Arbitration under s.170MX following termination of bargaining periods initiated by the Australian Nursing Federation and the Health Services Union of Australia.

INTRODUCTION

[1] This decision concerns the arbitration of matters under s.170MX of the Workplace Relations Act 1996 (the Act) and follows Orders issued by Senior Deputy President MacBean [Prints R9901 and S0296] terminating bargaining periods in existence between the Australian Nursing Federation (ANF), Health Services Union of Australia (HSUA) and some approximately 356 employers respondent to the Nurses (Victoria Health Service) Award 1992 [Print K6359 [N0175]] (the Nurses VHS Award). The bargaining periods were terminated on the ground that the circumstances under s.170MX(7) existed.

[2] All of the approximately 356 employers are engaged in the operation of nursing homes and hostels in the Residential Aged Care Sector in Victoria (the aged care sector). The awards sought by the ANF would be binding on the employers listed in the schedule to the ANF amended application for termination of bargaining periods, with the exception of the Good Shepherd Services Inc. The awards claimed by the ANF for each of the employers, are in identical terms and are set out in Exhibit ANF 4 and if made will be applicable to registered nurses (Divisions 1 and 2). In summary, the ANF claim consists of a 15% increase in wages. The inclusion of the conditions of employment from the Nurses VHS Award, a flexibility clause together with a clause providing for a registered nurse to patient ratio. Such a clause existed in the Nurses VHS Award prior to a Full Bench decision of 30 August 1999 [Print R8575] that found the clause non-allowable and it was deleted from the award.

[3] The HSUA sought parity between the public sector and that of the private sector in both wages and conditions of employment and establishment of an appropriate registered nurse to patient ratio.

[4] The respondent employers oppose the claims.

[5] With a number of minor exceptions, registered nurses in the aged care sector are not in receipt of wages above those prescribed in the Nurses VHS Award.

COMMONWEALTH GOVERNMENT FUNDING AND ACCREDITATION OF THE NURSING HOME SECTOR

[6] We set out in the following paragraphs a brief overview of the funding and other arrangements under Commonwealth legislation relating to the nursing home sector. The Aged Care Act (Commonwealth) 1997 (Aged Care Act) provides the funding regime that applies to both nursing homes and hostels together with the services that are required to be provided to residents depending on their classification under the Resident Classification Scale and prescriptive regulation in respect of the facilities and their accreditation. Residents are classified under the Resident Classification Scale from 1 to 8, with 1 attracting the greatest funding as a result of the assessed caring hours being the highest, and a 8 rating attracting no funding. The greater the level of dependency of the resident the greater the funding that is provided.

[7] In addition to Commonwealth funding operators receive resident contributions which under the Aged Care Act are related to a percentage of the aged care pension. For those residents with additional means, the Commonwealth levy an additional fee which is reduced from the fee charged or recovered by the provider. There is an annual review of the subsidy paid to operators based on a formula which includes the measure of underlying inflation and safety net adjustments.

[8] The present system of funding arrangements differs in a number of ways to the funding which applied under previous legislation. Prior to 1997 funding was provided in three categories. Firstly, funding was made to cover costs such as food, fuel or electricity, administration costs and salaries for cooking and domestic staff under what was known as the Standard Aggregate Module (SAM). Funds not spent by the nursing home operator on these and other infrastructure costs were available as a surplus to the operator.

[9] Secondly, under the Care Aggregate Module (CAM), funding was provided specifically for the purpose of expenditure on nursing and personal care. Nursing home operators were required to acquit or account for the expenditure of CAM funding.

[10] Thirdly, funding was paid to cover expenditure for such items as payroll tax, workers compensation, superannuation and long service leave for nursing and personal care staff. This funding was paid in advance based on information as to likely costs.

[11] Under the Aged Care Act the boundaries between the three streams of funding were eliminated and the requirement to acquit expenditure on nursing and personal care and other items was abolished.

[12] Accreditation is the evaluation process under the Aged Care Act which residential aged care facilities are required to go through to be recognised as approved providers in order to continue to receive residential care subsidies. There are a number of factors considered in the audit for accreditation which include:

The standard of care and facilities, user rights, the quality of buildings, concessional and assisted ratios and prudential arrangements.

[13] From this brief overview it can be seen that operators are required to meet on an ongoing basis a range of standards set down in legislation and through regulations. Responsibility for the accreditation process across Australia is the Aged Care Standards and Accreditation Agency which employs a team of quality assessors to audit the services of providers.

[14] As part of the new funding arrangements, the Commonwealth Government introduced in 1998 a system to coalesce funding across the states to a national uniform rate over a set number of years.

[15] The effect being that those states that had higher rates of funding such as Victoria and New South Wales would receive a reduction in the amount of indexation increase in their funding whereas other states below the national benchmark would receive higher amounts of indexation than those states on or above the national average.

[16] It was put to us by employers that the policy would adversely affect the level of funding provided to Victorian Employers in the years ahead.

[17] However, the Federal Minister for Aged Care announced on 6 December 1999 a new policy known as the Funding Equalisation and Assistance Package to replace the existing coalescence policy. Relevantly the Minister's Media Release stated (Annexure A to Exhibit now marked ANF 56):

"The existing coalescence policy will be replaced with a Funding Equalisation and Assistance Package, under which States will reach uniform national rates at different times, over different periods, to give an equitable outcome.

The response provides for an extra $148 million over 6 years to 2005-06 in recurrent payments:

* Queensland will gain $83.6m, South Australia will gain $14.7m, Western Australia will gain $3.5m and the Australia Capital Territory will gain $0.3m.

