CURRENT CIRCULATION: DATE: ISSUE NO:
7793 nd 22 June, 2010 171
Welcome to Health & Life’s free email newsletter service. Tell a friend that we would be happy to add their email address to the distribution list. This service is to provide Health and Life’s clients and those who attended our presentations with up to date information on key financial and Practice management issues that may affect your Practice. Please do not use this as a substitute to seeking professional advice. Writer in charge: Mr David Dahm BA.Acc, FCPA, FTIA, Ffin, FAAPM, GLFG.
30th June Wage Increase & Award Compliance Changes Introduction National Media Coverage It has been a busy last month in the national media and we do appreciate the support of our readers and the media in getting these important issues into the public arena. There have been more but the key ones I thought that may be of interest are below. 1. Medical Observer - Doctor Patient Interference by Medicare Thank you to all of you who have responded to our last news alert in relation to doctor patient interference by Medicare Australia. It did make the national media press so let’s hope some good will come out of it. Medical Observer - Legality of GP watchdog’s clinical edicts questioned on May 14th, 2010. See http://www.medicalobserver.com.au/news/legality-of-gpwatchdogs-clinical-edicts-questioned. 2. Medical Observer - Pathology Collection Centre De-regulation – Establishing Legal Market Rental Values We also made the National media again on the new pathology kick back laws in relation to the new inquiry into pathology kick backs by Human Services Minister Chris Bowen. Unfortunately Dr David Rivett from the Federal AMA did not make an accurate assessment in relation to my comments. Prices paid for General Practice collection centres are reaching an st all time high due to the deregulation of pathology collection centres from 1 July 2010. My response was published in the Medical Observer on June 18th, 2010 titled “Clarifying Proper Market Value” to clarify how to set a legally correct market value for a pathology lease under the new laws. See https://www.accounting.eknowhow.com/HealthandLife/html/s02_article/article_view.asp?id=1 39&nav_cat_id=127&nav_top_id=55&dsb=360. 3. The Australian - Learn from live trials: Rudd's plan to co-locate Health Specialists On a brighter note, The Australian published my article on how to make co-location of healthcare services sustainable on June 5, 2010. See http://www.theaustralian.com.au/news/health-science/learn-from-live-trials-rudds-plan-to-colocate-health-specialists/story-e6frg8y6-1225875605065.
In this Edition ….. All of you by now should have become Award compliant. For 99% of you, this means you have a written contract with each one of your employees if you are paying your staff above Award rates and you wish to opt out of Award payments such as overtime and penalty rates. It is not enough to pay staff employed in your Practice above the minimum Award rates based on a “handshake” and say that you are compliant. If this is the case, Practices can still face a $33,000 fine for underpaying staff and will have to pay additional penalties over and above these minimum entitlements unless they are documented correctly. Many Practices have been waiting for the new laws to settle down before doing anything and this is also not an appropriate strategy. The Awards are like the tax laws. They will keep changing but this is not an excuse for not doing your tax return. st
In fact, many Practices did not realize that by 1 January 2010 your Practice must have st become Award compliant and not by 1 July 2010. Only parts of the Award had a delayed or transitional period. The Fair Work Act and its corresponding Awards came into full effect from st 1 January 2010. The good news in this edition is that many Practices may have been overpaying their staff in the last 6 months with the new ordinary hours ruling that affects part-time staff. In this edition we will cover off on the following, significant last minute award changes, significant common misinterpretation problems and are you award compliant? Finally how to th purchase award compliant employment templates with job descriptions before 30 June 2010 and get a tax deduction this financial year to ensure you are compliant.
