SCHADS is widely regarded as one of the more complicated industrial awards. BDO’s Payroll Advisory team explore the recent changes surrounding an often-overlooked element of the award - broken shifts, including new issues surrounding broken shift allowances and longstanding pitfalls for broken shifts spanning more than 12 hours. Find out more about SCHADS awards, payroll compliance and our other Payroll Advisory services today.
The Social, Community, Home Care and Disability Service Industry Award 2010 (SCHADS Award) is widely regarded as one of the more complicated industrial instruments, particularly given it can apply across a broad spectrum of organisations.
Not taking the time to understand the scope and complexity of SCHADS Awards can quickly lead to problems, while accurately configuring and applying its provisions can be challenging for employers.
Below, we highlight one aspect of the award that is often overlooked - broken shifts, exploring the new issue surrounding broken shift allowances and longstanding pitfalls for broken shifts spanning more than 12 hours.
Employees working in disability services, home care or aged care often work shifts consisting of multiple periods of work, separated by an unpaid break (other than an unpaid meal break). These shifts are referred to as ‘broken shifts’.
Following the conclusion of a four-year review, the Fair Work Commission introduced changes to the SCHADS Award from 1 July 2022, two of which impact broken shifts.
The first requires employee agreement where there are more than two periods of work in the broken shift (i.e. two or more unpaid gaps). An agreement must be obtained before the shift, or as part of the employees’ regular pattern of work.
The second introduced a new broken shift allowance which, in our experience, some employers have yet to implement.
New issues surrounding broken shift allowances
From 1 July 2022, the Award recognises the inconvenience of multiple shift starts in a day, and introduces the following allowance:
- For broken shifts consisting of two periods of work, an employee must be paid an allowance of 1.7 per cent of the standard rate (currently $18.34)
- For broken shifts consisting of three periods of work, an employee must be paid an allowance of 2.25 per cent of the standard rate (currently $24.27).
As mentioned above, an agreement must now be obtained for these types of broken shifts.
For example: An employee works their first shift between 9am and 11am, takes a three hour unpaid break, and works the next shift between 2pm to 5pm on the same day. In this case, the employee will be entitled to 1.7 per cent ($18.34) broken shift allowance for working two split shifts along with one unpaid break.
Legacy issues for broken shifts spanning more than 12 hours
Historically, a common pitfall of broken shifts arises when the total span of the broken shift exceeds 12 hours. In such cases, employees are entitled to double time for hours exceeding the 12-hour span.
A 12-hour span commences at the start of the first shift and continues until the end of the last shift, inclusive of break times.
Employers commonly apply the double-time rate only where the employee has worked more than 12 hours, which can be a costly mistake to make.
For example: An employee works their first shift from 8am to 11am, takes a break from 11am to 5pm, and then resumes work from 5pm to 10pm. Despite only working eight hours, the final two hours must be paid at double their ordinary rate under the Award, as the total span of the broken shift exceeded 12 hours (from 8am to 10pm).
Consideration for employers
The broken shift allowance, and 12-hour span clause, can have a significant financial impact on employers who regularly schedule their employees across broken shifts. To ensure compliance with the SCHADS award requirement for appropriate allowance and double-time penalties, it is essential to:
- Review existing employment contracts and update the terms and conditions as needed to comply with the award
- Ensure the payroll system is configured to align with the obligations outlined in the SCHADS Award
- Facilitate a process for obtaining employee agreement where multiple breaks will arise in a shift
- Consider whether a remediation exercise is needed to determine historical underpayments that have arisen from broken shifts
How BDO can help
Pay compliance is an increasingly important consideration for employers, with errors proving both costly and time-consuming to resolve. Our Payroll Advisory team can support a program of work to resolve uncovered issues and enable you to do the right thing by your employees, while reducing the risk of penalties and reputational damage. We work with employment lawyers, to ensure our clients are best protected.
If you would like to find out more about Fair Work compliance and our other Payroll Advisory services, please contact the team at BDO today. Subscribe to receive updates on the latest developments in workplace compliance.