Issue number:
04/2016
Date Issued:
16 Dec 2016
Issued to:
Public Hospitals and Health Services
Purpose:
To advise hospitals and health services on funding of the implementation of the proposed new enterprise agreements.

Background

As you would be aware, new four-year enterprise agreements have been negotiated with:

  • the Health Workers Union with respect to health and allied services, managers and administrative workers (the ‘Health and Allied Agreement’)
  • the Victorian Allied Health Professionals Association with respect to allied health professionals (the ‘Health Professionals Agreement’).

The new Health and Allied Agreement has been approved by the Fair Work Commission (FWC).

The proposed new Health Professionals Agreement has successfully passed a ballot of affected employees (see Victorian Hospitals’ Industrial Association Bulletin 2149) and will be submitted to the FWC soon for formal approval.

Both new enterprise agreements will have retrospective effect (to 1 October 2016 under the Health and Allied Agreement and to 4 August 2016 under the Health Professionals Agreement) for some key matters, including the first salary increase under each enterprise agreement.

Authority to pay

As you have been advised by the Victorian Hospitals’ Industrial Association (VHIA) payment of new rates and benefits under the Health and Allied Agreement should have commenced (see VHIA Bulletin 2148).

We have recently advised the VHIA that the government has agreed to authorise payment of new salaries and benefits under the Health Professionals Agreement as if the proposed new enterprise agreement was in formal operation. This circular confirms that advice.

Funding to implement the outcomes

Indexation

Public hospitals and health services are notionally funded for the first 2.5 per cent annually of any salary increases that arise from enterprise bargaining.

The previous Victorian Public Health Sector (Health Professionals, Health and Allied Services, Managers and Administrative Officers) Enterprise Agreement 2011-15 reached its nominal expiry date on 31 December 2015 with the last annual salary increases payable under that agreement having taken effect on 1 April 2015.

The new enterprise agreements each provide four annual salary increases. Health services are expected to fund the first 2.5 per cent of these increases annually.

Other revenue sources

Public hospitals and health services are reminded that the department does not fund 100 per cent of their activities. Public hospitals and health services typically have other revenue streams such as Commonwealth funding and grants (for example, residential aged care bed day funding), private practice revenue and business unit revenue.

Public hospitals and health services are expected to set aside 2.5 per cent per annum funding from these other sources to meet a proportion of the new enterprise agreement costs.

Funding supplementation

As the annual pay increases under the proposed new enterprise agreement exceed the government’s standard rate of annual pay increase of 2.5 per cent, The government has agreed to provide funding supplementation equivalent to the difference between the annual pay increases provided for under the proposed new enterprise agreement and the standard 2.5 per cent per annum increases. This funding supplementation will be provided by way of Specified Grant in 2016-17 and rolled into budgets thereafter.

Attribution of incorporated savings/offsets

The proposed new enterprise agreements include some savings/offset provisions as well as benefits that will arise from the service delivery partnership plans agreed between the parties. The realisation of these benefits will contribute to meeting the ongoing implementation costs of new or improved employee benefits.

Release of funding

Public hospitals and health services will receive funding adjustments through the Budget Payment System (BPS) in early 2017.

Funding inclusions

This funding supplementation relates to the salary increases under the new enterprise agreements and is inclusive of salary-related on-costs relating to superannuation contributions and WorkCover premiums. Changes to Long Service Leave liabilities will continue to be managed through existing mechanisms. As with previous agreements, annual leave uplift is not funded.

More information

Queries regarding the terms of the proposed new enterprise agreements should be directed to the VHIA on telephone + 61 3 9861 4000. Hospitals and health services with queries relating to funding arrangements outlined above should contact Ms Jenny Zahara, Assistant Director, Accounting and Commercial Operations on telephone +61 3 9096 8459 or by email addressed to jenny.zahara@dhhs.vic.gov.au.

Lance Wallace
Deputy Secretary
Corporate Services