CONTENTS 1.0 Significant Last Minute Award Changes 1.1 The Legislative Framework 1.2 Wage and Allowance Increases - 4% p.a? st 1.3 New Definition of Ordinary Hours - New ruling 31 May 2010: No more penalties or overtime for part-time workers? 1.4 New Physiotherapy Extended Definition of Ordinary Hours 1.5 Shiftworker - No more 15% Shift Allowance 1.6 Regular Casual - There is no such thing anymore! 2.0 Significant and Common Award Misinterpretations 2.1 Employee vs Contractor vs Associate 2.2 General Practitioner Award! 2.3 WA - Still not coming to the party if you are a partnership or sole trader 2.4 Employees can change their mind!?! 3.0 Are You Award Compliant? - Checklist 3.1 Are You Familiar With New Rules? 3.2 Make sure you have the correct legal entity and structure! 3.3 No Signed Employment Contract? - No deal and no protection from prosecution up to $33,000 per incident. th 3.4 Purchase Award compliant templates with job descriptions before 30 June 2010 and get a tax deduction this financial year to ensure you are compliant 4.0 2010 Seminar Presentations
5.0 Catching Up with David Dahm and the Team 6.0 Where to from here? th
30 June Wage Increase & Award Compliance Changes
1.0 Significant Last Minute Award Changes Warning a number of these changes have not been inserted into the Awards as they have not been updated yet but they are law. Please note these new rulings replace any telephone, seminar or written advice we have given in relation to the new industrial laws and st some apply retrospectively to 1 January 2010. 1.1 The Legislative Framework What is often misunderstood is that the following areas of law affect each of your employee’s contracts. Employers need to take into consideration all areas in order to ensure they have covered all their bases. Details of these areas have been briefly noted below. Employers technically must ensure compliance as ignorance of the law is no excuse. I have read over 890 pages of the new legislation which includes but is not limited to: 1. The Fair Work Act 1999 which incorporates The National Employment Standards that applies to Award free and Award employees states Independent Contractors and contractors can be deemed employees if the contractor terms remain unwritten or are poorly worded. Practices can purchase service agreement templates for their providers that removes the need to ensure these providers comply with the new Fair Work Act rules. See below for more information. 2. Relevant Long Service Leave Acts and legislation in each State or Territory remains as most of the Awards and Fair Work Act 1999 do not address. 3. Western Australia has not referred all of its industrial powers to the Federal Awards. This particularly affects unincorporated entities such as partnerships and sole traders where the local State WA Award still applies. 4. Common Law relates to any legally binding employment conditions either written or verbal that are enforceable and do not conflict with the statutory industrial laws as detailed above. This needs to be written into your employment contracts. An example may include paid conference leave. This is not a Statutory or Award obligation but it may be a mutually agreed negotiated condition agreed between the employer and employee. We have noted some healthcare employment templates sold by employer or employee healthcare associations do include such terms but they are not part of the Award. We do support continuing education however; our templates do not represent these conditions as mandatory. 5. Job Descriptions are just that, descriptions of a person’s position so the employer can correctly classify a staff member according to the Award. The Award should not be used to establish a job description. This is a critical first step to ensure Award compliance. Our templates do come with job descriptions for reception, nurses, Practice managers and doctors. Our templates have taken into consideration all these areas of employment law that is practically possible. All employers must take the necessary steps to ensure that all the above areas are addressed in their contracts including disclosing to employees their rights and obligations under the new rules.
1.2 Wage and Allowance Increases - 4% p.a? New wage and allowance increases have been announced and these increases can be absorbed in your over award payments. On average, increases will average from 3 to 5% in the different Awards that may affect your Practice. For example, most Practices would employ Level 3 reception staff. Their wages have st increased from $630 per week to $656 per week effective from 1 July 2010. This represents a 4.13% increase in wages. If you are paying your staff above the Award rate you may wish to st increase their total package by 4.13% or absorb any increases pre- the new 1 January 2010 Award. Don’t forget 9% employer super is added on top. The determinations take effect from the first full pay period on or after 1 July 2010. For a complete list of wages increases for the relevant Awards http://www.fwa.gov.au/index.cfm?pagename=wagereview2010&page=determination.
