SCHADS Award Compliance: Finding Payroll Issues Before They Become Costly Underpayments

This transcript of Effective HR’s “SCHADS Award Compliance: Finding Payroll Issues Before They Become Costly Underpayments” webinar is auto-generated and may contain errors. For the full context, please watch the webinar above or contact Effective HR.

Emma Dawson: Okay, okay, good afternoon, everyone, and welcome. Today we're talking about SHADS Award Payroll Compliance, and more specifically where payroll issues can hide before they turn into those expensive underpayments. With… say this is an area that we do see a lot, often it's not one big obvious mistake. It's a classification that hasn't been reviewed, an allowance that isn't triggering a roster change that hasn't flowed through to payroll or a system rule that was set up years ago and has never really been tested again. Those small things can repeat across hundreds of shifts and pay periods, and that's where the exposure can start to build. So today is really about helping you know what to look for, what to question, and where the common SCHDS payroll risks sit we'll share some real fair work cases along the way because they are a great reminder of how quickly ordinary pay issuers can become very significant. Before we get started, we would like to acknowledge the traditional custodians of the land on which we live and work, and the lands of everyone joining us today. We pay our respects to elders past and present, and extend that respect to all Aboriginal and Torres Strait Islander people here with us

Emma Dawson: For those who don't know us, I'm Emma Dawson, one of the HR and IR consultants here at Effective HR. And joining me today is Renee Arthur, our systems and audit lead consultant. Renee spends a lot of her time working right in the detail of payroll systems, award interpretation, audits and remediation. So she sees firsthand where things can go wrong, but also what good payroll controls look like when they're working properly, which makes her very much the perfect person to take us through today's session. We've got quite a bit to cover, but we're going to keep it very practical. We're going to be looking at where those shards Underpayments tend to hide, classifications and payroll configuration, salary and flat rate arrangements, IFAs, some of those pay events that may deserve a little bit of extra checking, and then what a good payroll audit and remediation process process should actually look like. So hopefully you'll leave today with a few questions you can take straight back to your own organisation and ask of your payroll processors Renee, I will hand it over to you.

Renee Arthur: Fantastic, Emma, thank you so much. I'm going to dive straight in. So in my role as payroll and systems audit lead consultant here at Effective HR, I work with clients day in, day out, and I see the issues that they're facing A lot of these payroll issues, as Emma mentioned, don't come from big major issues. They come from small things that are compounding over time and aren't picked up in a timely fashion. They're small issues, they go unnoticed. Maybe it's passed down from one payroll officer to another. There might be miscommunication, or there might be a change in the award that might have been missed. And all these little things can compound over time to result in some really significant remediation back payment calculations and amounts that are payable to employees. Not just payable to employees, but also underpayments of superannuation, we see as well.

Renee Arthur: The set and forget mentality, as we all know, the awards are constantly changing. The 1st of July, we're used to seeing increases in the minimum rates of pay. But under the SCHADS award, there was also a really significant change that rolled out in the 1st of June in regards to the interpretation of sleepovers. So that's an outside of a scheduled change in the award. And if you have that set and forget mentality, which I understand being a business owner, you're being pulled in so many different directions. Your intention is that payroll is just working. But without regular checks and balances, things can just get missed, slip through the cracks assumptions can be made that maybe aren't necessarily correct, rather. The next thing is the award complexity. There's no beating around the bush. The SCHADS Award, the community services sector is the most complex in terms of the shift patterns, the allowances, the penalty rates that's out there. It truly is

Renee Arthur: I have had the opportunity to work across multiple different industries, and I keep coming back to that community services sector, just being so incredibly complex in its interpretation. Because of that complexity of the interpretation and because that there are some clauses within the SHADS award that aren't clearly defined, one that comes to mind, for example, is broken shifts. It can become really, really challenging to get the award right in the first place operational change is another one that we see. Businesses change and evolve over time. You might be rostering employees in one way and you might have audited that. You might have had some checks and balances done on how that roster flows through to payroll and everything's working well but then you might bring on another participant and that roster might need to change because of that. And because of those operational changes, maybe there's longer shifts, shorter rests between work, overtime required. Maybe there's been a missed meal allowance because of, you know, because overtime's triggered it, but it hasn't been identified those operational changes always need to be reviewed and ensure that they're being paid correctly.

