Insights

In brief - No clear framework to decide which wage assessment tool an ADE must use in assessing employee wages

This article reviews the wage assessment tools available to ADEs to assess capacity of disabled employees and offers guidance to employers in adhering to best practice in supported employment contracts.

Role of ADEs in the Australian workforce

ADEs are commercial entities that assist people with moderate to severe disability who require considerable ongoing support in order to maintain their employment.

ADEs are funded by the Department of Families, Housing, Community Services and Indigenous Affairs to provide what is known as "supported employment". This is distinct from disabled employees who are employed by general employers in the open employment market.

A number of ADEs and their employees are covered by the Supported Employment Services Modern Award 2010 (SES award), which provides criteria to assist employers in assessing the type and level of work that their employees are capable of performing. The SES award provides for levels of employment which are graded with different standard pay rates relevant to each level.

Where a disabled employee is assessed by an ADE as being unable to achieve a similar productivity level as an average worker for their grading level, the SES award allows their wage to be determined as a percentage of the applicable base pay rate. This is performed through the use of one of 30 wage assessment tools.

Wage assessment tools — when to use them

The type of assessment tool an ADE must use in assessing employee wages is not specified. Instead, ADEs are able to choose their preferred tool from an approved list contained in the SES Award. It is therefore important for ADEs to have regard to the fact that some tools assess employee productivity, some are based on competency and others use a hybrid of these two methods.

Two examples of the most commonly used tools within the supported employment sector are the Business Services Wage Assessment Tool (BSWAT) and the Supported Wage System (SWS).

The Business Services Wage Assessment Tool

This hybrid tool assesses both the productivity and competency levels of employees. The two components are evaluated individually, then combined to determine an overall wage for the individual based upon the minimum rate of pay for the relevant modern award grading level. (See Guide to Good Practice Wage Determination, FaHCSIA 2001; Business services wage tool, CRS Australia Department of Human Services, 2011.)

The competency component includes a series of questions which are used to determine the employee's ability to understand and respond to workplace scenarios. The productivity component compares the employee's output with an industry standard illustrative of the expected level of output required in order for an individual to receive the full rate of pay for their grading level.

The Supported Wage System

Unlike the BSWAT, the SWS focuses on a productivity based assessment only. The SWS uses a set of "basic performance standards" derived from the abilities of non-disabled workers and assesses disabled worker productivity levels based upon their performance of the same duties in the workplace (See Guide to Good Practice Wage Determination, FaCSIA 2001; Supported Wage System Handbook, Department of Education, Employment and Workplace Relations, March 2010).

The process involves creating a list of tasks for each disabled employee and assessing their ability to perform those tasks against time-weighted standards set for each.

Implications of wage assessment tools

The result of using a tool is that the disabled employee will then receive a percentage of the relevant hourly rate for their grading level depending on their assessed capacity and/or productivity output. In some cases, after assessment an employee may receive as little as $2 per hour, depending upon their determined productivity percentage.

That said, a large portion of supported employees working in ADEs are on some form of governmental support, such as a Disability Support Pension and receive additional benefits relating to that pension (For more information see Australian Government Disability Services Census Report 2011.)

Nojin case - ADEs succeed in defending use of the BSWAT

In 2011, the Federal Court of Australia heard the case of Nojin v Commonwealth of Australia [2011] FCA 1066. A claim was brought against two separate ADEs on behalf of their respective intellectually disabled employees.

In Nojin it was argued that the requirements and conditions of the BSWAT used to assess the employee's work capabilities discriminated against people with intellectual disabilities, as they are likely to have greater difficulty satisfying the requirements of the competency based assessment than persons whose disabilities are not intellectually based.

The judge ultimately dismissed the case, as it was found that by using the BSWAT tool, the ADEs in question did not impose any unreasonable requirement or condition on the applicants within the definition of section 6(1)(b) of the Disability Discrimination Act 1992 (DDA).

Although the ADEs were successful in defending the matter, the case brought negative publicity for the enterprises involved.

Five guidelines for employers applying wage assessment tools

To minimise the potential of being perceived to be unfair, below are some useful recommendations for ADEs to consider before applying a wage assessment tool.

1. Ensure a wage adjustment is necessary

ADEs should ensure that their disabled employees have been allocated to the appropriate grading level and it must be clear that the disabled person is unable to achieve full productive capacity before a wage assessment tool is to be applied. (Supported Wage System Handbook, Department of Education, Employment and Workplace Relations, March 2010).

An assessment tool should not automatically be applied, nor should a lower grading level be determined simply because the employee has a disability.

2. Ensure the industrial award permits the use of a tool

In general, wage assessment tools are to be considered where a new employee is to be hired. ADEs should consult their employee's relevant modern award before selecting a tool and undertaking any wage assessment to ensure it is permissible in the circumstances.

3. Comply with maximum review time periods

Most tools have a set period in which the employee's assessed wage level must be reviewed. Failure to review an employee's rates of wage on a regular and systematic basis may expose an organisation to potential discrimination allegations.

The type of tool chosen by the ADE and the employee's applicable modern award will govern how often the review must take place. An employee assessed under the BSWAT, for example, must have their wage reviewed every three years, or possibly earlier where the employee's circumstances have changed, resulting in a significant and permanent difference in their performance (Business services wage tool, CRS Australia Department of Human Services, 2011). The SWS, in contrast, requires an employee's productivity to be reviewed every 12 months.

The review process does not necessarily mean that there will be a change in the employee's wages. It may result in no change at all. The relevant modern award should be consulted for provisions relating to reductions in wages if an employee's capacity level is assessed as being lower than that previously determined.

4. Transparency — keep records of the application of wage assessment tools and review process

Any wage assessment made should be clearly documented and a copy provided to the employee and/or the employee's representative. Similarly, when employing any new disabled employee, ADEs should consider providing a detailed information pack regarding the wage assessment process to the individual so that they are aware in advance of the potential for their pay rate to be reduced.

The pack should also clearly identify other independent information sources regarding wage assessment to reduce the potential risk of the employee later claiming they were provided with insufficient information about the process.

5. Consider the application of disability legislation

ADEs should ensure they keep abreast of the relevant disability discrimination legislation and guidelines. The DDA requires an employer to attempt to make adjustments (where reasonable) to the duties of an employee prior to reducing the wages.

For example, an employer might be obliged to insert a ramp for a wheelchair-bound individual. Without such a modification the employee could be deprived of their ability to reach a higher capacity level grading.

Disability enterprises need more than good intentions

In an increasingly litigious age, ADEs need to do their utmost to avoid having legal action brought against them by employees, former employees and their advocates out of the belief that the ADE has discriminated against a person on the basis of their disability.

Even a case which has little merit can be expensive to defend. Furthermore, the negative publicity generated even by an unsuccessful claim can do enormous and long-term damage to a disability employer's reputation.

Keeping up to date with relevant legislation, complying meticulously with legal requirements and ensuring that employees are fully informed in advance of the wage assessment process provides the best safeguard against claims from employees who believe that they have been treated unfairly.

More information regarding supported employment can be found at Department of Families, Housing, Community Services and Indigenous Affairs and Australian Disability Enterprises.


This article first appeared in the July 2012 edition of Keeping Good Companies, the journal of Chartered Secretaries Australia.

This article has been published by Colin Biggers & Paisley for information and education purposes only and is a general summary of the topic(s) presented. This article is not specific legal advice. Please seek your own legal advice for any questions you may have. All information contained in this article is subject to change. Colin Biggers & Paisley cannot be held responsible for any liability whatsoever, or for any loss howsoever arising from any reliance upon the contents of this article.​

Related Articles