Challenges Facing The Aged Care Sector

Wednesday June 8, 2016

Karl Rozenbergs and Melinda Bell joined Chris Sanchez earlier in the week for a Q&A focusing on current challenges facing the aged care sector. You can find a full transcript and informatoin about the authors below.

If you wish to hear more from Karl, you can join him at our Brisbane Aged Care seminar this June.

What are some of the challenges facing the aged care sector today?

From an employment perspective, there are numerous challenges currently facing the aged care sector. In a sector that is rapidly growing and projected to keep doing so due to Australia’s ageing population, attracting and retaining graduates is essential, however, it can be a challenge. The challenge is making a career in the aged care sector appear attractive to younger generations. To attract and retain the best graduates, the aged care sector will need to come up with innovative employment opportunities and benefits which can compete with the opportunities and benefits offered by other sectors which appear more appealing to younger generations.

Another challenge in the aged care sector is the ability for negative news stories to greatly impact on an aged care provider’s brand and reputation. This has been illustrated in a number of cases, but perhaps most recently, by a Victorian man who left his quite sizeable estate to his carer.

From an employment perspective it is imperative that:

  1. There are appropriate policies and procedures in place to deal with the various challenges which may face a facility (including, among other things gifts and benefits from residents and social media use); 
  2. All staff receive comprehensive training in the policies and their obligations; and 
  3. There is astute day-to-day management of the facility.

Do you foresee continued consolidation in the aged care sector?

Continued consolidation in the aged care sector is inevitable.

Currently, the industry is highly fragmented with over 60% of providers still operating a single facility and over 90% operating less than six facilities. The existence of numerous listed aged care providers, such as Regis, Japara and Estia, is likely to drive the consolidation of the sector due to their financial power and consequent ability to acquire smaller aged care providers. This is complemented by the ever-increasing regulatory burden being placed on aged care providers, the impact of which hits the profit margins of smaller providers hardest and results in the decreased viability of these types of providers. Further, although it is not yet set in stone due to the imminent Federal election and potential change of Government, the latest budget plans to make $1.2 billion of aged care funding cuts over the next four years. This will place even more pressure on smaller providers and is likely to accelerate consolidation if the proposed cuts are maintained.

How might that affect employment issues such as enterprise agreements?

With the consolidation of the aged care sector comes employment issues at the enterprise level. The biggest issue is the ability of enterprise agreements to continue to cover employees that transfer from one aged care provider to another when an acquisition occurs. This can result in an organisation having multiple enterprise agreements covering different employees, in addition to the various modern awards which are often applicable to workers in the aged care sector. This leads to the increased administration costs of managing employees, increased risks that contraventions of agreements will occur and potential discord between employees on different terms and conditions.

The consolidation of the aged care sector also presents issues with the integration of the cultures of different providers. While a facility may be a strategic acquisition by a larger aged care provider, that does not necessarily mean the cultures will align. This can result in the increased frequency of employee absences, employment disputes and, if various enterprise agreements cover the employees, different dispute resolution and disciplinary procedures that need to be adhered to.

These integration issues can be dealt with and, to an extent overcome, with careful planning and integration strategies. We assist clients with these strategies and using the relevant provisions of the Fair Work Act to integrate businesses and, to the extent practicable, create consistent terms and conditions of employment for all employees.

Karl Rozenbergs, Partner, Hall & Wilcox 
Karl Rozenbergs is the section leader in Hall & Wilcox's Employment & Workplace Relations team.  Karl is an experienced litigator who understands the complicated nature of employment disputes and the effect they have on a business’ culture. He is a skilled negotiator and appreciates that sometimes less is more.  Karl advises his clients in adverse action claims at the Fair Work Commission, implementing and negotiating enterprise agreements, unfair dismissal claims, discrimination claims and contractual disputes.  Karl acts for a diverse range of clients, from those that are state based to large companies which operate throughout Australia. He regularly deals with clients in the financial services, aged care, manufacturing sectors and quasi-government bodies.

Melinda Bell, Senior Associate, Hall & Wilcox
Melinda Bell provides strategic and practical advice on a range of employment and industrial relations law issues.  She has extensive experience in the drafting and implementation of enterprise agreements, including advising on compliance with good faith bargaining obligations and the industrial action provisions of the Fair Work Act 2009. She is also experienced in negotiations on enterprise agreements and in resolving workplace industrial relations issues.  Melinda regularly advises clients on the employment-law related aspects of commercial transactions, the implementation of corporate restructures, transfers of business and outsourcing arrangements. She also regularly provides strategic advice to clients on the performance management of employees and the implementation of redundancies and handles unfair dismissal applications, general protections claims and disputes in the Fair Work Commission.


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