For these states, this new money will dramatically accelerate their increase in funding. This response clearly addresses the issue of equity between states and provides for uniform national rates to be achieved two years earlier on 1 July 2002; and

* Victoria will gain $39.6m and Tasmania will gain $6.3m.

For these states, this will ensure ongoing annual increases in funding, each year. The response will also enable more time for the sector to manage the transition, as uniform national rates for Victoria and Tasmania will instead be achieved two years later on 1 July 2006.

The Government will also commit $1 million to help address aged care workforce issues by, for example, promoting the aged care nursing workforce, assisting with retention of the existing workforce and assisting to attract new entrants to that workforce.

`I think it is very important to support measures to encourage a strong and committed workforce for aged care. I'll be looking to a steering committee of industry, consumers, staff and the professional colleges to support development of this initiative,' Mrs. Bishop said."

[18] Submissions were made by the ANF and SIAG on the funding assistance package and its effect on the ability of operators to meet the unions' claims. We deal later with these submissions.

HAS THE COMMISSION POWER TO MAKE A MULTI -EMPLOYER AWARD UNDER S.170MX?

[19] This was a matter on which we sought submissions during the early part of the proceedings. The ANF submitted that the power existed, while the employers argued that the power was confined to the making of an award with a single respondent employer. On 16 September 1999 we gave a decision without reasons [Print R9199] which in part concluded (page 3):

"We have concluded that on a proper construction of the Act the Commission does not have the power to make a single award under s.170MX with multiple employer respondency. The making of an award under s.170MX is confined to a single employer respondent."

We now provide our reasons.

[20] The matters before the Commission under s.170MX follow the termination of approximately 700 separate bargaining periods on the grounds that the circumstances under s.170MW(7) existed. The Commission is required in each of the single matters to consider under s.170MX(3) whether to exercise the arbitration powers mentioned in s.170MY to make an award that deals with the matters that were at issue between the parties during each of the bargaining periods.

[21] The object of Part VIB is set out under s.170L in the following terms:

"170L Object

The object of this part is to facilitate the making, and certifying by the Commission, of certain agreements, particularly at the level of a single business or part of a single business."

[22] Section 170LA sets out the functions of the Commission under this part and relevantly provides at sub-clause (1) the following:

"(1) The Commission must, as far as practicable, perform its functions under this Part in a way that furthers the objects of this Act and, in particular, the object of this Part."

[23] Section 170LC is headed "Additional Operation of the Act" and provides as follows:

"170LC Additional operation of Part

(1) In addition to its operation apart from this section to a single business, or part of a single business, of an employer, this Part applies, subject to this section, in the same way to any of the following, or any combination or combinations of the following:

(a) one or more single businesses;

(b) one or more parts of single businesses;

carried on by one or more employers.

(2) If an application for certification of an agreement by the Commission can only be made under this Part because of subsection (1), the agreement is a multiple-business agreement.

(3) Only a Full Bench may certify a multiple-business agreement under Division 4.

(4) A Full Bench, under that Division, must not certify a multiple-business agreement unless it is satisfied that it is in the public interest to certify the agreement, having regard to:

(a) whether the matters dealt with by the agreement could be more appropriately dealt with by an agreement, other than a multiple-business agreement, under this Part; and

(b) any other matter that the Full Bench considers relevant.

(5) In spite of section 170LY (which deals with the effect of a certified agreement in relation to awards and other certified agreements), a multiple-business agreement has no effect in so far as it is inconsistent with any other agreement that is certified under Division 4 that is not a multiple-business agreement.

Note 1: Section 170LY would nevertheless apply to inconsistencies with awards or orders of the Commission or with other multiple-business agreements.

Note 2: Part VID deals with the relationship between AWAs and all certified agreements.

(6) Division 8 (other than sections 170NA and 170NB) does not apply in relation to a proposed multiple-business agreement."

[24] Section 170MI sets out how the initiation of a bargaining period is undertaken. Throughout s.170MI the reference to an employer is in the singular. Likewise, under s.170MW the reference to the parties who are negotiating parties, contains a reference to the employer in the singular.

[25] Section 170MZ deals with awards made under s.170MX and where a reference is made to the employer it is a reference in the singular. For example, s.170MZ(4) provides:

"(4) Before the award's nominal expiry date has passed, the Full Bench must not revoke the award unless it is satisfied that:

(a) the employer and the one or more organisations, or a majority of the employees, who are bound by the award have agreed to the revocation (for example, because they propose to make an agreement under Division 2 or 3); and

(b) the revocation would not be against the public interest."

[26] Under Part VIB, apart from the operation of s.170LC, wherever there is a reference to an employer it is a reference in the singular. In other words, the focus of VIB is on agreement making at the level of the single business.

[27] Turning to the additional operation of 170LC, in the submissions of the employers the additional powers under s.170LC relate only to the multi-business agreements, whereas the ANF submitted that s.170LC was a grant of power which is restricted by ss(2), (3), (4), (5) and (6) only in respect of multiple business agreements and as such does not impose any restriction in relation to the Commission's powers under s.170MX.

[28] In the ANF's submission s.170MY gives the Commission the same conciliation and arbitration power in relation to matters under Part VI, that it has to matters under Part VIB as if it were exercising those powers in relation to industrial disputes. Such power extends to multiple employer awards. In the case of s.170MX a consideration of whether the Commission should make a single award with multiple employer respondents was a discretionary matter governed by the matters in s.170MX, not one of power.

[29] We consider that there is some uncertainty as to the proper intention of Parliament in the wording of s.170LC and accordingly, we had recourse to the explanatory memorandum of the Workplace Relations and Other Legislation Amendment Bill 1996. Under the title "New Section 170LC - Additional Operation of Part" paragraph 9.43 is set out as follows:

"9.43 The primary focus of the Part VIB is to encourage and facilitate certified agreements at the level of the single business or part of a single business [see notes on new section 170L, above]. However, new section 170LC extends the operation of Part VIB to allow for multiple-business agreements, subject to specified criteria being met."

