Sector perspectives General agreement in principle that SACS work has been undervalued for gender-based reasons Acknowledgement that comparable public sector jobs pay much more But, concerns about funding, and also programs that are not government funded

Wages Gap Comparison of wage movements for new graduate commencing at Level 3.4 in SACS Qld award, with new graduate commencing at Professional Officer Level 2.1 State Government Departments Certified Agreement 2006.

“Boss’s perspective” Evidence varies across regions, sub-sectors and individual organisations, but – ACOSS survey data indicates approx 30% turnover on average – Ageing workforce – Workforce crisis already apparent in some areas, looming in others Pay clearly uncompetitive, on average, and this is affecting future viability of services

Qld experience Qld government provided immediate significant supplementation to fund 18-37% increases Not enough to fully fund Problems with funding mechanisms Federal government provided no supplementation Anecdotal evidence of improved recruitment & retention and performance where higher wages were funded Phasing in assisted where insufficient funding – some restructuring and renegotiation of funding contracts Regulation to preserve original effect of pay equity on transitional awards

Other industries Concerns about potential flow on to other industries that employ lots of women Test case on criteria for future equal pay orders Sceptical about claims of any gender basis Suggest higher public sector pay rates due to public sector bargaining, and failure of community sector to bargain effectively

FWA interim decision SACS work is undervalued Gender is an important factor in the undervaluation More information needed about the extent of gender-based undervaluation, funding implications and other technical issues before making a final decision regarding pay increases

Gender-based undervaluation History of charitable good works by women Industrial awards only established in the last 20 years Unstated assumptions about “caring” work that undervalues compared to other professional work Some public sector workers do similar feminised work, but bargaining heavily influenced by other parts of the public sector, longer industrial history Not simply a matter of being an industry with high proportion of women

Commonwealth & ASU Joint Submission Delay award transition to July 2012 Caring/women’s work method for determining extent of gender-based undervaluation Propose rates based on Qld rates First equal pay instalment Dec 2012 Phase in over up to 6 years Shorter phase where smaller increases

Imagine we had competitive pay What would be the real strategic workforce issues for the sector?

Possible issues Maintaining competitive pay – Award system? – Productivity-based bargaining? Promoting high performance – Line management skills – HR practices that foster commitment and engagement

Bargaining Options Bargaining – Unfunded? – Funded frameworks negotiated with government? – Multi-employer agreements? – Productivity?

Management Issues But not every management issue is an industrial issue to be bargained – Scope for reforming/enhancing HR management practices and strategies? – Red tape – Employee engagement – Recruitment & retention

Employee Engagement Level of engagement is a predictor of organisational performance Commitment, discretionary effort More than just satisfaction

Recruitment & Retention Wages – Gap between community and public sectors Flexibility – Hours – Leave “Direct supervisor” Expectations and reality

Managing Organisations Employer rights and responsibilities To deliver on our mission; To determine how job is done and by whom; To decide how to run our organisation Constrained by Industrial issues and employee responses; Organisational values; and Strategic considerations

A Framework 3 Sets of Considerations Industrial Organisational Values Organisational Values Strategic Objectives Strategic Objectives

A model HR practices Organisational performance Organisational values

Emerging Issues: Adverse Action Adverse action includes: – Termination of employment – Other actions to detriment of employee such as refusing training requests, non-renewal of contract, reduction in hours Adverse action OK if for a “valid reason” Adverse action unlawful if for a “prohibited reason”

Valid reasons Poor performance Misconduct Capacity Operational reasons

Prohibited reasons Discrimination on equal opportunity attributes Temporary absence due to illness or injury Union activity Making a workplace complaint Exercising a workplace right

General protections claims All employees have general protection against prohibited adverse action, including: – Casual – Probationary Onus of proof on employer to show decision was not wholly or in part for a prohibited reason If not resolved in conciliation, may go to court No cap on potential compensation

Implications for management Prudent to ensure transparent process for all employees, including: – Short term casuals and – Probationary Absence of process likely to mean no evidence of real reason available to defend adverse action claims