Renee Arthur: And the final one there is often the discovery comes too late. Issues sometimes will only be identified when an audit has occurred or maybe an employee has asked a question, maybe something has been in kind of the worst case been reported to the Fair Work Ombudsman through the regulator maybe there's regulator involvement. Emma and I work with clients who have received enforceable undertakings from the Fair Work Ombudsman and their remediations that are directed by the Fair Work Ombudsman, which is really the position that we want to avoid. Ideally, we want to get it right in the first instance but if an issue has occurred, we'll quickly rectifying it, and so then we're able to move forward. There are business risks associated with underpayment of wages as well. And these risks are significant. I will identify the risks on this slide, but I don't want to dwell on them too much. My intention is not to scare or use any kind of scare tactics or anything like that. I want to acknowledge the risks. I want to acknowledge the,

Renee Arthur: That they are there, but we can do things by being proactive to ensure that we're managing the actual likelihood of those, risks being enforced. So the statute of limitations outlines that an employee can claim underpayment of wages going back six years. Outside of underpayment of wages, that's where you're required to back pay an employee for underpaid wages including possibly including superannuation. There can also be award breaches there are some aspects of the SHADS award and all other awards out there as well. There are some aspects of the award that if we don't follow them, it doesn't actually result in an underpayment to the employee. Rather, it results in a breach of the award what the consequences or the risk or the penalty associated with a breach of the award is penalties or fines being imposed on the director or the company itself for breaching the award.

Renee Arthur: No actual underpayment is payable to the employee for some of these breaches. Fair work scrutiny, regulator investigation, none of us want to have to deal with that paperwork. Let's be honest. And also, if there is an enforceable undertaking, it does become public knowledge then as well, similar to an unfair dismissal claim it's logged… lodged rather publicly, and we don't want that for our reputation either. That flows nicely into the next one, reputation and trust. I know I shouldn't say I know, but a lot of the business owners that I speak to, they don't start businesses because they want to do the wrong thing. You know, they don't start businesses because they want to have to deal with difficult employee issues, right? A lot of the clients that I speak to start businesses because they're passionate about what they do. And they build up a relationship and a level of trust, not just within their employees, but also within the community that they operate within. And these types of claims can can affect that reputation and trust

Renee Arthur: Lastly, but definitely not least, is the Costly Remediations. Back payment calculations compound, they compound over time. As I've mentioned, superannuation is also affected. Taxes also come into it as well. They can… some of the back payments that we work with can… the amounts can cripple businesses. You know, we can be talking into the hundreds of thousands, you know, up to the million… million and more dollar mark, depending on the length that the underpayment has gone on for, what the underpayment is in regards to, and how many employees have been affected by that. I mentioned this on the previous slide, but underpayment liability, it can become personal. Since the 1st of January 2025, and this did come into place earlier for some particular states, for example, Queensland but it came into place nationally on the 1st of January 2025. Intentional underpayments can be penalized at the criminal level

Renee Arthur: So what that means is that directors can be put into prison for underpayment of wages we have not seen this flow through to enforcement at this stage. And I know I don't want anyone leaving this conversation losing any sleep over what I've just said there, being the intentional underpayments can be criminal because honest mistakes are not included in this. A business who is trying to do the right thing, who engages in regular audits, regular checks regularly stress tests their payroll processes, their rostering processes to ensure compliance. Whilst I'm not a regulator, I'm not a judge. I can't say this with certainty. Realistically, the chances of that actually happening and that person being deemed intentionally underpaying you know, it's really low

Renee Arthur: But nonetheless, it is there. And the penalties and imprisonment term are significant, as you can see on that slide. As I said, I don't want to dwell too long on the risks. I want to acknowledge that they're there they can be imposed, but we can take steps to mitigate the risk of that happening. It's not just directors who can be held liable. It can also flow down through all the way through the chain. It can also include HR and managers. It can include payroll officers, external advisors like myself and Emma it could also include payroll providers as well, so your system software, and any other CRMs or rostering tools that you might be using.

