1st July 2018 3.5% Award pay rise or freeze revisited!

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Did you know that on the 1st July 2018 your staff may be legally entitled up to a 3.5 % pay rise? Also just announced is a new option for people to be paid out their four weeks’ annual leave. Just ensure you have the agreement with them in writing!

July 2018 up to 3.5% pay Increase.

The industrial general minimum pay increase was set at 3.5%. However, it is important to refer to the specific Awards below.

The recent Medicare freeze has led to a number of important changes that could seriously impact your practice. Here we cover the four most important ways to address these changes by providing practice solutions for you. Regardless of whether you pay your staff above the Award, on the 1st July 2018 wage rates should be increased by up to 3.5% p.a. In general, staff wages represent up to 60% of the total overheads of a practice. These changes are accompanied by two more other challenges for employers in medical practices.

Firstly, for practices that predominantly receive the Medicare Benefit Schedule rebate, the rebate has been frozen from 2016 until 2018. (You may have started to feel the impact by mid-to-late 2017). The Medicare rebate from 1st July 2018 has been increased by less than 1.5%.

It is a bit late now to engage in drastic change if your practice is already under severe financial pressure. However we have provided some new ideas on how to survive the Medicare freezes without freezing wages; see our article What am I doing wrong? How does a practice keep up with practice overheads and not affect patient care?

These challenges represent an important opportunity to engage positively with your staff to enhance recruitment and retention, which will in turn aid in improving the sustainability of your practice. If you are unsure about where to start, our newly revised employment kit provides practices with a better employment package template for key staff in the short and long-term. These templates have been developed to provide staff with a solid career structure, which includes employer paid training.

1.  New national wage increase up to 3.5% p.a. from 1st July 2018.


The new Award rate increased for the Medical, Nursing and Health Support Staff Awards is effective from 1st July 2018, even if you pay staff above the Award, unless you have a valid employment contract.

Regardless of changes in the Federal Budget, it is more than likely that Medicare rebate increases for general and medical practices will continue to not exceed the annual increase in the Fair Work minimum wage.

Practices and staff therefore have four options. Click on the link for smart ways to; 1) organised your pay structures from cashing out excessive leave, 2) reduce your reliance on Medicare income, 3) restructure your practice legally, and 4) ethically and sustainably improve staff productivity.

2.  Take it or leave it – cash out of two weeks’ annual leave!

There is a new option for people to be paid out two out of their four weeks’ annual leave – see https://www.fairwork.gov.au/leave/annual-leave/cashing-out-annual-leave. Just make sure it is in writing. Two weeks in lieu of actually taking leave can only occur if the employee is entitled to a minimum of four weeks leave.

For the practice, this can be a win-win opportunity. Accumulating excessive leave creates a significant liability for a practice. Note that any leave owning for annual, sick or long service leave is based on the employee’s current hourly rate.


For example, a person who started five years ago and has had five annual pay increases and has had no annual leave (which admittedly would be rare) is entitled to be paid at the employee’s current annual employment rate and not at the rate when it should have been taken at the end of each year.

There are many reasons why no annual leave may have been taken, ranging from a lack of back up support staff to annual leave plans falling through.

However, the liability adds up, in either staff burnout or unnecessary financial liability. We have seen significant disputes arise when owners retire or staff are experiencing burnout and seek compensation for this reason alone.

Cashing out of leave as a policy may be a way to ‘meet everyone half way’ and may be a good idea to prevent employee burnout. However, taking four weeks leave annually rather than cashing out is good for staff morale and is also more family-friendly. Clearly smaller practices may have less flexibility in this area due to staffing constraints.

3.  Look at new ways to boost your income and be more efficient

There are a number of ways to do this. Read our latest article: What am I doing wrong? How does a practice keep up with practice overheads and not affect patient care? See our website for national MUST READ articles published on this topic http://www.healthandlife.com.au/what-we-do/news-and-archives/archives-current-news/.

4.  New changes to the Award – our employment templates will help you immediately comply.

These are the latest Awards, commencing 1st July 2018;

1. Medical Practitioners Award 2010


2. Nurses Award 2010


3. Health Professionals and Support Services Award 2010


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The main points include:


  1.  A 3.5% increase in new Award rate increases for the Medical, Nursing and Health Support Staff Awards, effective from 1st July 2018 (even if you pay staff above the Award), unless you have a valid employment contract.

  2. A requirement to confirm employment terms to ensure your employment agreements are legally binding (we recommend you seek legal advice from a lawyer), regardless of whether you have a signed employment contract. They key points are detailed below. This is important if you wish to avoid an underpayment of wages claim and any related fines. These fines can be up to $54,000 per breach.

If you are thinking of absorbing future wage increases or ensuring your practice will not be hit with a claim for underpayment even if you are paying your staff above the Award, make sure you have properly implemented the employment laws. We recommend you seek independent legal advice.

Do you have legally binding and sustainable employment arrangements?


As stated above, if you do not have signed and up-to-date employment contracts, your staff may be entitled, from 1st July 2018, to up to a 3.5% p.a. pay increase even if you pay them above the Award.

Practices should have updated their payroll software programs to reflect and pay these changes. Currently, wages represent 60% of a practice’s total overheads so it is a significant investment. Freezing staff wages can significantly hurt morale. However, any significant cost increases will have to be met by possibly reducing practice standards or increasing patient fees. Share this article with your staff and patients; see Greedy Doctors? to gain some context in relation to this vexed issue.

Great staff employment contracts are good for staff morale.


Generally, staff prefer to work with practices that are open and transparent. This builds trust and prevents any misguided feelings that they may have been taken advantage of.

The new and revised 2018/19 Health and Life Employment Template Kit

As described in this news alert, there are quite a number of significant and sensitive changes.

The new terms provided in our employment kit will help identify, train and reward your key staff plus offer flexible working arrangements without significant risk to the practice. So it is a win-win for everyone. This solution will enable you to continue to reward your staff on merit and provide high quality services, thereby minimizing patient fee increases. In order to achieve this objective, we have updated our employment kit to include: see Employment Kit Offer for full table of content and cost

If you have any queries, before making any changes, please contact us at no obligation, by email at pa@healthandlife.com.au on 1800 077 222. Do you want to purchase an Employment Template Kit or Upgrade? See our Employment Kit Offer .

This will enable you or your practice to save thousands of dollars on expert advice and time. Most importantly, this process will only add to your staff morale and recruitment and retention strategies. This may be a perfect solution for your practice if your staff are concerned about their future wages or working conditions.

The content of the employment kit includes useful job descriptions and a quote for the kit. Email us at pa@healthandlife.com.au to order. We strongly recommend you consider reconfirming your employment agreements in order to implement these changes at your next six monthly staff performance appraisal.

We continue to provide this unique and exclusive template throughout Australia. Please note we are not lawyers, however we have had these agreements reviewed by lawyers.  

It is important you seek independent legal advice before implementing any ideas from this article or related links referred to. The purpose of this article is so you can ask better questions from your advisers.

By contacting Health & Life we can assist you and where necessary refer you to the highly skilled and experienced external lawyers we work with regularly.

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