Application for variation of the Healthscope - Psychologists & Dietitians Agreement 2023 - 2026

[1] Healthscope Operations Pty Ltd has applied for approval of a variation (Variation) to the Healthscope - Psychologists & Dietitians Agreement 2023-2026 ("Agreement"). The application is made under section 210 of the Fair Work Act 2009 (Act).

[2] The effect of the Variation is to introduce into the Agreement a new salary packaging clause (Salary Packaging Clause) in anticipation of Healthscope transitioning to become a not-for-profit organisation.

[3] The Agreement covers the Health Services Union Victoria No. 4 Branch (HSU). The HSU opposes the Commission approving the Variation.

[4] In an email to the Commission on 15 January 2026, the HSU stated:

"We do continue to hold concerns about, and oppose, the relevant application and would seek to make some brief and relatively limited submissions to this effect. ...

If it would be convenient, we would be content to file a relatively brief written submission - subject to the views of the Applicant and any other interested party, and any other written submissions that other parties may seek to file, and subject to the Commissioner's preference, it may be that the matter can be determined on the papers. Alternatively should the Commissioner be minded to conduct a Hearing and prefer to receive these submissions orally, we are of course in his hands."

[5] I subsequently made directions requiring the HSU to file and serve the submissions it had foreshadowed, and for Healthscope to file any submissions in reply that it wished to make. Having received and considered written submissions from both parties, I have accepted the HSU's suggestion to deal with its objection on the papers.

[6] The context in which the application is made is not greatly in dispute. It is convenient to reproduce the following background from Healthscope's submissions:[1]

8. Healthscope currently owns and operates a group of 33 private hospitals across Australia (and operates a further 3 private hospitals).

9. In May 2025, Healthscope's parent entities entered into receivership with about $1.6 billion owed to lenders. Its lenders appointed McGrathNicol Restructuring to undertake a process to sell the business.

13. The Proposed Variations are material to a bid made by Healthscope management as part of the sale process to restructure part or all of its operations into a for-purpose organisation, referred to as PurposeCo, and to retain ownership of some or all of the Healthscope hospitals through the sale process.

14. The Healthscope 'PurposeCo' management bid has been proposed to employees on the basis that it would be a shared benefit arrangement between employees and PurposeCo. Specifically, PurposeCo would initially retain most of the tax savings associated with salary packaging (up to 90% of those savings), with the remaining benefit being paid to the employee. ...

15. ...Healthscope is currently in receivership, with debts of $1.6 billion as at May 2025. By transitioning some Healthscope hospitals into a not-for-profit model, PurposeCo would operate primarily for the benefit of its patients and employees. However, in order to successfully bid for some or all of the remaining Healthscope hospitals, the lenders must be satisfied that the PurposeCo model can service its debt obligations and remain financially viable into the future. The FBT savings will be an important source of funding in the early stages of the PurposeCo model."

[7] Voting for the Variation took place from 20 to 27 October 2025. Of the 91 employees affected by the Variation, 63 cast a valid vote and 36 voted to approve the variation.

[8] I digress to observe that the Form F23AB declaration that Healthscope filed with the application stated that 14 of the affected employees were casuals. Given the closeness of the vote, I requested that Healthscope provide further evidence to demonstrate that any casual employees who voted for the Variation were entitled to do so. Healthscope filed submissions and evidence in response to that request on 30 January 2026.

[9] In its submissions on the objection, the HSU noted:[2]

"HSU4 notes the email correspondence sent to parties from the Chambers of Commissioner Sloan in recent days, and the requirement for the Applicant to provide further particulars addressing the eligibility of casual employees to have participated in the vote. HSU4 considers that the nature of the further particulars provided may give rise to concerns about the validity of the vote's outcome - particularly noting the relatively narrow margin by which the vote succeeded in the case of the HSU4 Agreement. HSU4 may respectfully seek leave to make a further brief submission addressing the further particulars provided by the Applicant, in the event that such concerns arise."

[10] The HSU has not applied for leave to make further submissions on the validity of the vote. I accept Healthscope's evidence and submissions on the issue. I am satisfied that the vote was conducted validly and that the majority of eligible employees voted in favour of the Variation.