Renee Arthur: Personal exposure can come into place essentially when there is significant involvement from that party. When there is knowledge from that party that there has been an underpayment that has been ignored those liabilities can flow through when there's been non-compliant actions reported, but then no one has taken steps to reduce that or eliminate that or work towards eliminating that risk. Okay, so enough about all of that. Let's talk about the SCHADS Award specifically. Let's talk about, in my experience, working with clients. You know, currently I have one client that I'm supporting with an enforceable undertaking remediation. We've got another client who's doing a proactive remediation and we've got other clients who are doing proactive payroll audits to test their compliance. Where do I see the underpayments hiding in my experience? Where does Emma see these underpayments hiding? And they're from, as we said at the top of the conversation, multiple different parts. It's usually small things that go missed and classifications is one of the big ones.

Renee Arthur: If we have blanket classifications for all of our employees, not taking into consideration the qualifications that they have, potentially the qualifications that they have attained throughout their employment with us, right? We're really good often at the beginning of someone's employment to identify their qualifications but do they evolve? Do they pick up new qualifications along the way? Or do they pick up new duties and responsibilities? For example, sometimes an employee might start taking on more responsibility. You know, they're a great employee, they're taking on more team lead type duties, they're taking on more administrative support for you the classifications can change and evolve over time. Their pay points can change and evolve over time. The SCHADS Award has complex classifications in some areas and quite simple classifications in other areas. For example, if employees hold certain qualifications, we know that they need to be at certain levels and certain pay points within the SHADS award

Renee Arthur: It's really important to be on top of your classifications with employees, and that includes pay point and how you're managing pay point progression within the business. Penalties and loadings is another really common one that we see. Just last week we wrapped up a payroll audit for a client and we identified that they were only paying that afternoon shift penalty for time worked after 8pm rather than that whole shift for a shift worker employee. That can result in really significant underpayments because it means that that penalty rate hasn't been applied for the whole shift. There's also been changes lately. I mentioned before in regards to the 1st of June sleepover changes under the SCHADS award that change how night shift and daytime and rather ordinary hours rates are paid for that sleepover shift, dependent upon where the sleepover portion of the shift is, of course.

Renee Arthur: And ensuring that we're staying on top of those award changes means that we're not underpaying our employees, but also with that sleepover change, ensuring that we're not overpaying our employees as well. Allowances is another one that we commonly see. I mentioned earlier before, I mentioned the first sorry I mentioned rather the meal allowance. You know, if employees start working overtime, there are some instances where they'll be triggering a meal allowance for working that overtime. And that's one of the ones that I see gets missed all the time. And it might, even if it's rostered over time, there still can be meal allowances that are triggered in some instances. It is quite a complex area. But understanding how those allowances or rather when those allowances are triggered is a really important aspect to ensure that we're paying our employees correctly, and we're not inadvertently resulting in an underpayment of wages claim. Time and attendance is another area that we commonly see Underpayments driven by. And this is, you know, I understand the operational requirements, you know, you put a roster out, but it will often change. That's normal. You know, someone will call in sick

Renee Arthur: A participant will need more support. Something will happen, you know, whatever it might be, the roster often needs to change. So the comparison between roster and timesheets and what hours we're actually paying employees is really important. Now, those changes in roster can sometimes result in overtime for employees. But it's also really important to ensure that those roster changes are well documented rather than an underpayment, I also am conscious that I don't want to make clients or I want to identify when clients are overpaying and there's operational, you know, efficiencies that can be made you know, for example, if someone's worked a shift but gone home sick after only an hour, it might appear to the payroll officer that that person hasn't met the minimum engagement for that shift but if it's well documented that that person went home sick, that minimum engagement wouldn't apply. So if the payroll officer was to top up to minimum engagement, we'd be overpaying that employee. So it's another aspect we, of course, want to avoid.