[30] This explanation on the additional operation of Part VIB, as set out above, supports an interpretation that the additional operation is confined to multiple business agreements. Having regard to the explanatory notes, together with the reference to the employer in the singular throughout Part VIB (excepting s.170LC), the objects of Part VIB and also of the Act, we have concluded that the power under s.170MX is confined to the making of awards with single employer respondents.

[31] All the matters were heard concurrently and no party objected to this course.

THE CASE OF THE ANF

[32] The ANF called the following witnesses:

[33] The ANF supported its claim that each of the awards sought be in identical terms on the ground that the evidence and material established that the nature, function and extent of responsibilities performed by registered nurses in this sector is "comparable and similar or the same in each of the businesses conducted by the respondents to these proceedings."

[34] It was also put that the business of the respondents is similar or the same and they are all subject to the same funding and regulatory framework. The ANF submitted that since 1991 registered nurses' work value, productivity and efficiency has increased significantly. The evidence demonstrated that the increase in these factors were the result of the following:

- Residents in Victoria have higher dependency levels compared to other states and territories.

- Victoria has the lowest provision of residential aged care places compared to other states and territories, as a result the care provided in Victorian Nursing homes is "generally heavier or more complex than in any other state or territories.

- Care mix funding has impacted in the rate of nurses in the sector, resulting in more complex care needs and more dependent residents now being catered for.

- As a result of budget cuts in the public health sector there has been a shift of the frail elderly from the public sector to private and non-government residential aged care sector.

- As a result of changes in 1997 in the funding available from the Commonwealth Government, there has been an increase in the non-nursing duties required of registered nurses.

- There are less nurses now performing more duties and nursing more highly dependent residents.

[35] It was also submitted that it was in the public interest that the sector have the ability to recruit and maintain registered nurses.

[36] The interests of the respondent employers would be best served in the ANF's submission by improving wages and maintaining a registered nurse to patient ratio, as this would assist in improving quality and efficiency of the business.

[37] The ANF submitted that it was necessary to have the registered nurse to patient ratio included as it would provide registered nurses who are regulated by the Nurses Act 1993 (Vic) (the Nurses Act) to practice safely and within legal requirements.

[38] It was also vital for the safe delivery of care to residents that there be a minimum requirement on nurse to patient ratio.

[39] In relation to nurses in the public health sector whose rates of pay were higher than those in this sector it was submitted by the ANF that the work value, efficiency and productivity of nurses in the residential aged care sector are at least equalled the efficiency of such nurses. The increase in work loads, skills and responsibilities of nurses in other health sectors have resulted in higher wages being paid to the registered nurses.

[40] In response to the employers' submission regarding the added difficulties faced by Victorian operators regarding the Commonwealth policy on coalescence of funding, the ANF submitted that the new policy set out in the Ministers' Media Release (Annexure A to Exhibit ANF 56) will provide Victoria an amount of $39.6 million funding over the 6 year period of implementation in addition to indexation increases. The ANF submitted that the employers' submission on this point could no longer be sustained.

THE SUBMISSIONS OF THE HSUA

[41] The HSUA called the following witness:

Malcolm Charles Hoy

[42] The HSUA's claim was for the Commission to make an award that restored parity between the public sector and the aged care sector in wages and conditions for both Registered Nurse Divisions 1 & 2 and the inclusion of an appropriate clause covering staff patient ratio.

[43] Relying on the evidence of the HSUA witness M. Hoy, the HSUA submitted that registered nurses were expected to do similar work to their colleagues in the public sector. The use of technology is also the same between the private and public sector.

[44] The evidence disclosed that nurses were working in an environment in which the residents were more dependent than those in the public sector. The evidence also showed that trained staff were difficult to recruit and the use of untrained staff placed registered staff under extra stress.

[45] There were no grounds why registered nurses in the aged care sector should be paid less than those in the Victorian public sector.

THE SUBMISSIONS OF THE SERVICE INDUSTRY ADVISORY GROUP (SIAG).

SIAG called the following witness:

Name:

Michael Donohoe

[46] The SIAG submitted that apart from the Good Shepherd Aged Services Inc. and Blue Cross Country Care the ANF and HSUA (the unions) have not genuinely sought to engage in enterprise bargaining with the approximately 350 employers.

[47] The ANF have only sought to pursue their claim at a central level with representatives of the respondents, whilst the HSUA made no attempt to negotiate even at a central level.

[48] Having regard to the existence of at least one certified agreement with increases of a lesser amount than now claimed and the fact that the applicants have not genuinely sought to engage in enterprise bargaining, it is open to the Full Bench to reject the claims.

[49] In respect of the claim for a 15% wage increase above current award rates SIAG submit that this claim is made based "squarely on the basis of the restoration of parity with rates paid in the public sector in Victoria". The public sector rates for nurses exist as a result of certified agreements made in 1997 and 1999. The increases in wages as a result of the certified agreements occurred, in the submission of SIAG, because the public sector employers were able to meet the additional costs incurred.

[50] The evidence in these proceedings it was submitted indicate that the employers generally are not in a position of meeting the increased costs. These employers operate in a health sector in which the Commonwealth Government strictly controls the funding arrangements.

[51] It was further submitted that the new funding assistance package announced by the Minister did not alter the position that Victoria's level of funding will be reduced to a uniform national rate; only the date of 1 July 2004 to achieve the uniform rate has been extended to 1 July 2006. Until this date is met Victorian operators will receive less than the general annual increases in funding.

