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Hospital Circular 11/12

Date Issued: 4 June 2012

Distribution: Public Hospitals and Health Services Only

Subject: Funding of the Proposed New Nurses' and Midwives' Enterprise Agreement

Purpose: To advise hospitals and health services on funding of the implementation of the proposed new Nurses' and Midwives' Agreement when formalised.

Context

The Department of Health, the Victorian Hospitals’ Industrial Association (the VHIA) and the Australian Nurses Federation (the ANF) recently reached ‘in-principle’ agreement on the terms of a new enterprise agreement to cover Victorian public health sector nurses and midwives through to 31 March 2016.

The proposed new enterprise agreement will shortly be put to a ballot of nurses and midwives and if voted up, will then be submitted to Fair Work Australia (FWA) for formal approval. The department anticipates these processes will be completed by mid to late June 2012.

While the proposed new enterprise agreement will not become operative until approved by FWA, once approved it will have retrospective effect for some key matters from 31 March 2012.

Authority to Pay

Hospitals and health services should not commence payment of any of the terms or benefits contained in the proposed new agreement until it is formally approved by FWA. Hospitals and health services will receive advice from the VHIA of FWA’s formal approval when it is granted.

Nonetheless, hospitals and health services can and should commence preparatory steps to facilitate a prompt and smooth implementation of the new terms and conditions.

Funding to Implement the Outcomes

DFM Indexation

Health services have DFM indexation applied to budgets from the start of each financial year including the 2011-12 financial year.

The current nurses’ agreement reached its nominal expiry date on 1 November 2011 with the last annual salary increase (3.25%) payable under that agreement having taken effect on 1 October 2010. As mentioned above, the first annual salary increase (2.5%) under the proposed new agreement will have effect from 31 March 2012 .

Therefore, in 2011-12 hospitals and health services have a full year’s DFM indexation on funds utilised to pay the salaries and wage of nurses and midwives with a new salary increase payable only in the last three months of this financial year. This provides funding capacity to meet other entitlements such as the professional development allowance.

Other Revenue Sources

Hospitals and health services are reminded that the department does not fund 100% of their activities.  Hospitals and health services typically have other revenue streams such as Commonwealth funding and grants (e.g. residential aged care bed day funding), private practice revenue and business unit revenue.
The Department only provides indexation on State funding and health services are expected to set aside funding from these other sources to meet a proportion of enterprise agreement costs.

Funding Supplementation

Due to the implementation timings of some obligations under the agreement the Department will provide additional funding to assist with cash flows.

For the 2011-12 financial year, total supplementation of $8.2M state-wide will be distributed proportionally based on the relative size of hospitals’ and health services’ budgets.

Further supplementation will then be built into ‘price’ for a further three-year period to continue to support cash flow issues.

Attribution of Incorporated Savings/Offsets

The proposed new enterprise agreement also includes some savings/offset provisions, realisation of which will contribute to meeting the ongoing implementation costs of new or improved benefits.

These savings/offsets include (but are not limited to) increased utilisation of Enrolled Nurses in medical/surgical wards/units of larger hospitals/health services and amendments to the current Workload Management clause.

Release of Funding

Hospitals and health services will receive funding adjustments through the Budget Payment System (BPS) in June 2012.

Application of Funding

The combination of DFM indexation already received and the supplementary funding will cover the costs of implementing:

This funding is inclusive of salary-related on-costs relating to superannuation contributions, WorkCover premiums and a Long Service Leave cash component.

As with previous agreements annual leave uplift is not funded.

Delayed Implementation Matters

The proposed new enterprise agreement provides a maximum recurrent amount of $10M to support additional staffing in Day Oncology Units and specific Rehabilitation Units. Allocation of this funding is be agreed and effected in coming months with the additional staff to be employed from 1 January 2013.

Therefore, no funding for additional staffing in those areas is included in supplementation in 2011-12.

Further Information

If hospitals/health services have any queries regarding the release or funding allocation they should contact their performance lead in the first instance.

Any queries regarding the terms of the proposed new enterprise agreement should be directed to the VHIA on telephone 9861 4000.

Hospitals/health services with queries relating to enterprise bargaining agreement funding policy may contact Mr Simon Chant, Director Health Services Employee Relations (simon.chant@health.vic.gov.au).

Frances Diver
Executive Director
Hospital & Health Services Performance


This and some other new or changed benefits are actually payable from the first day of the first pay period commencing on or after 31 March 2012, which may be a later date than 31 March 2012.

 

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