Renee Arthur: And last but not least, payroll setup, payroll system configuration. The SCHADS award is an incredibly complex award to try and interpret into a rule set in a payroll system or a CRM or any other software out there and then it's made even more complex because it changes. So it doesn't make any of those system providers' jobs easy by any stretch of the imagination. But those system rules need to be obviously set up well. They need to be tested for different types of rosters and if there are system limitations, it's being aware of those system limitations, right? I understand that a system may not be able to 100% of the time interpret any shift that's put into that system in line with the SCHADS award. That's totally reasonable. Given the complexity of the SCHADS award, and also given the fact that the SCHADS Award isn't black and white on some shift patterns, the one that comes to mind is broken shifts for me so I understand that a system may not be able to be 100% of the time be able to interpret all of those shifts

Renee Arthur: So what it's really important as a company director, an operations manager or a payroll officer is to understand what those limitations are of that system. So you can jump in and do the manual corrections when or as needed. Just checking my watch, quick time check, I think we're doing okay so far, 122 Eastern Standard. We're doing okay. We've talked about this a little bit in the previous slide, but let's go into more detail in terms of classification. A job title is a job title. Whenever I am doing a project where I am assisting a business in classifying their employees to be honest, I spent a pretty small amount of time considering the actual job title that that employee does. Because what I need to know to ensure classification for an employee is the duties that the employees actually doing. It's common that those duties will change and evolve over time. But as the useful audit question says here, I really like to consider ignoring the job title and looking solely at the duties that that employee performs

Renee Arthur: Those duties are going to tell you what level, what classification rather within the SCHADSA law that that employee should sit at but the… but you need to ensure that you don't stop there. We need to ensure under the SCHADS award that we're also looking at the qualifications that employee holds and ensuring that we are classifying them at at least the minimum for the qualification that the relevant, rather, I should say, relevant qualification that they hold. Again, the SCHADS award classifications don't stop there. It's not a set and forget system. Even if an employee does not pick up any additional duties or responsibilities, pay point progression still needs to be considered within the SCHADS award now, if we're talking about a level one employee, there is a specific number of hours that that employee needs to work per year. 1974, I think off the top of my head, but don't quote me on that number, 1,970 something. But for a level two or above employee

Renee Arthur: What we're looking at rather is competency and performance in the role. Now, just because an employee has passed 12 months, it doesn't automatically mean that they are eligible to progress from one pay point to the next However, it does give them it doesn't automatically progress them from one pay point to the next, but it gives them the eligibility to progress. From a best practice perspective, from relevant case law that Emma and I have looked at, if we are choosing not to progress an employee from pay point one onto the pay point two, et cetera, et cetera we would really recommend having some kind of documented process in place to document why we have not progressed that employee from one play point to the next. It is absolutely reasonable to do so, but if push came to shove and the fair work ombudsman ever came in and said, well, why wasn't this person progressed from one pay point to the next? That documentation is what you're going to use to explain why we haven't progressed someone from one pay point to the next

Renee Arthur: There's a number of cases out there that really support the different classification errors that Emma and I see in our day-to-day practice as well. Enforceable undertakings show us that there's been $5.9 million rectified to employees that's through enforceable undertakings to 784 employees. And that's over that eight year period. So not, you know, not a huge amount of time there, but quite a lot of quite a lot of money paid out to those employees. What the failure commencement identified through those enforceable undertakings is that a lot of the time businesses were relying on their systems to accurately classify their employees, accurately progress them through the pay points. And again, they were just applying that set and forget mentality and what that meant is that the employees were not progressing through the pay points, not being… their duties and responsibilities weren't being reassessed when they were taking on taking on new roles, not necessarily new roles, but new duties. When we see that incorrect classification, that incorrect classification flows onto effect all the rates of pay for the employees apart from the flat rates such as the allowances. It flows on to affect all of your penalty rates, ordinary rates

Renee Arthur: Loadings and overtimes as well. There's also a mention here on this slide in regards to record keeping obligations. Record keeping obligations timeframe differs slightly to our statute of limitations for remediation. Unlike the statute of limitations for remediation which goes back six years Record-keeping obligations go back 7 years. There is a specific list of records that we do need to keep for employees, and that includes our former employees as well. Those records, of course, can be archived. You don't need to keep them fresh and in your, you know computer, but they do need to be available if if they were requested by either the employee or the fair work ombudsman the fair work regulations provides us specific guidelines and timeframes in terms of how quickly we need to produce those records if requested, which can be found online if you're interested.