[52] Whilst it might be argued that operators "will not receive as much less each year because of the new policy" in the submission of SIAG it needed to be recognised that the salaries of nursing and personal care staff were not the only costs associated with the operation of nursing homes.

[53] SIAG concluded by submitting that the new policy on coalescence did not demonstrate any significantly greater ability of operators to meet the unions' claims and it "should be ignored by the Commission."

[54] In response to the unions' claim that the increases sought are justified on the evidence of work value, SIAG submitted that a proper assessment of the evidence suggests that employees may have a greater workload. If that is the position, the Commission's principles preclude wage increase based on increased workloads.

[55] SIAG submitted that properly considered, the wage claim is based on comparative wage justice with nurses employed under certified agreements by other employers able to meet the increased costs.

[56] In respect to the operation of s.170MX(5), SIAG submitted that the requirements of this section need to be applied to the circumstances of each respondent to the proceedings. Such an application, if there were some merit to the claim would produce widely divergent outcomes as each enterprise is subject to different considerations.

[57] SIAG submitted that should the Commission conclude that the evidence supports an increase less than the claim, it was open to the Commission to provide that any increases be implemented by instalments.

[58] In response to the claim for inclusion of a clause relating to a supervision and staffing requirement of a registered nurse to patient ratio, SIAG submitted that this claim be rejected on the ground that this was clearly an issue directed to the delivery of care to residents in nursing homes. Accordingly, it was not an appropriate matter to be dealt with in an award dealing with industrial relationships between employers and employees.

[59] The provision had its origins from regulations made under the Health Services Act 1988 (Vic) and its predecessor. The evidence demonstrated that the registered nurse to patient ratio "is not and has not been met to a significant extent throughout its history". The inability of employers to meet this requirement in the past were due to a range of factors associated with the nature of the work and the shortage of nurses generally.

[60] The evidence in SIAG's submission, makes clear that the obligation sought by the clause is a more onerous obligation than applies in any other state. Having regard to the fact that funding arrangements are the same in all states, to place such an obligation on employers in Victoria would not be in the public interest.

[61] It was submitted by SIAG that all the evidence relied on by the unions was solely directed to the claims on wage and the registered nurse to patient ratio and the Commission should not in the circumstances make an award in the form sought by the unions.

[62] SIAG submitted the Commission should make a provision in any award it makes for a period of time, in which respondent employers may make application to the Commission that the award should not apply to it on the grounds of incapacity to pay.

[63] Finally, SIAG submitted that the Commission should limit any awards it makes to employers operating nursing homes or high care facilities and awards should not be made for hostels or low care facilities. In SIAG's submission there were many hostels or low care facilities which are not part of these proceedings.

[64] Whilst there were a number of respondents in the proceedings which operated both nursing homes and hostels, in some cases on the same site, predominantly the employers in these proceedings operated nursing homes.

THE SUBMISSIONS OF THE VICTORIAN EMPLOYERS' CHAMBER OF COMMERCE AND INDUSTRY (VECCI)

[65] VECCI called the following witness:

Name:

John Brooks

[66] VECCI in its written statement of 20 December 1999 supported the submissions of SIAG.

THE SUBMISSIONS OF THE ACTU, INTERVENING

[67] The ACTU in its written submission (now marked Exhibit ACTU 1), supported both the ANF and the HSUA case for increased wages and the inclusion in an award of a clause relating to registered nurse to patient ratio.

[68] It was submitted by the ACTU that the Commission should, in considering the wages claim, take into account the rates paid to nurses in the market. In this regard the Commission should have regard to the wages paid in other sectors compared to those paid in the aged care sector. Such a comparison together with other factors would justify the wages claim.

[69] It was also important in the ACTU submission that the Commission take into account the desirability of maintaining some national consistency in nurses wages and salaries.

[70] Other factors which supported the wages claim included the following (Exhibit ACTU 1, p. 4):

" * The difficulties in achieving a fair outcome having regard to the nature of the funding structure and attitude of the employer to the bargaining of wages;

* The comparability of the efficiency and productivity of Nurses in the Aged Care Sector and nurses elsewhere;

* The significant increase in the workload, skills and responsibilities of nurses in the Aged Care Sector;

* The comparability of skill, responsibility and workload of Nurses in Aged Care with nurses elsewhere in the market;

* The need to retain experienced and qualified staff in the Aged Care Sector."

[71] In support of the registered nurse to patient ratio claim the ACTU submitted that this condition had been included in the award based on merit by Senior Deputy President Drake [Print M9916] and whilst it had been excluded by the Commission, pursuant to s.89A, there were no such constraints on the Commission under s.170MX.

[72] Other relevant factors include (Exhibit ACTU 1, p. 5):

" * The clause's origin in legislative prescription;

* The fact the clause directly affects the capacity of registered nurses to discharge their obligations under the Nurses Act;

* The fact the clause is integral to meeting community expectations of appropriate staff supervision and staffing in nursing home care;

* The inequity and unfairness which would result to Nurses in Aged Care exposed to the consequences of inappropriate staff supervision and staffing; as well as the adverse effects on the community."

CONCLUSION

[73] The employers have submitted that we should not exercise the arbitration powers mentioned in s.170MY by the making of an award. For the reasons which we set out later, we have decided that we should exercise the arbitration powers under s.170MX and make an award.

[74] It was submitted by SIAG that the existence of one certified agreement (Exhibit ANF 21) and the alleged failure by the unions to genuinely pursue enterprise bargaining at the enterprise level should lead the Commission to conclude that it should not exercise its arbitration powers.

