The Community Sector IR Landscape:Key Issues

Michael Pegg & Jen ForwardJobs 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 systemDate Federal system (ACT & NSW

NAPSA)Former state system (NSW)

1 January 2010

NES NES 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 Translation to new classifications

1st instalment phasing in new wages & loadings

1st 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 2012-2014

• 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 2009-2012

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.

2004 2005 2006 2007 2008 2009 2010 2011

SACS QQPS

“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 organisationConstrained by• Industrial issues and employee responses;• Organisational values; and • Strategic considerations

A Framework

3 Sets of Considerations3 Sets of Considerations3 Sets of Considerations

IndustrialIndustrialOrganisational

ValuesOrganisational

Values

Strategic ObjectivesStrategic 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