Renee Arthur: Perfect. The shadow, I think I say this probably about a dozen times every day, the most complex award. So trying to configure a payroll system or a CRM or a rostering system, any kind of system to accurately interpret any shift pattern for any type of employee, for any day worker versus shift worker, casual versus permanent part-time. It's an incredibly complex feat for any system provider to try and take on Accurate classifications are obviously incredibly important, but the rule mapping is where I see some of these systems fall down. drafting up rules to interpret different shifts to interpret shifts that start on one day of the week, let's say a Friday, but then finish on a Saturday, for example, and pay the different penalty rates that cross over that midnight timeframe is incredibly difficult and not just that, when the award then goes on to change as again it did first of June, sleepover shifts, that can make it incredibly difficult to then retest

Renee Arthur: Rec rebuild and then roll out those changes in the award as well. With the rules as well, most systems will have limitations. Knowing those limitations is your, you know, is your secret weapon, really. I think just being able to understand what the limitations are so that when you're doing your payroll on a fortnightly or a weekly basis, you know what to check for, right? You know the weak spots, you know where the system can't interpret a shift. For example, a broken shift that spans 12 hours and spans midnight. That's multiple layers there of a system configuration that needs to be working to be able to interpret and pay that shift correctly.

Renee Arthur: But if you know that that's a limitation of your system, you can be checking for that. You can be checking, okay, I know Susie did that shift on Tuesday night, there was a broken shift spanned 12 hours and spanned midnight and it's it becomes part of your final checklist for payroll allowances, I touched on this one before. So in certain instances when an employee, either a shift or a day worker, works overtime, specific amounts of overtime sometimes it's any overtime, sometimes it's overtime outside their ordinary hours. One of those employees does work overtime, they're triggering a meal allowance. It's one of those allowances that I commonly see missed it's not a lot of money, $15 something, I think it is at the moment. Again, don't quote me on those numbers.

Renee Arthur: But that meal allowance, you know, it's still an entitlement that needs to be paid for that employee. Another one of those allowances, laundry, uniform, they can be really tricky to identify. If you're issuing uniforms to your employees, polos, for example, or something to the effect, and you're not laundering those uniforms for the employees you know, it's quite likely that those employees will be entitled to a laundry allowance. So again, just being aware of the different allowances and when they're entitled for the employees, and what you need to do in your payroll system to tell the system to pay that employee that allowance. Right? You might have some employees that are eligible for the first aid allowance, but others are not. So understanding how you communicate that with your payroll system to ensure it's done automatically for you. Again, another secret weapon that you've got in your toolkit

Renee Arthur: The data alignment is another crucial piece that we see slip up, for example. And I understand why, you know, for example, someone might change their position. They might have started with you as a casual support worker, but they might be promoted into a permanent part-time rostering a rostering person, for example you might roll out the new employment contract to that employee, but ensuring that that new employment contract and the change in terms for that employee flows through to your payroll system Pardon me. And the effective date is correctly captured is again a really important part of that change for that employee. In that same scenario where you've had someone who has been a casual support worker and they've moved into a permanent part-time office type rostering admin role maybe as the casual support worker, they were entitled to the first aid allowance, but maybe now in the rostering administration role they are not entitled to the first aid allowance

Renee Arthur: Making sure that the system is updated to ensure it ceases paying that first aid allowance. Because whilst we're mainly here today to talk about avoiding costly underpayments, I also want to ensure that I'm identifying areas for opportunity, and efficiency for you. There are multiple ways to pay an employee. This is something I see businesses some stumble on all the time and I understand why. It's incredibly, incredibly complex. Under the SCHADS Award, there are no provisions for an annualised wage arrangement. Unlike other awards, for example, the Clerk's Private Sector Award, which does have annualised wage arrangement provisions, the SCHADS Award does not have annualised wage provisions.