[75] On 25 January 1999 in respect of the ANF, and on 20 April 1999 in respect of the HSUA, MacBean SDP concluded that there was no reasonable prospect of the negotiating parties reaching an agreement under Division 2 or 3 during the bargaining periods then in existence. The reasons for reaching this conclusion are set out in the two decisions of MacBean SDP [Print R0947 and R4085]. In the case of the decision relating to the ANF, the Senior Deputy President set out in this decision an extract from the statement of Ms J. Ligeti (an industrial officer with the ANF) which detailed the efforts of the ANF to negotiate enterprise agreements. He then went on to state the following (pp30 - 31):

"This evidence was in addition to earlier evidence given by Ms Ligeti which detailed extensive correspondence from the ANF to each of the individual employers and the employer organisations who had not responded to the ANF's request to progress their claims through enterprise bargaining. No employer, either through their employer organisation or individually, has agreed to the claims of the ANF.

Both Mr Rahilly and Mr McIntyre conceded that no agreement was possible having regard to the difficulties that existed in the extended health care sector due to Commonwealth funding levels."

[76] In the case of the decision relating to the HSUA which covered almost the same employer negotiating parties as the ANF's decision, the Senior Deputy President at page 3 set out the position of employers and interveners in these terms:

"THE POSITION OF RESPONDENT EMPLOYERS AND INTERVENERS

The Victorian Employers' Chamber of Commerce and Industry on behalf of respondent members, Ms Fraumano on behalf of Bethlehem Home for the Aged did not oppose the applications.

The Service Industry Advisory Group on behalf of respondent members whilst opposing the applications conceded that in the light of the Commission decision in the Nursing Homes Decision such oppositions was difficult to sustain. The Victorian Hospitals' Industrial Association intervening did not oppose the applications. The Australian Nurses Federation intervening supported the HSUA applications."

and further under "Conclusion" the Senior Deputy President made the following conclusion (p.4):

"Having regard to the evidence of Mr. Clancy summarised earlier in this decision, which was not challenged, the submissions of the respondent employers and the evidence before the Commission in the Nursing Home Decision, I have concluded that there is no reasonable prospect of the negotiating parties reaching an agreement."

[77] The existence of one certified agreement in circumstances where there are some 350 other employers in the proceedings who have been unable to reach an agreement with the unions does not constitute evidence that would cause us to come to a different conclusion than that of Senior Deputy President MacBean when he terminated the various bargaining periods and refrain from exercising our arbitration powers by the making of an award.

[78] We now turn to consider the respective cases put by the unions and the employers.

[79] Relevant to our consideration in the making of awards are the terms of ss170MX(5) and (6) which are as follows:

"(5) In exercising those arbitration powers, the Full Bench must have regard to the following:

(a) the matters that were at issue during the bargaining period;

(b) the merits of the case;

(c) the interests of the negotiating parties and the public interest;

(d) how productivity might be improved in the business or part of the business concerned;

(e) the extent to which the conduct of the negotiating parties during the bargaining period was reasonable;

(f) any relevant principles formulated by a Full Bench for the purposes of this subsection.

(6) Subsection (5) does not, by implication, limit the matters to which the Full Bench may have regard."

The Matters That Were At Issue During The Bargaining Periods (s.170MX(5)(a))

[80] The matters that were at issue during the bargaining periods are those matters set out in the particulars which accompanied the s170MI notices as required by s.170MJ. No party submitted otherwise.

THE MERITS OF THE CASE (S.170MX(5)(b))

Wages

[81] In respect of the wages claim the main factors relied on by the unions were:

- The wages and conditions of work in the aged care sector are considerably lower than those applicable to registered nurses performing substantially the same work in other sectors including the public acute and public residential aged care sectors.

- There has been significant increase in work value particularly since 1991.

- Victorian residents have higher dependency levels compared to other states and territories and as a consequence care given is generally heavier or more complex than in other states and territories.

- Although fewer nurses are now employed, they are performing more duties and nursing more highly dependent residents.

[82] The SIAG have submitted that the unions' claims amount to a claim for wage parity with the Victorian public sector nurse rates and that the work value claim is based on alleged increased workload, which is not a reason for increasing wages. In addition, SIAG submitted that the funding regime is such that respondents generally would not be able to meet an increase in costs arising from the granting of the unions' wages claim.

[83] We are satisfied after considering the evidence and submissions that there is a case for the making of awards which include wages at a level higher than those under the Nurses VHS Award. The increase we have decided upon is less than that claimed by the unions.

[84] The main reason which has persuaded us to grant an increase is the difficulties faced by operators in being able to attract and retain registered nurses due to a number of factors including the higher rates of pay for registered nurses in other Victorian health sectors. For example, the rate of pay for a Registered Nurse Division 1 - Grade 2 Year 1 in the Victorian public sector is currently $603.30 per week under a certified agreement, compared to the rate of pay for the same classification in a nursing home under the Nurses VHS Award of $542.40 per week, a difference of $60.90. The difference at Year 6 Grade 2 is $91.00. In the case of a Registered Nurse Division 2 in the public sector, the rate of pay per week at pay point 5 is $582.30 compared to $525.05 under the Nurses VHS Award, a difference of $57.25. The gap will widen as registered nurses in the public sector are to receive a further 2% increase in salaries from the first full pay period on or after 1 July 2000.

[85] The evidence before the Commission was that there was a shortage of registered nurses generally across all states. The difficulties of attracting and retaining sufficient registered nurses in the health system are more acute in the aged care sector. The evidence suggests that there is a preference for nurses to work with younger people in acute care settings. The existence of comparatively low rates of pay and heavy work load requirements are factors which make nursing less attractive for registered nurses considering employment in this sector. Whilst the amount of increase decided upon does not bring the rates of pay up to those in the public sector we consider they will provide some assistance to respondent employers in being able to compete with the public sector to retain registered nurses.

