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On 8 October 2018 the Royal Commission into Aged Care Quality and Safety was established to inquire into the quality and safety of aged care in Australia. The Royal Commission’s Final Report, tabled in Federal Parliament on 1 March 2021, made 148 wide-ranging recommendations for the fundamental reform of the aged care system. A number of those recommendations related to the employment terms and conditions of workers in the aged care industry, including:

  • increases in award wages;
  • improved remuneration for aged care workers; and
  • minimum staff time standards for residential care.

Following the release of the Royal Commission’s Final Report, the Morrison Government agreed to the recommendation to replace the Aged Care Act 1997 and create a framework for generational reform of the aged care system. While some urgent legislative amendments have already been implemented, the Government’s overhaul of the aged care system via a new Act is planned to come into effect from 1 July 2023 (subject to usual parliamentary processes).

One of the recommendations not yet implemented by the Government relates to the preference of direct employment by aged care providers as opposed to labour hire or independent contractor arrangements. The Royal Commission’s specific recommendation in that regard was as follows:

Recommendation 87: Employment status and related labour standards as enforceable standards

  1. By 1 January 2022, the Australian Government should require as an ongoing condition of holding an approval to provide aged care services that:

    a) approved providers: have policies and procedures that preference the direct employment of workers engaged to provide personal care and nursing services on their behalf;

    b) where personal care or nursing work is contracted to another entity, that entity has policies and procedures that preference direct employment of workers for work performed under that contract.
  2. From 1 January 2022, quality reviews conducted by the Quality Regulator must include assessing compliance with those policies and procedures and record the extent of use of independent contractors.

To that end, the Honourable Josh Frydenberg MP has requested the Productivity Commission undertake a Study “to examine employment models in aged care, and the effects that policies and procedures to preference the direct employment of aged care workers would have on the sector.” You can access the Productivity Commission’s “Indirect employment in aged care” issues paper here and the inquiry’s terms of reference here.

The Productivity Commission has invited interested people and organisations to make a written submission by no later than Friday 29 April 2022. (It is also possible to make a brief comment in relation to the inquiry at any time).

We would encourage any organisations which employ or engage workers in the aged care industry (including aged care and labour hire providers) to consider the impact of these legislative reforms on their businesses and to ensure that their views are provided to the Productivity Commission for their consideration.