Renee Arthur: What is an annualised wage arrangement? If we look at other awards, so again, for example, like the clerical award, it has a specific clause in that award that outlines an annualised wage arrangement that clause allows us to annualize over 12 months certain entitlements that the employee is eligible for. For example, annual leave loading. For example, overtime so you might, for example, have an employee who every throughout the winter months, June, July, August, flat out, doing loads and loads and loads of overtime. You know, maybe we're doing 10 hours of overtime every week during the Christmas month, during the summer months, December, January, February, it might be much quieter

Renee Arthur: There might not be that overtime provision there. You can annualize if the award allows, which the SCHADS award does not. If the award allows, you can annualize those entitlements over the whole year there are very strict documentation auditing administration requirements associated with these types of arrangements. You are required to ensure all time and attendance timesheets are all recorded you're entitled to commute your required rather to communicate with the employee at the commencement that they're on an annualised wage arrangement and what the award terms is out of limits of that annualised wage arrangement are. So, for example, during those winter months, the maximum amount of overtime you can work in a week, well, not that you can work in a week, but the maximum amount of overtime that we've included into this annualized wage arrangement is maybe 10 h per week, or whatever it is. The outer limit needs to be communicated.

Renee Arthur: In addition to that, annual audits need to occur on those annualized wage arrangements. But like I said, the SHADS Award doesn't have that provision for an annualised wage arrangement in the absence of that arrangement, there is still nothing stopping you from paying an employee a salary under the SCHADS award, right? You could still say to an employee, let's just say for argument's sake, they're a full-time employee, disability support worker, and we're going to pay them $100,000 just for argument's sake there's still nothing in the award saying that you cannot do that. However, a salary of that effect does not mean that we can annualize entitlements under the award over the whole year.

Renee Arthur: So, for example, annual leave loading what it means, rather, is that each pay period, whether you do a weekly pay period or a fortnightly pay period, each pay period, the employee still needs to take home what they would have been paid if they were paid as per the award for that pay period one of the common back of the envelope type calculations I always recommend for clients to do is to say, okay, so if they were paid as per the award and we do a fortnightly pay period and they took a whole fortnight, so 76 hours of annual leave if I add on the award rate of pay plus 17.5% for annual leave does that 100,000 divided by 26 for the fortnights in a year. Are they still taking home the the award minimum or more

Renee Arthur: because there is no annualized wage arrangement in the SHADS award, we can't spread the cost of that annual leave loading out over the whole year. Each pay period, even on a common law salary under the SCHADS Award, they still need to take home what they would have as per the award minimum or above for that pay period there's also nothing stopping us if we move now to the second column, top option there. There's also nothing stopping us under the SHADS award or any other ward rather to pay an above award rate of pay. And have that above award rate of pay designed to absorb certain award entitlements.

Renee Arthur: So, for example, the award might require for a level 2 employee, I think currently it's 4328 for a 2.1 casual. Again, don't quote me on that. It's just changed recently with the 1st of July. I know you're all aware of that, but let's say that the $43 is the 2.1 rate for casual under the SCHADS award under the SAC stream. You might say, I'm going to pay you $50 per hour. Okay, I'm gonna pay you $50 per hour and that $50 per hour, I'm going to pay you that whether you're working a day shift, an afternoon shift, Saturday shift, Sunday shift, but we'll do overtime separately. Overtime will be calculated separately. So if you're doing that, there's nothing stopping you from doing that. You know, it's administratively, that's… that makes your life a lot easier. You're not having to worry about flicking between ordinary rates, afternoon, Saturdays, Sundays, for example.

Renee Arthur: You can absolutely do that. However, what I mentioned before, the employee still needs to be paid at least the award minimum per pay period still applies if we're paying that above award rate of pay so if they only worked on a Sunday in that pay period, $50 isn't going to cut it, is it? We all know the Sunday rates are higher than $50 per hour for a casual SHADS SACS 2.1 it's not going to cut it for that pay period, and the employee would be underpaid in that one pay period if they only worked on a Sunday. If they worked more days, and there was, you know, overall, they were still better off

Renee Arthur: Then the award required, we're going to be okay. I mentioned better off there as well. It's worth touching on that. The better off overall test, it's a calculation that's really worthwhile doing and doing regularly if you're paying either a common law salary or a flat rate for your employees pick the worst of the pay periods. Pick the pay period where they worked a whole bunch of overtime or night rates, or they took a lot of annual leave, rather. Pick one of those pay periods and do that better off overall test calculation on that pay period. Okay, I've just checked my watch 139, so we've still got some good time there. I know Emma will interrupt me if I'm going too long.