[86] Whilst we accept that there has been an increase in acuity and dependency levels of residents over the recent period, this factor in our view does not warrant an increase based on work value. The work of registered nurses associated with increased acuity and dependency level of residents is work which falls within the profession of nursing. The fact that there are more residents requiring the application of particular nursing skills and responsibilities does not constitute a ground for increased wages on work value.

[87] The rates of pay in the award were established as professional rates having regard to the qualifications, training, skills and responsibilities necessary to deliver care in a range of health settings both acute and aged.

[88] We have also decided not to link the rates of pay in the award to those in the Victorian public sector or to establish rates of pay based on a principle of maintaining some national consistency in nursing salaries as was proposed. To do so would be to tie respondent employers in this health sector to wage increases agreed to by employers in other health sectors based on their own set of circumstances. To adopt such proposals would in our view, be a disincentive to future enterprise bargaining and place employers in the nursing home sector at a serious disadvantage.

[89] In reaching our decision on the level of increase in wages that should apply over the life of the award we have taken into account the evidence regarding the financial constraints that exist in this part of the health sector. The respondents comprise a mixture of private and "not for profit" organisations operating various size nursing homes across both metropolitan, regional and country Victoria. The aged care sector is one which is governed in its ability to meet increased costs by a funding regime which the Commonwealth Government strictly controls.

[90] For the reasons set out we have decided that the awards we make will increase existing wages, (ie. those contained in the Nurses VHS Award) in the following manner:

- 5% increase from the first pay period commencing on or after 1^st February 2000.

- A further 5% increase on the then existing rates to operate from the first pay period commencing on or after 1^st February 2001.

- A final 5% increase on the then existing rates to operate from the first pay period commencing on or after 1^st February 2002.

[91] The awards we intend to make will have a nominal expiry date of 30 June 2002 and are to be read in conjunction with the Nurses VHS Award and to the extent of any inconsistency, the terms of s170MX awards are to prevail over the terms of the Nurses VHS Award. The awards will be known as the {insert name of respondent} Residential Aged Care Nursing Home Award.

Registered Nurse to Patient Ratio

[92] The claim by the union on this matter was initially set out at clause 23 under the heading "Supervision and Staffing". The origins of the claim go back to the Health Services Act 1988 (the Health Act) and the Health Services (Residential Care) Regulations 1991 (the Regulations). Under the Health Act and Regulations private nursing homes and hostels were required to maintain a certain level of nurses as a proportion to the number of residents. This proportion was as follows:

Day Shift - 1 nurse to each 10 or fraction of 10 patients, and

Night Shift - 1 nurse to each 15 or fraction of 15 patients.

[93] Following the decision by the Victorian Government in 1994 to repeal the provisions of the Health Act which related to nursing homes and hostels, the ANF made application in 1994 to vary the then clause 16 - "Proportion to nurses to patients" to include a registered nurse to patient ratio for nursing homes and hostels.

[94] In a decision on 11 March 1996 [Print M9916] Senior Deputy President Drake, with some modifications regarding short absences during meal breaks not being a breach of the proportions, granted the application with a clause providing the respondents with the right to apply for exemption from the clause. The exemption provision was subsequently amended by a Full Bench [Prints P3165 and P3250] as a result of an appeal against the Drake SDP's decision.

[95] A Full Bench on 30 August 1999, following a reference under s.107 of whether clause 16 was an allowable matter, decided the following [Print R8575](pp 19 - 20):

"CONCLUSION

[34] We are not satisfied that clauses 16(b), (c) and (d) of the award are directly allowable by reference to the matters within s.89A(2) of the Act. Nor are we satisfied that they are incidental to an allowable matter and necessary for the effective operation of the award.

[35] In respect of clauses 16(a), (e), (f) and (g); these clauses rely on the existence of the clauses we have found to be non allowable and would be consequently removed as a result of our decision.

[36] For the reasons already set out we are not satisfied that clause 16 either in its current form or as reformulated in Exhibit ANF 10 is directly allowable by reference to the matters within s.89A(2) of the Act. We are also not satisfied that they are incidental to an allowable matter and necessary for the effective operation of the award."

[96] The clause now claimed is in the following terms (Exhibit ANF 4 (p.21) and Annex B of Exhibit now marked ANF 55):

"SUPERVISION AND STAFFING

23.1 The Proprietor of a Nursing Home must appoint a Director of Nursing who is a Registered Nurse whose name appears in Division 1 of the Register of Nurses kept by the Nurses Board of Victoria and who holds a certificate of registration issued by the Nurses Board of Victoria, and has:-

23.1.1 a recognised qualification in gerontology; and

23.1.2 at least three years experience in gerontology; or

23.1.3 at least five years experience in gerontology.

23.2 If the Director of Nursing of a Nursing Home is absent or incapacitated the proprietor must appoint a person as acting Director of Nursing.

23.3 A person appointed under Subclause 23.2 must be a Registered Nurse whose name appears in Division 1 of the Register of Nurses by the Nurses Board of Victoria and who holds a certificate of registration issued by the Nurses Board of Victoria.

23.4 For the purpose of Subcaluse 23.3 "absent" shall not include, absences of less than five (5) consecutive days.

23.5 The proprietor of a Nursing Home must ensure that the minimum number of nursing staff provided is as follows:

23.5.1 day and evening shifts: 1 Registered Nurse from either Division 1 or 2 of the Register for each 10 residents or fraction of 10;

23.5.2 night shift; 1 Registered Nurse from either Division 1 or 2 of the Register for each 15 residents or fraction of 15.

