The introduction of the National Disability Insurance Scheme (“NDIS”) in July 2016 has thrown up significant challenges for disability service providers wanting to navigate (or even enter) the sector.
The shift away from block government funding for standardised services to consumer-directed care has prompted some radical changes in service design, workforce planning and risk management practices.
Despite a large amount of information out there on the NDIS, remarkably little is available on emerging workplace issues for NDIS providers and how these issues should be addressed. If we know one thing, it’s that providers that fail to adapt to the rapidly changing market face an uncertain future.
With this in mind, the New Year provides a timely opportunity to outline our predictions for the top ten employment issues that NDIS providers will face in 2017.
1. Misclassifying employees as contractors
Given the NDIS will change how your organisation operates and provides services (from standardised services in institutions to individualised services in residential settings), you may have to change the manner in which you engage your workers. For example, under the NDIS you may need to change:
- The level of control you have over your workers;
- The level of supervision of workers (which may now have less frequent and arm’s length supervision by phone, rather than supervision in person);
- Who provides the equipment for the workers to provide the services;
- The level of risk that the workers take on; and
- How the workers are paid.
Due to these changes, it will be important for you to reassess whether the workers you engage are employees or independent contractors, and the contractual arrangements that formalise that relationship. If you misclassify an employee as an independent contractor, you would be at risk of facing whopping underpayment claims and fines of up to $54,000 per contravention. In addition, you could also face personal fines of up $10,800 if you are found to have been personally “involved” in the contravention.
In many instances the classification question will be clear. But for the less clear cut situations, we recommend you seek legal advice.
2. Selecting the right Modern Award
Finding out which Modern Award (if any) will cover your employees can be a challenging task in any situation. However, in the NDIS space it can be particularly difficult. This is because of the often flexible nature of the work, the qualifications and training required for certain roles, and the numerous Modern Awards that have adjacent coverage. We have also seen situations where an employee may be covered by a Modern Award for one service they provide, and then a different Modern Award for another service based on the age of the person to whom the service is provided. From an administrative perspective this can be extremely difficult to manage, yet no more difficult than responding to an underpayment claim or legal dispute about an employee’s award classification.
Our advice in dealing with these issues is to do the heavy lifting up front and make sure that the Modern Award you are using is the right one. Otherwise, you could be facing large underpayment claims, fines of up to $54,000 per contravention, and personal fines of up to $10,800.
3. Understanding your occupational health and safety obligations
Changing consumer demand for disability services in a residential setting may mean that the services your workers provide will be unsupervised at the client’s home. While freeing for the worker, it also carries new and unexpected occupational health and safety risks. For example, under occupational health and safety obligations, you owe duties around providing a safe working environment for both your workers, and also members of the public. This means that you need to ensure that the environments you are instructing your workers to attend are safe, and that you are taking all reasonable steps to keep it that way. Do the wrong thing, and you could face fines of up to $1,399.140 per contravention for the organisation, personal fines of up to $1,800 per contravention, and devastating reputational damage for the organisation.
Working out how best to deal with occupational health and safety in the context of the NDIS will depend on a case by case basis, but a strong policy and training program will be important steps on the way to compliance. Some organisations are conducting site visits to identify and address occupational health and safety risks before work is commenced. It will also be vital to ensure that your insurance policy covers your workers in all situations, and that you understand when you need to notify your insurer when an incident occurs. Otherwise, you may be left fitting the bill yourself.
4. Workplace injuries
Little do people know, but the health and social services industry ranks second in terms of the total number of WorkCover claims made in Victoria (behind only manufacturing). To put it in other words, this sector represents more WorkCover claims than the construction industry, the mining industry and the electricity, gas, water and waste services industry combined.
Due to the unsupervised nature of NDIS work (and the level of new entrants into the sector) we predict there may even be an increase in the number of workplace injuries in 2017. This means additional workers’ compensation claims, potential legal disputes, and a solid increase in your insurance premiums. In other words, a situation you really want to avoid.
Similar to the above, making sure that your training, policies, and occupational health and safety framework is compliant and meets best practice will go a long way in reducing these risks, and will be time well spent.