Renee Arthur: Compliance testing, again, really important. Correct any shortfalls if you identify them quickly, those better off overall tests are a great way of testing that. If you do, if there is a pay period, so say for example you are paying a salary to an employee, we've got full-time SHADS employee paid $100,000 and there is a pay period that they have worked in excess like you know they've worked so much that they have not been paid the award minimum top them up for that pay period, because that eliminates that underpayment for that one pay period, and you've solved your problem. Okay, flat rates often don't cover the award. You know, I think I've kind of talked about this previously with my Sunday example the other… the other one that I mentioned before as well is a good back of the envelope test is to say, well, what if this person took a whole fortnight, or whatever your pay period is? I'm just… most commonly, we work with fortnights, but it's weeklies

Renee Arthur: Course viable option too. But what if this person took a whole fortnight of annual leave and doing those back of the envelope calculations to see if that flat rate is actually enough? IFAs are allowable under the SCHADS award. I mentioned before annualised wage arrangements, they're not provided for under the SHADS Award, but IFAs are. Individual flexibility arrangements individual flexibility arrangements allow for an employer and an employee to agree in writing, voluntarily to very specific parts of the award. The specific parts of the award are listed in the SCHADS award, you know what we can actually vary these agreements cannot be made before an employee starts with an employer. So it's my first day with my new employer was ease today rather, you know, Tuesday, the 8th of September. But yesterday, Monday the 7th of September, I cited individual flexibility arrangement. It's not applicable. You know, that's actually a breach of the award to have the Ifa started pre-employment. It needs to be signed after that employee, starting with the employer

Renee Arthur: The IFA cannot vary the award to a point. That means that the employee is not better off overall. Now, the award doesn't specify that that has to be monetarily better off overall. It could be non-monetary benefits that the employee is enjoying for varying the award through an IFA. It's certainly harder to test that, right? If we've got an IFA and we've done a better off overall test calculation to clearly black and whitely show that an employee is better off overall, that's very easy to defend for non-monetary benefits that the employee is receiving that they've agreed that they are better off overall with. It does introduce more grey, into that arrangement. It certainly doesn't mean that it's not possible

Renee Arthur: It's just harder to argue, harder to defend Written documentation, IFA needs to be documented and you need to have specific agreement. The award outlines exactly what needs to be in that agreement. And then that agreement also needs to be regularly reviewed. You know, I would say at least every 12 months be reviewing that IFA, retesting the better off overall test to ensure that the employee is better off overall, everyone's still happy with the arrangement, it's still being voluntarily entered into, for example. I've mentioned a couple of these already, but I also haven't mentioned some, so I think it's certainly worthwhile that we spend a bit of time on this slide. There's certain parts of the SHADS award that are not clearly outlined, defined within the SHADS award. For example, broken shifts is one of them

Renee Arthur: We all know a meal break within the SHADS Award is very clearly defined as being 30 to 60 min but the rest between rostered work for a broken shift is not defined within the SCHADS award. So it makes it very difficult for us as at all stages at the rostering stage and at the payroll stage to understand and identify when broken shift allowance is payable. The other thing to take into consideration is what are we asking an employee to do between those periods of rostered work? That's where point two comes into play here. Travel between clients if we have an employee support worker working with one participant at location A, and they are then being required to travel to location B to work with their second period

Renee Arthur: And if that travel time is taking up the majority of that rest between rostered work it's quite likely that that period between those two participants needs to be treated as paid working time. Kilometer allowances, vehicle allowances are also going to be applicable then for that travel between participants. On the other hand, if there's a really decent rest between roster periods of work, you know, say, for example, let's put some numbers to it. Let's say, for example, we've got a two hour period between when shift one finishes and shift two starts and there's approximately 30 minutes of travel between those 2 participants. That's going to be quite clearly a broken shift.

