Earlier on this year, two major residential aged care providers confessed to underpaying workers. Over 11,000 workers were owed over $4.6 million altogether, with one of the providers being fined $40,000 by the Fair Work Ombudsman. The Health Services Union who represents aged care workers has since called for a national pay audit for the aged care sector to see if more issues would be uncovered (source).
The complex nature of award interpretation in the sector
The way that aged care workers get paid is quite complicated. Besides a basic weekly or hourly paid rate, there are evening penalty rates, night penalty rates, Saturday penalty rates and public holiday rates; even overtime payment comes into different variations depending on the duration and what day of the week it is worked on. Adding these to all the different types of employees, it is no surprise that an aged care provider can have as many as 16 different award rules in place to cover all their staff.
While one might be able to run a roster via a spreadsheet (though we strongly recommend against it!), it is almost impossible to run payroll with that many variations in a spreadsheet. The error rate of running payroll manually with this kind of complications is estimated to be 60%.
COVID-19 adds to the complexity
2020 is going to take the complexity of award interpretation to a whole different level. COVID-19 has disrupted the industry in so many ways and put the already straining workforce through unprecedented challenges. In Victoria alone, there were 3574 coronavirus cases in healthcare workers as of 12 November. But there are many more who need to self-isolate due to being identified as a close contact to a positive case or for other reasons, forcing them to be absent from work. This alone has posed a big impact to rostering and payroll for many aged care homes.
In July, the Fair Work Commission has introduced the paid pandemic leave to all full-time, part-time and regularly and systematic employed casual aged care employees who are covered by the Aged Care Award, Nurses Award and Health Service Award (NB. The paid pandemic leave was set to expire on 29 Oct 2020, but is now extended to 29th March 2021).
Employees are entitled to 2 weeks of paid pandemic leave if they cannot work because they’ve come into close contact with a suspected or confirmed case; when they are required to self-isolate or when government or medical authority have taken measures that prevent them from working. The entitlement does not accrue, and each time an employee meets the criteria, they can take up to 2 weeks’ paid pandemic leave.
3 potential issues with the Paid Pandemic Leave
This poses three potential issues for aged care providers. One is the way providers do absence management. Do you record the reasons why employees are absent? Do you have different leave types created for COVID-19? Can you run reports from the system that enables you to identify leave types that fit in the criteria of the paid pandemic leave?
A second potential issue is how do you then distinguish the employees who have been on leave that fit in the criteria are also eligible for the paid pandemic leave? For example:
- Are they covered by the 3 awards listed?
- Had they taken sick leave?
- Are they entitled to worker’s compensation benefits as a result of contracting COVID-19?
- If it is a casual employee, has he/she been regularly and systematically employed?
Finally, how do you ensure they are being paid the right amount? For full-time employees, the paid pandemic leave needs to be paid in their base pay rate for the ordinary hours of work. For part-time employees, their paid pandemic leave needs to be paid in the higher of either their agreed ordinary hours of work or an average of their weekly ordinary hours of work for the previous 6 weeks. For casual employees, their paid pandemic leave needs to be paid in an amount based on the average of their weekly pay over the previous 6 weeks; or the average of their weekly pay for the time they’ve been employed should their employment is shorter than 6 weeks.
Adding this to the already complex award interpretations of the industry and chaos created by COVID-19, it feels like there is a perfect storm for many more unintended underpayments to be uncovered.
So aged care providers, how confident are you with the way you do payroll? Do you have a system that can support you through a year like 2020? Are you worried about underpaying staff unintentionally? In our next blog we will talk about how an e-rostering system with award interpretation functionality can support you, and what kind of measures you can take to minimise payroll errors.