see
MA000031 Medical Practitioners Award 2010 MA000034 Nurses Award 2010 MA000027 Health Professionals and Support Services Award 2010 For individual employees to find the right amount of pay they are entitled to go to http://www.fairwork.gov.au/Pages/default.aspx. st
1.3 New Definition of Ordinary Hours - New ruling 31 May 2010 means no more penalties or overtime for part-time workers? Please note this new ruling replaces any telephone, seminar or written advice we have given in relation to part-time employees employed under the Health Professionals and Support Services Award 2010. A new ruling that affects all part-time workers and applies retrospectively. Affected parttime employees (i.e. working less than 38 hours per week) that were entitled to shift allowances or over time payments that were based on regular rostered hours are no longer entitled to these payments if they are within a Practices ordinary hours. The Award has been clarified under the case Standen Nominees Pty Ltd ATF Stanbridge Unit Trust trading as st Bridge Clinic on 31 May 2010. This case addressed a number of anomalies in the Award discussed below. The bottom line, full timers and part-timers are treated the same. There is now no real advantage in employing full timers over part-timers. st
Note: If a part-timer pre-1 January 2010 was entitled to over time pay under their State Award, they can apply for a take home pay order so the employer will be forced to pay overtime to existing not new employees so they are no worse off under the new Award. The definition of ordinary hours is a critical issue to understand when determining the cost savings arising from this case. Ultimately this will determine full or part-time employees: 1. Annual and long service leave entitlements - These are based on an employees ordinary hours which are now longer so larger leave entitlements will accrue to parttimers; 2. 9% Employer Superannuation - Super is not payable on overtime, however it is on ordinary times earnings so a larger employer superannuation bill will apply given the broader definition of ordinary hours;
3. Overtime and shift allowance entitlements will no longer apply to part-timers working within the new definition of ordinary hours see below.
Three Types of Ordinary Hours Definitions There are three types of ordinary hours to keep in mind: 1. Business Hours - This is the official business hours the Practice is open; 2. Statutory Ordinary Hours - This is the ordinary hours as defined by the relevant Award for example 8:00 am to 9:00 pm if a medical Practice elects to use this time instead of the standard definition under the Health Professionals and Support Services Award 2010. Any rostered hours outside these times is considered overtime; 3. Employee Rostered Ordinary Hours - This is the ordinary hours the individual is contracted to work. Using the above statutory extended definition example where the Practice closes regularly on a Monday at 9pm, if a part-timer works regularly between 4pm to 7pm, any hours after 7 pm is considered overtime outside these times if it is unrostered. If the same employee is rostered to 9pm this is considered ordinary hours and no overtime penalty applies. Note if it is outside the statutory ordinary hours definition this is considered overtime. For example if the Practice closed at 10 pm, then 1 hour of overtime is payable, it cannot be called ordinary time. For the record under the Health Professionals and Support Services Award 2010 the new amendment will state: 24. Span of hours New Definition yet to be updated in the Award 24.1 Unless otherwise stated, the ordinary hours of work for a day worker will be worked between 6.00 am and 6.00 pm Monday to Friday. 24.2 Private medical, dental and pathology Practices The ordinary hours of work for a (deleted “full time”) day worker will be worked between 7.30 am and 9.00 pm Monday to Friday and between 8.00 am and 4.30 pm on Saturday. Practices need to nominate which definition of ordinary hours they wish to use. We recommend C1.242 which is the broader definition.
1.4 New Physiotherapy Extended Definition of Ordinary Hours rd
The new clause added on the 23 March 2010 in the Health Professionals and Support Services Award 2010 states… 24.4 Physiotherapy Practices In physiotherapy Practices, the ordinary hours of work for a day worker will be worked between 6.00 am and 6.00 pm Monday to Friday and 6.00 am to 12.00 noon on Saturday. This should reduce overtime penalty rates paid especially on a Saturday morning.
1.5 Shiftworker - No more 15% Shift Allowance No more shift allowances apply to day workers rostered in their ordinary hours. There is an amended definition of what is a shiftworker which would rarely apply to Practices. The Award has been clarified under the case Standen Nominees Pty Ltd ATF Stanbridge Unit Trust st trading as Bridge Clinic on 31 May 2010.
