FairWork is Cracking Down on SCHADS Business For These 7 Compliance Issues Under the Fair Work Act

This article is from our partners at Pay Cat, a member of our trusted network. Pay Cat is the legally compliant SCHADS Award payroll software for NDIS businesses. Discover more about our trusted partners.

Operating in the Social, Community, Home Care and Disability services sectors, you'’ll be familiar with the SCHADS Award. This award sets the fair pay and conditions safety net for your dedicated workers.

But as an NDIS employer or manager, staying on top of SCHADS Award compliance is an absolute nightmare. The award seems deliberately complex, with pages of classifications, pay scales, broken shift rules and timesheet requirements.

Unfortunately, even if you want to do right by your hardworking team, the reality is that the intricate award provisions trip up even the most conscientious business owners. A single mistake can lead to underpayment claims down the track, leaving you with back-pay bills and penalties you can't afford.

Ensuring compliance with the SCHADS Award is crucial not only for legal reasons but also for providing job security to workers. Stable employment and permanent jobs are essential for protecting worker rights and fostering a healthy economic landscape.

The good news is that technology exists to take the stress out of compliance.

But before we get there, where are NDIS employers commonly caught out when it comes to the SCHADS Award minefield?

1. Timesheets and Billing Requirements

Timesheets are the foundation of SCHADS Award compliance. With many support workers offsite, relying on paper timesheets makes it incredibly difficult to ensure accuracy. Employees out in the field may accidentally write down incorrect hours, forget to log breaks, or even fudge the numbers on paper timesheets. 

And managers have no way to verify without digitally tracking locations and shifts.

Even using digital timesheets, relying on manual calculation of entitlements from spreadsheets leaves room for errors. It’s nearly impossible to perfectly apply complex award rules like broken shifts and overtime rates.

Employee representatives play a crucial role in ensuring accurate timesheet records and advocating for fair treatment of workers, especially in addressing issues related to casual employment status and protections.

The Fair Work Ombudsman is cracking down on timesheet issues across the sector. If your processes are still manual, chances are you’re non-compliant and underpaying staff without realising it.

Digital rostering is essential for modern NDIS provider businesses. It has a crucial role to play in helping NDIS providers adapt to the challenges of running a disability support business in the digital age, helping the business to run smoothly and be more efficient. 

2. Incorrect Pay Classifications and Fair Pay

With 9 different pay levels in the SCHADS Award, it’s tricky to determine the correct classification for each caregiver. Rates vary based on qualifications, experience and duties performed.

Even once you've classified a support worker, you need to closely monitor the hours worked across different duties to pay the correct rate. This is especially challenging for casual employees, as misclassification can lead to significant underpayments. It's common for NDIS businesses to miss overtime or use outdated pay rates that no longer apply.

The Fair Work Ombudsman has entered into an Enforceable Undertaking (EU) with Disability Services Australia (DSA) regarding the incorrect application of time-off in place of overtime and penalty rates, underpayment of minimum wage rates, incorrect application of sleepover and on-call provisions, and underpayment of annual leave loading and allowances in 2020.

And in a 2021 report, the Fair Work Ombudsman found 36% of NDIS providers audited had incorrectly applied penalty rates for overtime, weekend and public holiday work.

Trying to manually calculate and apply complex shift allowance rules only compounds these issues. For busy managers and owners, it is extremely difficult to guarantee no one in your team is being underpaid due to incorrect rates.

And when issues are found, back-paying support staff at the right rates is costly enough without FairWork penalties on top. For small NDIS businesses, just a few staff underpayments can seriously impact the bottom line.

3. Sleepover Shifts and Allowances

Sleepover shifts are common in disability and home care services, allowing caregivers to be on-call overnight for clients. But the SCHADS Award has intricate rules around paying for sleepovers that often catch providers out.

The span for a sleepover shift is a continuous 8-hour period, and how much a caregiver gets paid for a sleepover depends on whether they have to perform any work during the shift. 

The minimum payment for a sleepover shift is a sleepover allowance of 2 hours at ordinary rates. Even if the employee gets a full night's sleep and is not woken up to perform any work, they must still be paid the 2-hour minimum allowance. Workers have raised concerns about the adequacy of sleepover shift payments and the need for strict compliance with these rules.

The support worker can also not be rostered for more than 7 consecutive sleepover shifts unless they request additional shifts. And if they are required to perform any work during a sleepover shift, additional payments for hours worked will apply on top of the allowance.

With caregivers coming and going from sleepovers, it's incredibly difficult to manually ensure compliance. However, failure to pay the correct sleepover entitlements is a surefire way to end up with back-pay claims.

4. Broken Shift Allowances and Minimum Engagements

The SCHADS Award contains a number of complex rules around broken shifts that are easily breached without digital tools.

