People with disability paid below minimum wage and lacking employment support

Public hearing 22, The experience of people with disability working in Australian Disability Enterprises, ran from 11 to 13 April and focused on the experiences of people working in ADEs, wage assessments, supported wage levels and the relationship to the Disability Support Pension (DSP), and the training and development opportunities offered.

The Commission also sought to understand whether the right policies and systems are in place for ADEs to make sure people with disability are given choice and control in their environment.

Senior Counsel Assisting Kate Eastman says the current minimum adult wage in Australia is $20.33 an hour, but that people with disability can legally be paid much less in ADEs, which were formerly known as sheltered workshops.

“Applying the wage assessment tools, it is permissible for workers who work in ADEs to be paid as low as 12.5 percent of the minimum rate, the $20.33, and that then constitutes a rate of $2.54 per hour,” Ms Eastman says.

“As part of the Fair Work Commission’s review, the Commission received evidence about the average hourly pay rate for people working in ADEs in 2019, and that average rate was $7 per hour.”

Despite the low pay rate, the Fair Work Ombudsman’s submission noted it has undertaken 43 investigations of ADEs, resulting in three enforcement actions and repayments of over $24 million in underpayments for 6,477 employees.

“As part of the Fair Work Commission’s review, one proposal is to set a minimum wage for people working in ADEs and the proposal is that the minimum wage be $3.50 per hour,” explains Ms Eastman.

“One important development to note is that from 1 January 2021, ADE workers must be paid superannuation at the same rate as the rest of workers, 9.5 percent of ordinary earnings, or $15 per week, whichever is the greater.”

Ms Eastman added that the pay rates the Commission has heard many people working in ADEs are paid a rate that will not affect their DSP payments, so there is a close link between the two.

There is also a lack of people with disability represented on the boards of ADEs and as part of the management, Ms Eastman says.

Around 16,000 Australians work in an ADE and data provided to the Commission showed most are in jobs such as packaging, gardening, landscaping, cleaning, laundry services and food services.

There are currently 161 ADEs registered with the National Disability Insurance Agency (NDIA) and these ADEs claim funding through employees’ National Disability Insurance Scheme (NDIS) plans for the services provided.

Supported employees not treated equally

Several of the witnesses appearing at the hearing told the Commission that they, or their family members, enjoyed working for an ADE, although they often mentioned the pay rate could be higher.

Two witnesses, parents of adults with disability who worked in ADEs, told the Commission their children had benefitted from working in ADEs but that there were also downsides.

Both parents had children who experienced negative workplace incidents, such as being ignored or shouted at, and at times also helped their peers with personal care tasks that they were not paid or trained for.

Chief Executive Officer (CEO) of Inclusion Australia (the National Council on Intellectual Disability), Catherine McAlpine, told the Commission many people in ADEs are not treated equally and are paid low wages because of the unequal system.

“Australian Disability Enterprises…are attended mainly by people with an intellectual disability…more than 80 percent of people in ADEs are people with an intellectual disability,” says Ms McAlpine.

“So we see them very much as segregated environments where the people with intellectual disability are sent to work and where pay rates are very low.”

Ms McAlpine also discussed Inclusion Australia’s definition of a social enterprise and the importance of making a distinction between that and the definition used by many ADEs.

“A social enterprise is generally regarded as the place where people with and without disability or people with or without disadvantage work together,” explains Ms McAlpine.

“We believe that terminology is being co-opted, because our understanding of ‘social enterprise’ is – a place where people are paid properly, so where people are paid at least the minimum wage.

“And we see the language of ‘social enterprises’ as being co-opted by Australian Disability Enterprises because people with disability and people without disability do work together, but not as equals.

“One of the things that’s even come up again this morning is that an ADE is supposed to be an employment support, but you keep hearing the people without disability being described as ‘supervisors’. The supervisors who are in charge. Not the supporters who are helping [you] work.”

Yesterday, representatives of National Disability Services (NDS), the peak body representing non-government disability service providers, told the Royal Commission their definition of social enterprise was different from Inclusion Australia’s.

NDS Head of Employment Kerrie Langford says the organisation uses social enterprise to describe ADEs that want to move away from the old model of funding and services that existed before the NDIS and towards the new NDIS funding model that the system began transitioning to 18 months ago.

“We use the NSW Government’s definition of social enterprise which is a business that trades to intentionally drive social change,” explains Ms Langford.

“This definition fits with the mission of many disability enterprises.”

Transitions to open employment not routinely supported

Each of the Commission’s witnesses this week had little opportunity to develop their work skills or progress in ADE’s and continued to do repetitive tasks for years, not receiving the support they needed to transition into open employment.

Their schools also did not support them to explore their employment options before leaving school.

In the 2020 to 2021 financial year, 295 NDIS participants reported they had transitioned from an ADE to open employment, 1.7 percent of the total number of people working in ADEs.

Ms McAlpine refers to the system of not supporting people with disability to explore more employment options as the “polished pathway”.

“I have talked about the polished pathway and…that is about particularly segregation from a very early age into segregated education and the way the systems all work together to make it easy to stay in those systems and to move from school into other segregated settings, including segregated employment,” says Ms McAlpine.

The low pay rates in ADEs lead to many more issues of segregation across the person’s life, adds Ms McAlpine.

“The problems with ADEs is that people do not get to work on an equal basis with others. They don’t have the opportunity to earn a living. They don’t freely choose their work, and they don’t have an open inclusive work environment,” she says.

“So we have this ongoing effect that if you don’t have an income, you are completely reliant on the pension, you are completely reliant on the jobs that the ADE tell you that you have to do, and then there’s this ongoing impact that you’re more likely to live a totally segregated life because you’re more likely to only be able to afford to live in a group home or can only get the supports you need in a group home.”

CEO of NDS, Laurie Leigh, explained to the Commission that the organisation is working towards a vision in which ADEs would develop the skills of employees, offer a range of options and settings, have high quality services and run sustainable businesses using the new system of NDIS funding.

The vision includes higher wages for supported employees and better supports for exploring other employment options, however, Ms Leigh stressed that the organisation still believes ADEs are an important employment option.

“This is an area where there is still development to be done, but the other thing that is important to remember here is that this is about the choices people with disability can make so people shouldn’t be pushed towards an option they are not comfortable with,” says Ms Leigh.

Ms Langford adds, “Everyone has the right to choose and attempt to work in open employment, there are not always the ways and they’re not always successful.”

To achieve higher wages and the other aspects of NDS’ vision, Ms Langford says the Government must be involved in subsidies and more funding.

But Inclusion Australia says fair wages are needed now because they are the “first step away from the segregated model that underpins most ADEs”.

Inclusion Australia is also calling for a five-year transition plan backed by Government, industry and the community, for ADEs to transition to being open employers and completely move away from the sheltered workshop model.