Shiftworker is an employee who is regularly rostered to work their ordinary hours outside the ordinary hours of work of a day worker as defined in clause 24. Shiftwork - Where the ordinary rostered hours of work of an (deleted “employee” and inserted a “shiftworker”) finish between 6.00 pm and 8.00 am or commence between 6.00 pm and 6.00 am, the employee will be paid an additional loading of 15% of their ordinary rate of pay. A 15% shift allowance can therefore only apply to a shift worker. There would be few staff members that would be eligible under this definition.
1.6 Regular Casual - There is no such thing anymore! We have received many enquiries asking when is a casual a permanent employee. Clearly this has been a major issue as many regular casuals face losing their 25% loading on their base hourly rate in lieu of annual and carers leave entitlements. The bottom line is it is next to impossible to have a true casual and most will be classified as a permanent part-time employee. Our advice is if your staff expect hours on a regular basis no matter how erratic (see the Ponce case below) in a given period classify them as permanent staff and not as casuals. If you don’t you could still remain liable for the above leave entitlements and unfair dismissal claim even though you have paid them above the Award and a 25% loading. As an example, The Health Professionals and Support Services Award 2010 specifically provides: Clause 10.3 Part-time employment a) A part-time employee is an employee who is engaged to work less than the full-time hours of an average of 38 hours per week and who has reasonably predictable hours of work. b) Before commencing employment, the employer and employee will agree in writing on a regular pattern of work including the number of hours to be worked each week, the days of the week the employee will work and the starting and finishing times each day. c) The terms of the agreement may be varied by agreement and recorded in writing. th
In Mr Cori Ponce v DJT Staff Management Services Pty Ltd T/A Daly's Traffic 15 March 2010 although this case established this casual employee had the same rights as a permanent part-time employee even on short term contracts, it clearly argued how difficult under the Fair Work Act it is for employers not to classify their staff permanent. Section 386 of the Fair Work Act defines what is regular and systematic work. These definitions can be used to interpret and argue whether your staff members are permanent staff as opposed to casuals. An interesting argument is if you make your casual staff permanent, they will lose up to 25% of any long service leave entitlement, because long service leave is based on their current hourly rate. Secondly if they are a true casual it is hard for them to argue they had employment rights similar to permanent staff unless the local State Award provided these benefits. Note some States such as NSW and SA did recognise permanent casual. An employee could argue for a take home pay order.
2.0 Significant and Common Award Misinterpretations 2.1 Employee vs Contractor vs Associate There remains a lot of confusion between an employee and an independent contract. The references below provide tools to explain the difference. The main reason for engaging an independent contractor that is not sham arrangement is to avoid the Fair Work Act laws. In other words, if they are genuine contractors they cannot be deemed employees and therefore they are exempt from the Fair Work Act rules. See http://www.fairwork.gov.au/Pages/Thingsevery-contractor-should-know.aspx?role=contractors The reality is that even though they may be independent contractors for the Fair Work Act rules, they can still be deemed an employee under the rules that govern the following: • • • • •
Taxation, Medico-legal liability Superannuation, Workers' Compensation, and Payroll Tax
This principally arises because the one independent contractor has only one major customer and that is your Practice, even if they work at other Practices. To legally avoid this problem we recommend you make your providers associates. We call them “tenant doctors” where the reverse occurs and they contract the Practice to provide support services to their own medical Practice for a percentage of receipts. This agreement should be in writing and it is called a service agreement. The percentages charged to the provider plus GST may be different for different Medicare item numbers or for sharing the PIP. The provider fully exempts and indemnifies the Practice for any medico-legal claims to keep insurance premiums to a minimum. A common mistake Practices have is they think they have malpractice insurance because the employee or contractor doctor has. This is incorrect and it is these parties insurers that end up litigating against the Practice to spread the litigation risk. Appropriate “firewall” agreements should be in place to protect the Practice. We sell template service agreements to solve the above problem that is provider and st compliance friendly. Contact us for a quote and don’t forget if you purchase before the 31 June 2010, you will get a tax deduction for this financial year.