The relevant legislative context and principles

[11] Section 211(1) of the Act is in these terms:

(1) If an application for the approval of a variation of an enterprise agreement is made under section 210, the FWC must approve the variation if:

(a) the FWC is satisfied that had an application been made under subsection 182(4) or section 185 for the approval of the agreement as proposed to be varied, the FWC would have been required to approve the agreement under section 186; and

(b) the FWC is satisfied that the agreement as proposed to be varied would not specify a date as its nominal expiry date which is more than 4 years after the day on which the FWC approved the agreement;

unless the FWC is satisfied that there are serious public interest grounds for not approving the variation.

[12] The HSU submitted that the Agreement as varied would not have passed the better off overall test (BOOT). As a result, having regard to section 186(2)(d) of the Act, the Commission would not have been required to approve the agreement under section 186.

[13] However, the HSU's primary contention was that the Commission should be satisfied that there are serious public interest grounds for not approving the Variation.

[14] In Australian Municipal, Administrative, Clerical and Services Union v Central Goldfields Shire Council & Ors[3] the Full Bench considered the meaning of "the public interest". Its observations included the following:[4]

• (1) It has long been recognised that the expression "in the public interest" imports a discretionary value judgment to be made by reference to undefined factual matters, confined only "in so far as the subject matter and the scope and purpose of the statutory enactments may enable ... given reasons to be [pronounced] definitely extraneous to any objects the legislature could have had in view".

• (2) Ascertainment in any particular case of where the public interest lies may require a balancing of countervailing public interests.

• (3) In identifying matters that may be relevant to an assessment of the public interest, a distinction is often drawn between matters affecting the public interests and the private interests of the parties. But that distinction may not always be clear. A consideration may affect both the interests of the public at large and the interests of one of more of the parties to the proceedings. The interests of the public might also be affected as a result of the impact of an authorisation on one of the parties.

• (4) The assessment of whether the making of an authorisation is contrary to the public interest will depend, very much, on the facts of a particular case.

[15] It is relevant (and significant) that section 211(1) refers to "serious public interest grounds" (my emphasis). That test has been held to set a "high barrier for the refusal to approve a variation that otherwise meets the statutory requirements".[5]

[16] The HSU raised "potential BOOT concerns" (my emphasis) in respect of an employee who may have a HECS-HELP debt.[6] It fell short of asserting, much less demonstrating, that such an employee would be worse off (or at lest not better off overall) under the Variation as compared to the Health Professionals and Support Services Award 2020.

[17] Healthscope accepted, though, that:[7]

"for an employee who elects to salary sacrifice and has an ongoing HECS-HELP debt, that employee's 'repayment income' for the income year will include an amount that relates to any reportable fringe benefits. As the reportable fringe benefits amount is grossed up based on the highest marginal rate plus Medicare, an employee's 'repayment income' after entering into a salary sacrificing arrangement may be higher than if no such arrangement was entered into. This may result in an employee making higher HECS-HELP repayments in the repayment year than would otherwise be the case."

[18] However, under the terms of the proposed Salary Packaging Clause:

• (1) participation in a salary packaging arrangement is voluntary;

• (2) an employee is encouraged to seek independent financial and taxation advice before entering into a salary packaging arrangement. This would presumably encompass advice as to the potential for making higher HECS-HELP repayments than if they did not enter into the arrangement;

• (3) it is a condition of entering into a salary packaging arrangement that the employee has understood and had the opportunity to access independent, expert advice in relation to entering into such an arrangement; and

• (4) an employee can withdraw from a salary packaging arrangement at any time on 14 days notice.

[19] The HSU did not submit that the Agreement, incorporating the Variation, would not pass the BOOT. It did no more than flag that as a potential outcome. But even allowing for Healthscope's concession, I am not persuaded that the Variation gives rise to a BOOT issue.

[20] Consequently, I am satisfied that had an application been made under subsection 182(4) or section 185 of the Act for the approval of the Agreement as proposed to be varied, the Commission would have been required to approve it under section 186. It follows that I must approve the Variation unless I am satisfied that there are serious public interest grounds for not doing so.

[21] The HSU's objection stems from the requirement in the Salary Packaging Clause that fringe benefit tax (FBT) savings made from an employee's salary packaging arrangement would be shared between PurposeCo and the employee. Until 30 June 2026, the employee would receive 100% of the FBT savings, but from 1 July 2026, 90% of the savings would be retained by PurposeCo as a deduction from the employee's salary. That is, the FBT exemption would be shared between PurposeCo and the employee (sharing arrangement). The amount of PurposeCo's share would reduce on a stepped basis depending on the number of employees who entered into salary packaging arrangements.

