Navigating the SCHADS Award: Payroll compliance and technology for Not-For-Profits

Is your not-for-profit payroll compliant? We recently held a webinar facilitated by Not-For-Profit National Leader Elizabeth Blunt, with experts James Henry, Andreia Lemos, Dann Haimovitch, and Adam Quigley. The webinar focused on payroll compliance and technology, highlighting the Social, Community, Home Care and Disability Services Industry (SCHADS) Award 2010.

Topics covered in the webinar included payroll compliance challenges and maintaining compliance, underpayment causes, the SCHADS Award, technology and payroll systems, and technology change management. The key points are summarised below:

Introduction to payroll compliance

Australian employers operating in certain industries are required to, at a minimum, abide by the relevant industry modern award, or as varied by an enterprise agreement. Payroll compliance aims to ensure that employees are being paid their appropriate legal entitlements. Navigating these legal requirements can become complicated as they’re driven by various instruments, including the National Employment Standards, industry awards, enterprise agreements, and employee contracts. Employee satisfaction and brand damage play a role in the impact of non-compliance on businesses. Where underpayments arise, media reporting can impact the trust of the business from current and prospective employees and the public.

How to maintain compliance and common causes of underpayment

When considering payroll compliance, we recommend employers consider regular reviews across key areas including pay against award, wage code, leave accrual, and pay process. Addressing these key areas will help make sure businesses are set up appropriately for their pay obligations, and configured for correct application of employment taxes, avoiding potential non-complaint issues. When considering an effective pay against award review approach, the depth of review and collaboration with external employment lawyers should be considered.

When performing these reviews, we often see recurring common causes of underpayment. These can include a set-and-forget approach to applying an ‘above award’ salary or hourly rate, lack of understanding of overtime triggers, resourcing constraints in a small payroll or HR team, use of global software, and lack of regular compliance monitoring. 

Issues specific to SCHADS Award

The SCHADS Award is not only complex but also dynamic. There are often costly and real risks associated with the SCHADS award, including broken shift allowances and classification errors. Payroll systems must be compliant and agile enough to adapt to changes.

One complex and evolving aspect of the award is the broken shift allowance. Recent changes to the award require employee agreement for any shift that includes more than two periods of work in a single day. The allowance applies to home care employees and social community service employees when undertaking disability work, meaning some NFPs must ensure their payroll systems are set up to trigger these allowances. These entitlements include percentage entitlements and double time allowance for shifts over 12 hours.

The type of work usually performed under the SCHADS Award may lead to organisations experiencing common pitfalls, such as rostering systems and dynamic working patterns, classification challenges, and minimum payments. These situations can lead to significant underpayments, and employers must act to ensure their payroll technology and systems are set up to identify the right triggers.

Payroll technology

Payroll technology plays a critical role in supporting teams and we continue to see these technologies evolve. There are three main trends taking shape, integration, AI and automation, and market fragmentation.

Integration remains the number one pain point for teams. This is particularly challenging in the mid-market where integration gaps lead to manual work, compliance risk, and limited visibility. Secondly, AI and automation provide a challenge to payroll teams, as it’s being used to run compliance checks and reduce manual errors. While many payroll platforms entering the Australian market include these capabilities, they still include an element of risk around accuracy and reliability regarding Australia’s awards and agreements. These systems can support compliance and efficiency but cannot replace the payroll expertise of team members. Thirdly, we see that the payroll technology market in Australia is crowded and fragmented. There is no one-size-fits-all solution to payroll technology, the choice depends on business complexity, integration needs, and compliance requirements.

To get the most value out of payroll technology systems and ensure your organisation is selecting the right system, there are key compliance features to look for:

• Award interpretation engine - how does the system configure and automate awards? Does it reduce manual calculations and compliance risk?
• Real-time timesheet integration - does the system integrate timesheets in real time to prevent delays and misalignments?
• Automated pay calculations - can the system accurately calculate pay, loadings, and penalties?
• Leave and entitlement tracking - is leave and entitlement tracking aligned to the correct award?
• Audit trails and reporting - does the system provide sufficient audit trails and reporting for compliance?

Change management

Change management is an important part of the integration of technology systems. One thing to get right is communicating the importance of the change. The goal is to have employees, accept, commit, and adapt to the change. 80 per cent of digital transformations fail to deliver without effective change management.

Investment in the change and alignment from leadership leads to a higher adoption and proficiency in using the new technology. Ensuring we create a connected, collaborative team, builds internal capability to implement changes both now and in the future. Building change muscle in the frontline workforce strengthens their ability to lead through change and ensures your organisation is equipped to manage the constant change we see in the industry. 

Conclusion

Payroll compliance under the SCHADS award is a critical responsibility for organisations. The complexities of the award requires attention to detail and an understanding of its provisions. Leveraging technology, investing in robust payroll systems, and staying informed about legislative changes allow organisations to achieve compliance and foster a fair and transparent workplace. Integrating technology in payroll management offers a strategic advantage to help improve overall efficiency and employee satisfaction.

If you need assistance with payroll compliance, have any questions about the SCHADS Award, or technology implementation, contact our team. We’re here to help navigate the complexities and ensure your organisation remains compliant and efficient.

Watch the webinar or learn more about our not-for-profit webinar series.