Allied Health Pay Equity Update
While we were not part of the Allied, Scientific and Technical Pay Equity Claim settlement (Pay Equity settlement) between Te Whatu Ora and health sector unions, we recognise this important milestone.
We would like to thank the sector for coming together to provide us feedback, especially over the holiday period. We appreciate your patience as we’ve worked through feedback on our out-of-cycle increase for pay equity.
We want to provide some additional information on how we construct pricing for the Allied Health contract, and how we have applied the Pay Equity increase.
Contracted rate components
The Allied Health contracted rate is made up of several components including:
- direct costs
- indirect costs, overheads and margin.
The contracted rate starts with the base salary, which informs both direct costs (eg base rate, allowances for leave, public holidays) and indirect costs (eg administrative time).
How the uplift has been applied
In the past, the base salary was benchmarked at Step 12 of the Degree-based Allied Pay Scale from the Rest of New Zealand Allied, Public Health, Scientific & Technical Multi-Employer Collective Agreement (MECA). This was set at $99,420 in July 2022.
In July 2023, ACC applied a placeholder uplift, increasing the base salary to $103,475. This was in anticipation of a new market benchmark as the current MECA had expired and no settlement had been reached.
With the Pay Equity Claim now settled, the salary component was increased to $109,000, in line with the new Recognition Step 2. This is a total increase of 9.64%.
Pay Equity Settlement: transition from Step 12 to Recognition Step 2
| Step |
PSA RoNZ Scale Mar 2022 |
New Steps following Pay Equity settlement |
Pay Equity Rates Jun 2023 |
Percentage Movement |
| 14 | $108,457 | Salary (post interim adjustment) maintained | $108,457 | 0% |
| 13 | $104,108 | Recognition Step 2 | $109,000 | +4.70% |
| 12 | $99,420 | Recognition Step 2 | $109,000 | +9.64% |
| 11 | $94,266 | Recognition Step 2 | $109,000 | +15.63% |
| 10 | $90,534 | Recognition Step 2 | $109,000 | +20.40% |
| 9 | $87,999 | Recognition Step 1 | $106,000 | +20.46% |
The Te Whatu Ora Pay Equity settlement led to a change in Te Whatu Ora’s national salary scale for Allied, Scientific, and Technical roles. The previous Step 12 of the MECA translates to Recognition Step 2 of the Pay Equity settlement. The pay equity uplift for this band was 9.64%, and the base salary for the Allied Health contracted rate has been adjusted to meet this.
When an uplift is applied to the base salary it doesn’t necessarily result in the service item price increasing by the same percentage. This is because the service item price is made up of several components (eg direct costs, indirect costs, overheads and margin). The base salary does not impact all components.
This uplift will not be backdated and will start 1 March 2024. We’ve applied this uplift outside of the annual pricing review cycle due to the exceptional nature of the pay equity settlements and the contribution these make to equitable pay in Aotearoa New Zealand.
We are working with urgency and 1 March 2024 allows us to make necessary amendments to our contracts, invoicing, and payment systems. It also gives Suppliers who hold contracts where an uplift has been applied time to update practice management systems and ensures Suppliers can return signed contract variations.
The overhead components of the contracted rate will be reviewed as part of the Allied Health contract annual pricing review cycle in July 2024.
Previous updates
December 2023: Pay Equity updates (acc.co.nz)
Related websites
Te Whatu Ora – Health New Zealand - Pay equity settlements
Frequently Asked Questions
What’s included in the service item price?
The Allied Health contracted rate is made up of several components including direct costs, indirect costs, overheads and margin.
Service item price breakdown
|
Component breakdown |
% of service item price |
Description |
|
Direct costs |
45% |
Based on annual base salary of $109,000 Includes allowances for leave, public holidays, KiwiSaver, ACC levy and professional association costs. |
|
Indirect costs, overheads & margin |
55% |
Includes allowance for reporting, liaison, other administrative tasks, travel, allowance for business operating overheads plus the margin. |
The contracted rate starts with the base salary, which informs both direct costs (eg base rate, allowances for leave, public holidays) and indirect costs (eg administrative time). The uplift for pay equity was applied to the base salary.
How do you determine the base salary?
We benchmark the base salary for Allied Health service items at Recognition Step 2 of Te Whatu Ora’s Pay Equity settlement. This is set at $109,000.
In the past, we benchmarked the base salary at Step 12 of the Degree-based Allied Pay Scale from the Rest of New Zealand Allied, Public Health, Scientific & Technical Multi-Employer Collective Agreement (MECA). This was set at $99,420 in July 2022.
In July 2023, we applied a placeholder uplift, increasing the base salary to $103,475. This was a placeholder uplift in anticipation of a new market benchmark as the current MECA had expired and no settlement had been reached.
With the Te Whatu Ora Pay Equity Claim now settled, we have further increased the base salary to $109,000, in line with the new Recognition Step 2. This is a total increase of 9.64%.
The Pay Equity settlement led to a change in Te Whatu Ora’s national salary scale for Allied, Scientific, and Technical roles. The previous Step 12 translates to Recognition Step 2 of the Pay Equity settlement. The pay equity uplift for this band was 9.64%, and we have adjusted our salary benchmark to meet this.