[22] The HSU submitted:[8]

"Central to HSU4's concerns with the application is that this entitlement contains a provision for the Applicant to 'claw back' a significant majority of employees' salary packaged entitlement. That is, should the variation be approved, and should the reorganisation take effect, then any employees seeking to access the new salary packaging benefit would have up to 90% of their entitlement diverted instead to the Applicant (or the relevant employing entity post-reorganisation)."

[23] This alleged "claw back" was the premise of the HSU contending that the sharing arrangement:

• (1) would be contrary to, or at the very least inconsistent with the policy purpose of, the Fringe Benefits Tax Assessment Act 1986 (FBTAA);

• (2) would be contrary to the object of the Act;

• (3) is seriously out of step with community expectations; and

• (4) would set a dangerous precedent.

[24] Healthscope submitted, and I accept, that the sharing arrangement does not involve a "claw back". Rather, employees who choose to enter into salary sacrificing arrangements agree that deductions will be made from their gross salary. As will become clear, no employee "entitlement" is being diverted to PurposeCo.

[25] I will turn to consider the HSU's several contentions.

[26] The HSU submitted that the sharing arrangement "would be contrary to" the FBTAA. It did not explain why that was the case. Its submissions were confined to the following:[9]

"Under the variations for which approval is sought, however, the money attributable to the notionally exempt benefits would in large part be directed to the employer, and not the employee. With respect, HSU4 has serious doubts about the permissibility of such a scheme with respect to the application of the FBTA Act. It is not clear how this clawback arrangement can properly be described as a benefit of the kind exempted under the FBTA Act.

HSU4 does not submit that the primary task before the Commission is resolving the proper application of the FBTA Act (nor that such a task would be squarely within the Commission's jurisdiction). However, the extent to which the Applicant's proposed scheme is, at least on its face, compliant with the relevant legislative framework is directly relevant to the Commission's consideration as to whether serious public interest grounds to refuse approval exist." (My emphasis)

[27] The HSU has not provided the basis on which it contends that the sharing arrangement would be contrary to the FBTAA, beyond expressing its "serious doubts" as to its permissibility. It is not for me to speculate as to what arguments it might have advanced. The HSU has not made out its case on this point.

[28] The HSU next submitted that even if the sharing arrangement did not "explicitly offend" the FBTAA, it "is inconsistent with the actual policy purpose of the exemptions available to eligible not-for-profit employers and should not be encouraged or facilitated".[10] That object was said to be the attraction and retention of staff in resource-constrained environments - that is, by allowing resource-constrained organisations to use salary packaging arrangements to pay an effective after-tax salary to an employee that is more competitive with the higher gross salaries that other employers may be able to offer. The HSU contended that an employee "clawing back" that premium was not in keeping with that policy purpose.

[29] In response, Healthscope made the following submissions:

• (1) FBT is a tax imposed on employers and the exemption from FBT applies in respect of employers.

• (2) Although the policy rationale behind the FBT exemption is for resource-constrained not-for-profit organisations to attract and retain staff, the policy rationale is to lower costs for employers who might not otherwise be able to compete in the labour market with for-profit entities. This is reflected in the explanatory memorandum to the A New Tax System (Fringe Benefits) Act 2000, which made certain amendments to section 57A of the FBTAA.

• (3) The proposal to share the benefit of the FBT exemption between PurposeCo and the employee is consistent with that purpose - it reduces wage costs to the employing entity if it is a public benevolent institution, thus providing a cost advantage over other employers, and still results in an improved effective after-tax salary for employees.

[30] I accept Healthscope's submissions. The premise of the HSU's position is that the "actual policy purpose" of the FBT scheme is that the benefits of any FBT exemptions must be passed to the employee. It has not demonstrated that this is the case.

[31] The HSU submitted that the sharing arrangement is "fundamentally inconsistent with fairness to working Australians".[11] This was said to be contrary to the object in section 3(a) of the Act of "providing workplace relations laws that are fair to working Australians".

[32] The objects of the Act may be relevant to the assessment of what is in the public interest for the purposes of the exercise of a power conferred by the Act. However, the legislature seeks to achieve the object of a piece of legislation through the provisions that it in fact enacts.[12] For present purposes, those provisions include section 209 to 211 of the Act.