2.2 General Practitioner Award! We still receive information from prominent law firms advising that the Medical Practitioners Award 2010 does not apply to registrars or General Practice. We remain bemused by this opinion to the point where we read one national law firm admitted there was an abnormality in the law which stated a general medical Practice fell under the Award and then dismissed it without any legal backing. Our position is the Fair Work Act says it still applies. We have done a recent search and there is no application or decision to remove the application of general Practice from the Award so do not ignore this Award if you employ doctors in General Practice or in a day surgery.
2.3 WA - Still not coming to the party if you are a partnership, sole trader or unincorporated trust From 1 January 2010, states referred most of their industrial relations powers to the Federal system. States from New South Wales, Queensland, South Australia and Tasmania to the Commonwealth have created a national workplace relations system which now includes all private sector employment other than employment by non-constitutional corporations e.g. partnerships, sole traders or trusts that do not use corporate trustees in WA. All employment
in Victoria, Northern Territory and the Australian Capital Territory was already under the national workplace relations system. 2.4 Employees can change their mind!?! It is important to note that employees can every 4 weeks terminate their employment arrangements and revert to the Award if they are not happy. For new employees this is especially so because they would have no idea of the working hours and the nature of the work to make an informed decision as to whether their employment contract was fair. We advise all new and existing employees are emailed or have in their contracts the following web reference http://www.fairwork.gov.au/Fact-sheets-tools/Pages/Factsheets.aspx?role=employees so they are aware of their rights and obligations under the new system. It is advisable employers get acknowledgement from their employees they have read and understood these provisions.
3.0 Are You Award Compliant? - Checklist 3.1. Are You Familiar With New Rules? Make sure you or your staff member responsible for Award compliance knows the rules. Attend seminars, use this news alert including past editions (see our home page www.healthandlife.com.au to spot test your knowledge). If you or the person responsible don’t know the rules, you or they can never get your contracts right. Remember the rules will keep changing especially as these are the early days. Unless you or they are keeping up to date, the Practice is at risk. It is easy for your contracts to become redundant at a pen stroke as demonstrated in this edition. Assess the impact on your Practice and engage your staff in an open and transparent manner on a timely basis.
3.2. Make sure you have the correct legal entity and structure! There is no bigger problem you spend all your time drafting up contracts and agreements only to realise your legal entities or structures need to change as well as your administration systems. If you are moving towards a service agreement arrangement, this will more likely be the case please consult us or your adviser. It is an expensive and frustrating process for everyone to have to tear up and redo contracts.
3.3. No Signed Employment Contract? - No deal and no protection from prosecution up to $33,000 per incident Ultimately over award payments are not enough to give you protection from an aggrieved staff member. It doesn’t take long before this issue can become a major topic in the lunch room. Not handled correctly this can severely impact staff morale and productivity. There are no short cuts. Do it properly instead of delaying the inevitable as the problem will only get worse. If you don’t have signed agreements by now you have a real problem and need to get st cracking before 1 July 2010. th
3.4. Purchase Award compliant templates with job descriptions before 30 June 2010 and get a tax deduction to ensure you are compliant We anticipated the complexities of the new industrial laws. Templates which have already been purchase by existing clients do not need to be modified. All you need to do is add this broadcast to the employment template kit we sent you. We can send your Practice a quote for a flat fee to purchase our templates with complete explanations, agreements and job descriptions for your Practice. Email us at
pa@healthandlife.com.au and or call and ask for Emma. We accept credit card payments and can email you on the same day or within 24 hours. You will find these templates will help you simplify the process without having to go through all the nuances of the law. Contact us should you have any queries. Provider service agreements are separate to the employment template kit. We can quote on these agreements. We may need to have a brief teleconference to ensure they are suitable for your structure. Our Doctors Pay Calculator significantly helps simplify the administrative complexity in this area see http://www.screencast.com/users/DDMG6870/folders/Default/media/19cc33e1-824a-41bb8c22-55e919941270
4.0 2010 Seminar Presentations Below is a summary of dates for our seminars across Australia. At each seminar there is an opportunity to meet with us face to face to discuss any Practice issues you may have at no obligation. Email us at pa@healthandlife.com.au to pre-book an appointment. If you would like your local medical organisation to host a seminar, forward them this email with our seminar details and copy us at pa@healthandlife.com.au into your email. We will contact them directly about presenting in your local area. We thank you in advance for your interest and support. You would be surprised how it only takes one person to make things happen! New programs confirmed are detailed below. Please contact the organisations directly for details about the course program, content and costs. More seminars will be announced during the year.