23.6 The proprietor of a Nursing Home must ensure that not less than one third of the nursing staff on duty on each shift are Registered Nurses whose names appear in Division 1 of the Register of Nurses kept by the Nurses Board of Victoria and who holds a certificate of registration issued by the Nurses Board of Victoria.

23.7 It shall not be a breach of the minimum numbers and proportions set out in sub-Clauses.

23.8 if during periods of one (1) hour or less or during meal breaks the proportions or minimum numbers less than those prescribed herein."

Annexure B, Exhibit ANF 55 p.123:

"In the event that the employer has:

(i) taken all reasonable steps to recruit Registered Nurses Division 1 and 2 and is unable to meet the requirements set out in sub-clauses 23.5 and 23.6

OR

(ii) is financially incapable of meeting the requirements set out in sub-clauses 23.5 and 23.6

OR

(iii) met the requirements and obtained Accreditation for 3 years pursuant to the provisions of the Commonwealth Aged Care Act 1997 and is able to demonstrate that Clauses 23.5 and 23.6 inhibit productivity and efficiency of the business (and are not necessary to maintain care standards),

the employer may make application to the Australian Industrial Relations Commission (pursuant to the Dispute Resolution Procedures set out in this Award) to have the prescription set in 23.5 and 23.6 varied."

[97] The evidence is that nurse to patient ratios do not exist in other states. We were not persuaded on the evidence that the unions concerns regarding nurse's safety will materialise in the absence of award based nurse to patient ratios. No evidence was produced to establish that such safety issues exist in the other states where such ratios do not exist. We have concluded that this claim should not be granted. The clause is directly related to the delivery of care to residents in nursing homes and in our view the quality and level of care is a matter of public health policy and is more appropriately determined by Government.

The Claim for the Inclusion of the Existing Award Provisions.

[98] Excepting the wages claim and the staffing and supervision provisions, all the other claims set out in Exhibit ANF 4 are contained in the Nurses VHS Award.

[99] The ANF support the inclusion of those provisions in the award claimed on the ground that they represent existing terms and conditions of employment. The employers submit that in the absence of any evidence to support their inclusion the Commission should not include them in any award made.

[100] We have concluded on the case presented by the unions that there are no grounds which would warrant the inclusion of existing award terms and conditions of employment into the awards we have decided to make. We consider that except as to wages, existing award terms and conditions of employment should continue to operate as part of a safety net of conditions in the Nurses VHS Award. This we believe would be consistent with the object of the Act of providing the means for conditions of employment to be determined as far as possible by the agreement of employers and employees at the workplace or enterprise level based upon a foundation of minimum standards. Accordingly, this part of the unions claim is rejected.

Should the Awards apply to Hostels

[101] The bargaining periods which were terminated for both the ANF and HSUA, some 350 in each case, related to employers conducting residential aged nursing homes in Victoria. In a number of isolated cases the employers conduct both an aged nursing facility and what is described as a hostel, being a low care facility in this sector. In one case the employer, operated both facilities on the one site but service was only directed to the aged nursing home facility.

[102] It was not disputed that hostels or low care facilities operating throughout Victoria were not (subject to the isolated cases referred to above) the subject of service of any bargaining notices by the ANF and HSUA. The cases as presented by all parties were ones directed almost solely to the residential aged care nursing home sector or high care sector.

[103] In the circumstances we do not consider it proper that we should extend the coverage of the awards to a part of the health industry on which there is insufficient material before us to come to a considered decision. Accordingly, the scope of the awards will only cover aged care nursing home facilities operated by the employer negotiating parties.

THE INTERESTS OF THE NEGOTIATING PARTIES AND THE PUBLIC INTEREST - (S.170MX(5)(c))

[104] In reaching our decision on the merits of the claims we have had regard to the interests of the negotiating parties. In relation to the public interest we have also taken the matter into account in arriving at our decision.

How productivity might be improved in the business or part of the business concerned - ( s.170MX(5)(d))

[105] We have considered this matter and concluded that there exists an ongoing improvement in the efficiency of aged care homes as a result of the need of operators of such homes to meet very specific outcome standards set by the Commonwealth Government as part of accreditation processes. The evidence also demonstrates that staff provide personal care to frail and highly dependent patients on a full time 24 hours 7 days a week basis and most of the care needs of patients require the delivery of care on a one to one basis.

[106] The ANF did propose a flexible clause attachment "A" to their written submission which may assist in ongoing productivity improvement and we will include the clause in the awards we make. The wage adjustments together with the flexibility clause will, in our view, assist the ongoing productivity improvement of aged nursing homes.

Any relevant principles formulated by a Full Bench for the purposes of this subsection - (s.170MX5(f))

[107] There have been no principles formulated by a Full Bench which require our consideration.

Any other matters not contained in s.170MX(5) which require consideration - (s.170MX(6)).

[108] There are no matters which have not already been considered by us in reaching our decision to make awards in the terms set out.

Should there be allowed a period of time in which any Respondent may make an application that the Award should not apply to it on the grounds of Incapacity to Pay?

[109] The employers have sought the above provision on the ground that different considerations apply to each of the enterprises. The ANF submitted that the respondent employers elected not to call any employers to give evidence whereas the "ANF led evidence from a wide variety of nurses working in or with expertise of divergent areas within the Residential Aged Care Sector."

[110] It was open to the employers in the ANF's submission to call evidence to controvert the ANF evidence on the existence of different conditions at the enterprises. The failure to do so entitles the Commission to "draw an inference favourable to the ANF that the circumstances pertaining to each Residential Aged Care facility, the subject of these proceedings, are the same or substantially the same."

[111] The ANF in our view make a strong point. On a number of occasions we raised with the employer parties whether they intended to bring forward evidence from individual operators to support their case relating to the inability of operators to meet the claim or whether they intended to conduct their case on an industry wide basis without distinguishing between the circumstances of individual operators and accept the consequences of such an approach.

