‘Fundamental’ changes to how Australian care workers are classified and paid on way

The Fair Work Commission ruling (51-page/725 KB PDF) concludes a two-year review into gender-based undervaluation within the Social, Community, Home Care and Disability Services Industry Award 2010 (SCHADS Award), and introduces the most substantial changes - and pay increases - the sector has seen in many years.

Following a lengthy review process, the commission ruled that the previous pay rates had been impacted by under-valuation and were “not fit for purpose”, leading to the restructuring – which resets the minimum wage rates and changes the classification structure for employees in the sector.

The move comes in the wake of the commission’s annual wage review, which approved a 6% rise in the national minimum wage and 4.75% increase to all modern award rates.

For employers in the sector, these changes will mean significantly increased wages and will require planning to ensure proper transition and compliance. In this article, we look at what the changes mean for employers in the sector and what they should be doing now to prepare. 

The changes

The SCHADS Award's existing classification structure has been spread across schedules B (social and community services), C (crisis accommodation), E (home care – disability) and F (home care – aged care), with different pay rates and inconsistent role descriptors and language used across each. This has previously made classification difficult and employee disputes common. 

The commission determined this classification structure was fundamentally flawed and systematically undervalued a predominantly female workforce. To fix these problems, it will implement a complete replacement of those schedules with a single, unified framework: the Final Classification Structure (FCS).

The new simplified structure is intended to make classification compliance simpler. The FCS organises covered roles into six work streams across ten classification levels, using consistent and simplified role descriptors and language:

• administrative and operational support,
• social and community services
• crisis assistance and supported housing
• disability support
• home care - aged
• home care - disability

Minimum pay rates within the FCS will be tied to qualifications and relevant experience. However, formal qualifications are not the only pathway to higher classification levels. The FCS deliberately accommodates equivalent experience, including lived experience, as a valid basis for accessing higher classification levels.

Progression will require evidence of performance at the relevant level, not just time in role. Movement between classification levels under clause 13.4 of the new award depends on demonstrated competency and satisfactory performance, with years of service alone not triggering progression. This will prevent lockstep increases without merit. 

However, it will require robust performance review and documentation processes and may lead to increased disputes about performance and competency evaluation. 

When increases take effect

Employees currently covered by schedule E (home care - disability) are expected to receive an interim pay rise of up to 27% per cent from 1 October 2026. This determination is provisional, but employers with schedule E workers should assume a significant increase will be implemented on that date.

We recommend employers identify all employees covered by schedule E and begin modelling the cost impact of the anticipated October 2026 pay increase.

For those employees paid above award-rates, an assessment of whether they remain above-award will need to be done to ensure continued award compliance. 

From 1 October 2027, all SCHADS Award employees will transition to the FCS. The existing schedules are revoked in full, and translated pay rates apply across all six work streams.

The Equal Remuneration Order that currently applies to social and community services employees will be revoked when the FCS commences, as its rates will be absorbed into the new minimum rates.  

The commission has published translation tables to assist employers to identify the correct classification under the FCS. However, translating employees into the FCS will not fix errors in how they were classified under the old schedules.

Employers who carry those errors through the transition will simply embed them in the new framework. Identifying and correcting existing misclassification, which is common in the sector, should be addressed with urgency, as it can lead to underpayment and other employee claims. 

Regulatory scrutiny of employment practices in the care sector is significant and is unlikely to diminish. Employers who treat the changes as merely a payroll update, without auditing underlying classification decisions and other award compliance issues such as use of annual salaries and allowance compliance, carry real legal and financial risk of underpayment claims, union and regulator scrutiny, and employee grievances and claims. 

Employers should use the transition period as an opportunity to bring classification and award compliance practices comprehensively into order, and to establish the systems and processes needed to maintain compliance under the new framework going forward.

Exceptions and sleepover changes

The exception to the new structure is the family day care employee stream in the current version of the SCHADS Award. 

The commission has previously determined that it was an “anomaly” that family day care was included in the SCHADS Award, and proposed to instead include it in the children’s services award. However, formalisation of this change has not yet taken effect, with the commission expecting this before the October 2027 implementation of the FCS. 

Separately, the commission has also varied the SCHADS Award to clarify how sleepover shifts are treated, with those changes taking effect from the first full pay period on or after 1 June 2026.

In summary: sleepover shifts that include work both before and after the sleepover must be treated as a single shift; shift loadings are now assessed separately for each working portion of the shift; and the cap on ordinary hours within a sleepover shift has been extended from 10 to 12 hours, with no more than eight ordinary hours permitted on either side).

Overtime rules for part-time and casual employees have also been updated.