If a caregiver works a broken shift, they are entitled to a broken shift allowance for each portion of work. It's common for NDIS businesses to miss paying this entirely when rostering broken shifts.

You also must pay staff for a minimum engagement of at least 2 hours’ pay for each portion of a broken shift (3 hours for social and community services employees). If you roster a caregiver for less than an hour, you'll end up inadvertently underpaying them. And if the break between portions of a broken shift is greater than 1 hour, you may need to pay an additional broken shift allowance, depending on the situation.

Workplace laws govern these broken shift allowances, and compliance is crucial to avoid penalties and ensure fair worker pay and conditions.

For time-poor NDIS business owners, managing this manually results in mistakes. But for support workers, even small underpayments can make a big difference - which is why Fair Work is focusing on underpayments from broken shift non-compliance.

5. Rules Around Time Between Shifts

A key area the Fair Work Ombudsman targets is inadequate rest breaks between shifts. The SCHADS Award requires at least 10 hours off between finishing one shift and starting the next. With complex manual rosters, it'’s easy to inadvertently schedule someone with only 9 hours of rest. This results in underpayment issues that attract regulators'’ attention.

Recent amendments to the Fair Work Act aim to address such unfair workplace practices by ensuring that minimum standards, including the 10-hour rest break requirement, are met across various industries.

6. Annual Leave Challenges for Shift Workers

Another annual leave pitfall catching out employers is incorrectly calculating shift workers' extra leave accruals. Under the SCHADS Award, shift workers gain additional annual leave if they work: 

• More than four ordinary hours on 10 or more weekends during the yearly period

• At least eight 24-hour care shifts during the yearly period

Manually tracking this is error-prone.

When support workers take leave, you must also pay annual leave loading on top of their base rate. Forgetting this requirement leads to substantial underpayments. For small NDIS provider businesses doing rosters and leave manually, keeping on top of shift worker entitlements is a nightmare. 

Ensuring workers have access to permanent employment status can help mitigate these issues by providing clearer entitlements and benefits.

But non-compliance poses major financial risks through back-pays.

7. Record-Keeping Slip-Ups

You need to keep accurate staff records on hours worked, duties performed, leave taken and more.

Yet many NDIS providers still rely on paper-based records that can easily go missing or become out-of-date. Even simple admin errors, like misfiling a timesheet, can lead to trouble down the track.

The Fair Work Ombudsman is increasingly scrutinising record-keeping in the sector. 

Sloppy or missing records make it impossible to prove you've paid staff correctly. This can lead to wage theft, where deceptive practices result in reduced pay for support workers, highlighting the systemic issues within the Australian labour market.

Read our blog "The Comprehensive Guide to Understanding the SCHADS Award", where you can find more information about the SCHADS Award and the SCHADS Award pay rates.

Conclusion

As we’ve seen, staying compliant with the intricate SCHADS Award provisions using manual processes is a constant struggle. Even conscientious employers get caught out.

Between complex allowances, broken shift rules, and detailed record keeping, it’s extremely difficult to guarantee that you are paying all staff correctly. The Fair Work Ombudsman is cracking down hard on underpayments.

The good news is that technology now exists to eliminate these compliance headaches. ShiftCare has partnered with Pay Cat’s legally compliant SCHADS Award payroll to take the stress out of compliance. Accurate award interpretation and correct pay ensure you won’t fall victim to non-compliance audits. 

See exactly how Pay Cat and ShiftCare work together to help you ensure 100% compliance with the SCHADS award. (yes, 100% compliance!)

Get started with ShiftCare by starting a free trial.

Do you want to speak to the Pay Cat team about getting your payroll set up? Here's where to get in touch.

1. What are the key compliance issues that FairWork is targeting in SCHADS businesses?

FairWork is focusing on seven major compliance issues, including incorrect application of SCHADS Award Rates, failure to pay allowances, and non-compliance with rostering rules. NDIS Providers must be vigilant in these areas to avoid penalties and ensure they are meeting all NDIS SCHADS Award Rate obligations.

2. How can NDIS Providers ensure compliance with FairWork regulations?

NDIS Providers can ensure compliance by using NDIS plan management software and carer apps that automate payroll, allowances, and shift rostering. These tools help providers stay aligned with SCHADS Award requirements and avoid the compliance pitfalls that FairWork is cracking down on.

3. How long does it take to become an NDIS provider while ensuring compliance with SCHADS regulations?

Becoming an NDIS provider typically takes several weeks, and during this time, it’s crucial to set up systems that ensure compliance with SCHADS Award Rates. Implementing NDIS plan management software early on can streamline the process and help avoid issues that could attract FairWork scrutiny.