[33] In this regard, Healthscope submitted:

"Sections 209 - 211 of the FW Act set out the requirements for approval of a variation of an enterprise agreement. A majority of the affected employees have voted up the proposed variations, which meet the legislative requirements dealing with variations. Affected employees will have the further opportunity to decide whether to personally participate in the proposed salary packaging scheme, if it comes into operation. That is the bargain struck between Healthscope and its employee within the legislative provisions as enacted."

[34] I have already expressed my satisfaction that the vote for the Variation was conducted validly and that the majority of eligible employees voted in favour of it. This lends force to Healthscope's submissions.

[35] Further in this regard, Healthscope drew my attention to two recent decisions of the Commission which approved enterprise agreements containing clauses in the same terms as the Salary Packaging Clause.[13] While not determinative, those decisions argue against the sharing arrangement being "fundamentally inconsistent with fairness to working Australians".

[36] The HSU submitted that "the very notion of a scheme in which an employer claws back employee wages for its own financial benefit is one which offends the decency and fairness which the Australian community can reasonably expect from their industrial relations framework"[14] and is "radically out of step with accepted norms and standards".[15]

[37] In large part, these submissions are addressed by the matters I have already canvassed.

[38] Further, Healthscope noted that in 2002 the New South Wales Government introduced, by agreement with the relevant HSU branches and employees, a similar practice of sharing tax savings associated with salary packaging for FBT purposes. It submitted that the sharing split was, for a long period of time, 50/50, although the NSW Government no longer takes a share of the tax savings. I accept that the existence of that arrangement is at odds with the HSU's contentions.

[39] The HSU submitted that Healthscope's rationale for the Variation was to prevent the need for the business to be broken up by way of piecemeal sales. However, a number of hospitals and facilities owned and operated by Healthscope have been, or are in the process of being, sold to other interests. The HSU contended that these developments have "superseded" the stated purpose of the Variation[16] which "further erodes any reason for the Commission to be persuaded to approve the variations as sought".[17]

[40] But the question is not whether the Commission is "persuaded" to approve the Variation. It is whether I am satisfied that there are serious public interest grounds for not doing so.

[41] Healthscope submitted that as at 28 January 2026 (the date of its submissions), it owned and operated 33 private hospitals across Australia. It has entered into agreements to sell five hospitals, with a further one to transition to full ownership by the NSW Government in April 2026. The sale process for the remaining 27 hospitals remains underway.

[42] I am not persuaded that Healthscope's sale of some of its hospitals undermines the rationale for the Variation, and certainly not to the extent that it gives rise to a serious public interest grounds for not approving the Variation. Healthscope submitted, and I accept, that its sale of some hospitals has no relevance to the approval of the Variation.

[43] The HSU has failed to demonstrate the existence of serious public interest grounds that would satisfy me not to approve the Variation. Its objection to the application is dismissed.

[44] Having regard to the material in the application and accompanying declaration, I am satisfied that each of the requirements of sections 210 and 211 as are relevant to this application for approval of the Variation have been met.

[45] The Variation is approved. The Variation takes effect from the date of this decision.

[46] The consolidated version of the Agreement, as varied, is attached to this decision.

[1] Healthscope's Outline of Submissions, 28 January 2026 (Healthscope Submissions)

[2] Outline of Submissions of Health Services Union Victoria No. 4 Branch (HSU Submissions), par 48 footnote 8

[3] [2024] FWCFB 444

[4] [2024] FWCFB 444 at [69]- [71]. The Full Bench was dealing with an application for a single interest employer authorisation, and considered the meaning of "the public interest" as it appears in section 249(3)(b) of the Act. Its observations are apposite to the present application.

[5] Application by Nest Employee Services Pty Ltd T/A Nido Early School [2025] FWCA 282 at [72]. In that case, Deputy President Hampton considered the test in the context of applications for variations under section 216AA of the Act and referring to section 216AB(1). Again, the observation is apposite to the present application.

[12] Australian Municipal, Administrative, Clerical and Services Union v Central Goldfields Shire Council & Ors [2024] FWCFB 444 at [75]

[13] Healthscope Operations Pty Ltd [2025] FWCA 3917 and Healthscope Operations Pty Ltd [2025] FWCA 3943

Printed by authority of the Commonwealth Government Printer