[112] In this regard we refer firstly to the following extract (transcript p. 101):

"MACBEAN SDP: See, it is open to the Commission, even if the Commission were to find that there was power to make a single award with multiple respondents, there is still a discretion as to whether all the matters in that award would apply to all the respondents. It is open to you to put an argument that respondents X, Y and Z ought not be bound by the terms of certain clauses and so forth and make exceptions to other respondents.

MR RAHILLY: Yes, that is true, your Honour.

MACBEAN SDP: Is that part of your case now?

MR RAHILLY: Well, thus far, your Honour, no, it hasn't been and the difficulty I think, your Honour, arose because the way in which the matters have been conducted historically, that is from the proceedings before yourself in respect of the termination and the methodology which has arisen in relation to these particular proceedings. There has been an assumption, I think, drawn from everybody's point of view that it is all in the same boat and when the Commission requested the parties to look at this particular question and upon looking at it, it raised this problem about - - -

MACBEAN SDP: Isn't your argument this, that (a) there is no capacity for any of your clients to pay an increase at all, not 15 per cent, not 1 per cent - - -

MR RAHILLY: Yes, your Honour.

MACBEAN SDP: That applies to your 100 respondent members. The argument against the nurse/patient ratio, whatever it may be, is uniform or is the same to each respondent? That is certainly your position, I presume?

MR RAHILLY: Yes, your Honour.

MACBEAN SDP: Yes. So you don't make any distinctions there, so where do the distinctions come in, if they come in at all?

MR RAHILLY: Well, your Honour, I think it is fair to say that there probably aren't any significant distinctions. There is a problem in respect of the claim by the ANF for classifications relating to district nursing."

Then at pages 102 and 103 a further exchange between MacBean SDP and Mr Rahilly, representing employer clients of SIAG:

"MACBEAN SDP: It is open to you to make the submission that in respect of respondents A, B and C something else shouldn't apply to them for some particular peculiar reasons only special to those particular respondents. Now, that has not been your case but is it going to be your case?

MR RAHILLY: Your Honour, the - it is going to be our case that the award not apply to hostels.

MACBEAN SDP: Yes, I understand that.

MR RAHILLY: It is going to be our case that the provisions relating to district nursing or classifications related to district nursing - - -

MACBEAN SDP: You haven't heard anything about it at this stage.

MR RAHILLY: No, although there was some evidence drawn yesterday in relation to that, that those provisions not apply. It will be our case that matters relating to introduction of change not appear in any award that might be made and it will be our case that no increases arise or that the provisions relating to supervision and staffing which are claimed not appear and essentially, your Honour, that will be the case that we putting.

MACBEAN SDP: But what I am getting to is this, that that case is the same for every respondent.

MR RAHILLY: Yes, it is.

MACBEAN SDP: And there is no particular circumstance in which it did distinguish your members in why those conditions ought not to apply to them.

MR RAHILLY: Yes, I have no instructions otherwise, your Honour.

MACBEAN: No. So we come back to the same question, does it alter the conduct of the case?

MR RAHILLY: I don't think it alters the conduct of the case, your Honour, no."

In the end the case conducted by the employer parties was one which did not distinguish between the individual operators.

[113] The evidence relied on in relation to the ability of employers to meet the claims was given by Mr Donohoe a consultant to the Aged Care Sector and Mr Brooks, Executive Manager of the Australian Nursing Homes and Extended Care Association - Victoria. Their evidence was to the effect that the operators did not have the capacity to fund the 15% increase in wages being claimed.

[114] In circumstances where individual employers did not avail themselves of the opportunity of presenting evidence on a claimed incapacity to pay, we do not consider appropriate or fair to the ANF to allow the case to be extended in the manner now sought by SIAG and VECCI. This part of the submissions of SIAG and VECCI is therefore rejected.

SUMMARY OF OUR DECISION

1. We have decided that awards should be made in respect of each of the employers with the ANF and HSUA as respondent union parties where the employer had been the subject of bargaining notices served by both the ANF and HSUA. In other cases it will only be the union which served the bargaining notice which will be the respondent union.

2. The awards will commence to operate from the first pay period commencing on or after 1 February 2000 and will contain a nominal expiry date of 30 June 2002.

3. The wages in the awards will equate to the existing wages in the Nurses VHS Award increased by (approximately) 15% in the manner set out paragraph 90.

4. A flexibility clause will be included in the terms set out in Annexure A to Exhibit ANF 56 .

5. The awards we intend to make are to be read in conjunction with the Nurses VHS Award and to the extent of any inconsistency, the terms of s170MX awards are to prevail over the terms of the Nurses VHS Award. The awards will be known as the {insert name of respondent} Residential Aged Care Nursing Home Award.

6. The awards will be settled by Senior President Watson with recourse if necessary to the Full Bench.

[115] The ANF is to file with the Commission and serve on the other parties a draft award reflecting our decision by close of business of 14 February 2000.

BY THE COMMISSION:

SENIOR DEPUTY PRESIDENT

Appearances:

V. Gostencnik of counsel with J. Ligeti for the Australian Nursing Federation.

K. Wilson for the Health Services Union of Australia.

M. Rahilly of counsel for respondent members of the Service Industry Advisory Group.

R. Ironmonger for respondent members of the Victorian Employers' Chamber of Commerce and Industry.

J. Fraumano and R. McIntyre for respondent members of the Private Hospitals Association of Victoria and Bethlehem Homes for the Aged, Bendigo.

Hearing Details:

1999.

Melbourne:

September 13, 14, 15;

October 12, 18 - 22.

Decision Summary

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