5. Making the move to an adaptable workplace
The nature of NDIS work will likely mean that you need to stay agile as an organisation to deal with the increased use of individual client plans and an increased focus on home and community care services. The consumer driven market may lead to demand for services on an irregular basis, at more unusual hours (i.e. not 9am to 5pm) and at different locations.
Dealing with these changes from an employment law perspective will be important to avoid underpaying your employees. For example, if an employee is starting to work outside of the standard 9 to 5 hours you will need to consider whether they are entitled to additional remuneration under the applicable Modern Award or Enterprise Agreement (i.e. additional break entitlements, penalty rates or TOIL). Similarly, the relevant industrial instrument may set a minimum engagement period for a shift, usually no less than three hours.
You could also explore the possibility of using Independent Flexibility Arrangements (“IFAs”) to ensure that the working arrangements of the employee are best suited to the needs of the organisation and employee. Importantly however, an IFA can’t be used to reduce or remove an employee’s entitlements.
6. Considering whether to merge with another provider
NDIS providers will need to adapt to the changing funding environment and the new world of consumer-directed care in order to flourish and survive. Not all existing disability service providers will be well suited to fully service clients in the NDIS space, and to do so will need to consider merging with another entity.
When merging with another entity, there are numerous employment issues that will need to be considered. For example, you will need to ensure that the other side in the transaction does not owe any outstanding entitlements to its employees (or you have at least taken these into account in conducting due diligence), and that you comply with the continuous service provisions under the Fair Work Act 2009 (Cth) for transferring employees (i.e. that the clock keeps ticking in relation to their accrued leave). Given the number of potential pitfalls, and the fines for doing it incorrectly, we recommend you seek advice from an employment lawyer before agreeing to merge with another entity.
7. Responding to increased competition
There is no denying that by placing additional buying power in the hands of the individual consumer (or their family), competition in the NDIS space will remain intense in 2017. This means that providers will need to always be thinking about what the client wants, how they want it delivered, and why they want it in the first place. Otherwise, it is likely that other providers in the space will move in, and fast.
We predict that organisations will be forced to minimise their costs in an effort to stay competitive, but you should always make sure that you are paying your employees their minimum entitlements. It is also clear that price is not the only motivator for individuals, and that providing a quality service through a human rights based approach will remain extremely important. This may mean keeping your employees at the organisation for longer, and providing them with additional incentives to ensure this will occur.
8. Low cash flow
For providers in the NDIS space that are reliant on individual funding arrangements, an inevitable theme in 2017 will be unpredictable cash flow. Cash flow problems do not provide an excuse for not paying employees their entitlements, and hence organisations will need to engage in careful business planning. It will also require you to assess whether the organisation should take on workers on casual or permanent contracts.
9. Your employees may start working for multiple providers
With an increase in the number of providers in the NDIS space (and the historical reliance on casual employees), it is likely that some of your workers will seek to be engaged by multiple organisations at the same time. Given the potential for this arrangement to cause problems, such as breaching maximum engagement periods and risks of injury caused by fatigue, we recommend you address this issue in training and employment contracts, and properly investigate any concerns that your employees are attending work while fatigued.
10. Restricting your employees from stealing clients
Similar to the above, there will be times when an employee will depart the organisation and then seek to steal your clients. This risk arises because the employee presents as the face of the organisation and has gained the client’s trust during their engagement.
In terms of what you can do to respond to the risk, it is possible to place restraint of trade clauses in your employment contracts, however it can be a difficult thing to enforce against front line staff in the sector. It will therefore be important to put in well drafted restraints and confidentiality clauses (particularly for more senior staff) to enable you to protect your clientele upon an employee’s departure. We recommend you seek legal advice when placing such a restraint in a contract.
How we can help?
Given the complexity of the issues above, please don’t hesitate to contact one of our experts – Skye Rose or Catherine Brooks on (03) 9843 0418 or via email: to firstname.lastname@example.org or email@example.com and let us know if you would like us to:
- provide advice on Modern Award coverage;
- review/draft your independent contractor agreement and/or provide advice on whether a worker of yours is likely to be an employee or contractor;
- run tailored training programs on occupational health and safety;
- assist you to merge with another entity; and/or
- answer any question you may have on the NDIS.