Submission 167 Australian Council of Trade Unions Workplace Relations Framework Public inquiry

Example

For example, Anna offers Martin an annualised salary of $65,000 per annum. Anna tells Martin that the salary is in compensation for all overtime, penalty and shift rates he would work and that he must work at least two weekends per month and do 3 hours of overtime per week. We set out a simple example below that does not factor in other amounts such as allowances etc.

• 
  Martin’s base or ordinary rate of pay is $25 per hour
  
• 
  His ordinary weekly hours are 38 per week
  
• 
  Saturday rate is 150% of ordinary rate
  
• 
  Sunday rate is 200% of ordinary rate
  
• 
  Overtime is 150% for the first three hours and 200% for all hours thereafter
  

If Martin only worked 38 hours per week during normal business hours Monday – Friday he would earn: $49,400 per annum, or $4 116.66 per month.

If Martin worked the following pattern according to his rates of pay and penalties etc. in accordance with the pattern of two weekends per month and 3 hours of overtime per week, he would earn:

• 
  Weekdays: 4 x $25 x 38 = $3800
  
• 
  Saturdays: 2 x $25 x 1.5 x 7.6 hours = $570
  
• 
  Sundays: 2 x $25 x 2 x 7.6 hours = $760
  
• 
  Overtime: 3 x 4 x $25 x 1.5 = $450
  
• 
  Monthly total = $5 580.00
  
• 
  Yearly total = $66 960.00
  
  

The $65 000 annual salary offered by Anna does not adequately compensate Martin for the work pattern he undertakes. If Martin works additional overtime hours, even one per week, or works on public holidays or additional weekends the discrepancy between his annual salary and what he should be receiving will be greater.

This is a simple example and illustrates how hard it is to calculate whether or not an employee is better off receiving individual amounts due under the award or a rolled up rate. It is not easy for an employee to interpret the terms of a contract of employment so that he or she can tell whether or not an annual salary is in fact effective. Likewise, it is hard for an employer to calculate amounts and draft provisions for contracts which ensure that they are not exposed to underpayments in the future.

Annualised salaries may assist employers by instituting more predicable labour expenses, and they may also assist employees in that they know how much money they will receive each week. However, while they may assist in this regard, they are still problematic in that an employee and employer could make mistakes or act in ways which conceal avoidance of minimum terms and conditions of employment. Further, they are clearly unsuitable for workers engaged almost exclusively to work unsociable hours.

Case study: Nurses and Midwives

Under the Nurses Award 2010 nurses and midwives receive standard overtime payments, shift and weekend penalties and additional payments for working on public holidays.  The award also provides that nurses and midwives are to be available to be rostered for work as necessary to meet the service requirements of the health care setting. 

Most nurses and midwives work according to a roster with changing shift patterns and at anti-social periods day and night.

Whether this be at a hospital, aged care or community setting a nurse or midwife will be on hand to ensure care is maintained, invariably working  in chaotic settings  for employers who operate their business on a 24 hour a day, 7 days a week basis.

As nurses and midwives are required to be at the frontline of the provision of health care they often suffer stress and other ill health effects from working not only long hours but also nonstandard hours.  Their obligations as employees, coupled with their professional commitment to the care and wellbeing of their clients results in exploitation including having to shoulder unacceptable workloads ,working short staffed, double shifts and excessive overtime.  This in turn leads to burnout and entrenched recruitment and retention problems in specific health and aged care settings. 

Given the business model  in both health and aged care it is not surprising nursing remuneration is made up of between 20% to 40 % of allowances shift loadings and penalties depending on the roster arrangements.

Any reductions in these current entitlements would have a deleterious impact on the employees and the provision of care in Australia.

Deregulation of penalty rates will result in nurses and midwives losing these payments in areas where they are industrial weak.  The consequence of this will be that there will be a shift in employment to those employers who continue to provide such entitlements.

The direct financial impact of reducing penalties will be significant as is evidenced in the modelling set out hereunder.

Table calculates the impact over a calendar month for registered and enrolled nurses who are full time , work ten shifts per fortnight including day , afternoon and night and work one public holiday in that month.  This roster would be viewed as typical in the hospital sectors.

Based on the roster even a marginal reduction in current penalties, as set out in Scenario B , would result in  significant income reduction , over $180 per week for some employees.  In Scenario C where penalties are removed completely the loss could be as much as $470 per week.

It is important also to note that where registered and enrolled nurses are required to work more nights, weekends on public the losses would be substantially more.
Table : Penalty Rate Scenarios for Nurses – Example A


Table models the same roster arrangements and penalties for a full time Assistant in Nursing employed in the residential aged care sectors in various states and territories. In Scenario B the Assistant in Nursing would lose around $100 per week and in Scenario C approximately $250. 

Table : Penalty Rate Scenarios for Nurses – Example B

In looking at the changes in Table it is worth keeping in mind the ordinary hourly rate under the award is between $18.41 and $19.64 and for the same worker covered by an agreement between $18.80 and $22.64; low wages on any criteria. 

11	The Safety Net: (3) National Employment Standards.