Pay Equity Settlement: transition from Step 12 to Recognition Step 2
| Step |
PSA RoNZ Scale Mar 2022 |
New Steps following Pay Equity settlement |
Pay Equity Rates Jun 2023 |
Percentage Movement |
| 14 | $108,457 | Salary (post interim adjustment) maintained | $108,457 | 0% |
| 13 | $104,108 | Recognition Step 2 | $109,000 | +4.70% |
| 12 | $99,420 | Recognition Step 2 | $109,000 | +9.64% |
| 11 | $94,266 | Recognition Step 2 | $109,000 | +15.63% |
| 10 | $90,534 | Recognition Step 2 | $109,000 | +20.40% |
| 9 | $87,999 | Recognition Step 1 | $106,000 | +20.46% |
Pay equity settlements – Te Whatu Ora - Health New Zealand
Why did the Allied Health contract not receive a 20% uplift for Pay Equity?
The Te Whatu Ora Pay Equity settlement uplifts ranged from 0% up to 20.46%.
We benchmarked our base salary to Step 12 of the MECA, which translates to Recognition Step 2 of the recent Pay Equity settlement.
The Te Whatu Ora pay equity uplift for this band was 9.64%, and we have adjusted our base salary with this.
Why does the 9.64% uplift to salary only reflect as 4.2% in the service item price?
There are two reasons for this.
- We have implemented two increases to the base salary; one placeholder uplift in July 2023 and one which will be implemented on 1 March 2024.
- When an uplift is applied to the base salary it doesn’t necessarily result in the service item price increasing by the same percentage. This is because the service item price is made up of several components (eg direct costs, indirect costs, overheads and margin). The base salary does not impact all components.
Since the July 2022 Annual Pricing Review, the total uplift for the service item price is 10.98%.
Change in Physiotherapy Initial Consult (PT01) Rate
|
2022 |
1 July 2023 | 1 March 2024 | |
| Physiotherapy Initial Consult (PT01) Rate | $55.36 | $58.96 | $61.44 |
| Change | +6.51% | +4.20% | |
|
Total service item price change July 2022 to March 2024 |
+10.98% |
Will this pay equity uplift be backdated?
This uplift will not be backdated and will start 1 March 2024.
This is outside of our annual pricing review cycle due to the exceptional nature of the pay equity settlements and the contribution these make to equitable pay in Aotearoa New Zealand.
We have taken steps to implement the increased service item price four months ahead of the annual pricing review in recognition of correcting the gender pay gap and to support the sector.
In July 2023, we applied a placeholder uplift, increasing the base salary to $103,475. This was a placeholder uplift in anticipation of a new market benchmark as the current MECA had expired and no settlement had been reached.
The price increase will be applied to 1,500 contracts across 41 different services. We have been working with urgency and 1 March 2024 allows us to make necessary amendments to our contracts, invoicing, and payment systems. It also gives Suppliers who hold contracts where an uplift has been applied time to update practice management systems and ensures suppliers can return signed contract variations.
What have you included in your calculations for direct costs?
Below are some examples of factors included in how we calculate direct costs:
- KiwiSaver employer contributions
- ACC Levy
- annual leave (based on 20 working days)
- public holidays
- other leave including sick leave, and special leave such as bereavement or domestic leave
- training days
- professional body fees
- annual practising certificate costs.
Please note: apart from 20 days annual leave and 12 days statutory holidays, we use estimated usage for other leave.
For services that include clinical supervision, is this included in direct labour costs?
There is an allowance for clinical oversight captured in the indirect costs. This allowance has received an increase.
When will you review the overhead part of the rate?
We acknowledge that across Aotearoa New Zealand there have been significant inflationary impacts on the cost of running a business. We will be reviewing the overhead component of the Allied Health contract pricing in our July Annual Pricing Review.
Subject to Physiotherapy New Zealand agreement, we will also be commissioning a joint independent third-party pricing review of the physiotherapy sector this year.
Where can I find more information on the Pay Equity settlement?
The Pay Equity settlement information is publicly available on the Te Whatu Ora website.
Pay equity settlements – Te Whatu Ora - Health New Zealand
Does this uplift also apply to providers treating under Cost of Treatment Regulations (CoTR)?
Providers who don’t work with us under a contract are paid through CoTR.
We are yet to apply an uplift to providers treating under CoTR. The Ministry of Business Innovation and Employment (MBIE) will run a consultation later this year to collect feedback from the sector. We will invite you to provide feedback to MBIE through our Provider Update once the consultation is open.
The regulations are usually reviewed every two years to make sure:
- payment rates mean that treatment is affordable for injured New Zealanders
- costs to ACC are affordable, sustainable, and consistent
- payments are not too dissimilar across the health and ACC systems. Once the review and consultation take place, the proposed changes need to be approved by Cabinet before we can implement them.
Where can I keep up to date with provider-related news from ACC?
Subscribe to our monthly Provider Update eNewsletter