1.
Host and Where
Date
Contact Name
Adelaide North Eastern Division of General Practice
TBA
Irene Glasson (08) 8362 1636
Contact Details iglasson@andgp.org.au
Topics The NEW Fair Work Act, the Medical, Nurses and Health Professionals and Support Staff Awards
Adelaide, SA Still confused? The latest changes!
2.
Midcoast Health Division
August 2010
Karen Plume (02) 6651 5774
kplumbe@mncdgp.org.au
Coffs Harbour, NSW
TBA The NEW Fair Work Act, the Medical, Nurses and Health Professionals and Support Staff Awards Still confused? The latest changes!
3.
New England Division of General Practice Armidale, NSW
TBA
Kyra Moss (02) 6771 1146
kmoss@nedgp.org.au
TBA Practice Sustainability Series – Succession Planning
5.0 Catching Up with David Dahm and the Team If you would like to catch up with us the next time we are in your neighborhood feel free to email us at pa@healthandlife.com.au or call for a no obligation chat in relation to these or any other issues you may be concerned about. We are planning trips to Sydney and Perth in the next couple of months. Alternatively feel free to contact one of our State Offices to arrange a no obligation appointment.
6.0 Where to from here? 1. Consult your professional adviser in relation to any advice suggested; 2. If you require any back issues of our news alerts please email us; 3. If you are not sure about any issues raised in this broadcast contact David Dahm on 1800 077 222 for an initial no obligation consult, or email us at pa@healthandlife.com.au. Health and Life provides comprehensive Practice consulting, accounting, taxation and financial planning advice for group Practices and individuals.
Which topics would you like to be covered? If there is a particular topic that you would like covered in one of our future News Alerts, please email pa@healthandlife.com.au and let us know what it is. We will then endeavor to cover your requested topic.
Do we have your email address? It is apparent in feedback we are receiving that there are persons receiving this regular email who are not on our email list. If you are receiving this email ‘second-hand’ from another source, we would be delighted to receive your email address and we will add you to our database so that you can receive it first-hand on the day it is sent. This invitation is open to all medical Practices. Please send your email address to pa@healthandlife.com.au.
Do you wish to unsubscribe from our list? Please email pa@healthandlife.com.au if you wish to be removed from our distribution list.
Copyright Notice 2010 This email, including any attachments, is for the personal use of the recipient(s) only. Republication and re-dissemination, including posting to news groups or web pages, is strictly prohibited without the express prior consent of Health & Life Pty Ltd. Disclaimer Notice Health & Life Pty Ltd’s Best Practice News Alert is designed as a comprehensive and up-to-date Accounting and Practice Management news service to alert readers to the latest in Practice and related developments affecting the medical, dental and allied health professions as they happen. It is published when there is news to report. No responsibility can be accepted for those who act on its content without first consulting us or obtaining specific advice. Health and Life Pty Ltd
Accounting, Tax & Practice Management Services “Looking after your future” PO Box 8145 Station Arcade, ADELAIDE SA 5000 Telephone: 1800 077 222 Fax: 1800 077 555 Email: pa@healthandlife.com.au Website: www.healthandlife.com.au