Renee Arthur: Travel time would not be payable, kilometre allowance not be payable, but the broken shift allowance would be payable. Sleepovers is another complex area. Again, we experienced change in this area back on the 1st of June in terms of how the sleepover shift is interpreted and payable Prior to the 1st of June, there were two methods or modes of payment for a sleepover shift but the rules around sleepover shifts in terms of a minimum 4-hour engagement, either before or after shift, before or after the sleepover period, still applies. It can't be combined, it can't be 2 hours before plus 2 hours after. It needs to be at least 4 hours on one side of those shifts if there's wake during that sleepover period, there's overtime payable, and there's minimum periods of overtime payable, even if they're only woken up for 10 minutes, there's minimum periods of time that we'd need to pay for that wake during sleepover as well.

Renee Arthur: Something else that we see commonly, which is incredibly difficult, and I understand from an operational rate perspective why it happens, but we'll sometimes see employees finishing a sleepover shift, maybe having a two hour, four hour, even six hour even rest between rostered work and then coming back for another shift we know that by agreement after a sleepover shift, we can reduce the rest between rostered work to reset the day from 10 down to 8 hours. When we're seeing employees recommence work after 2, 4, 6 or 6 hours, that, you know, can trigger a broken shift it can trigger a breach of the award, meaning penalties imposed on the business.

Renee Arthur: So it's really important to be cautious of ensuring that at the rostering stage we're not rostering that because we don't want to be breaching the award, we don't want to be scheduling broken shifts that span 12 hours. But then also, if there has been instances where it's had to change because someone's called in sick, someone's picked up a shift, participants run late, whatever it might be, identifying those shifts at the payroll time, and ensuring that they're paid correctly. The final one here, just to quickly touch on is on-call and recalls. There's on-call provisions within the SHADS award. We can have an employee be required to be on call for a 24 hour period. There's certain allowances that are payable if they are required to be on call. Plus, there is also minimum payments need to be made and at specific rates of pay as well. So just being cautious of that when we are asking employees to be on call. I might skip this Fair Work case just in the interests of time. And just to quickly finalise, I think I'm pretty sure this is my final slide here. Whether SCHADS payroll audit, what should it be covering? Emma and I have done many payroll audits for our clients over the years. Those payroll audits have sometimes resulted

Renee Arthur: remediations for clients as well. I think the first really important step with any payroll audit is to confirm and get on the same page in terms of what is the scope and what is the data required for the payroll audit. We want to be really clear on what we're testing. We have a specific list tailored for the SCHADS award, which is a, what are we remediating list so our clients know exactly what we are looking for, and we have a specific list that we as auditors, are checking off for every employee for every timesheet. That scope needs to be communicated. It needs to be documented. And then what needs to be done is the next step is award coverage and classification. There's no point doing a payroll audit for an employee based on a level 1 rate if they really need to be at a level two. The classifications need to be correct before any payroll audit or remediation is done.

Renee Arthur: Data needs to be gathered then as the next step. Employment contracts, letters of variation, individual flexibility agreements all need to be collected, reviewed and assessed Offset clauses within those contracts need to be identified, if there are any and payslips need to be reviewed, timesheets need to be reviewed, rosters need to be reviewed, qualifications need to be reviewed, position descriptions all need to be reviewed as part of a comprehensive payroll audit. Prior to getting into the compliance assessment, the final step then would be to again, similar to confirming the scope. But what else needs to be communicated and same page with the auditor and the business is the assumptions there are some parts of the SCHADS Award that are very black and white. There are others that are not. Particularly for those areas that are not black and white, assumptions need to be documented between the auditor and the business who's being audited to ensure that everyone's on the same page

Renee Arthur: Again, for example, broken shifts. Say, for example, there is a 45 minute rest between rostered work assumptions need to be documented so the auditor knows and the business knows exactly how that 40 minutes between roster work will be treated. Will it be treated as paid travel time? Will it be treated as a meal break? Will it be treated as a broken shift? That needs to be documented so everyone's on the same page and knows what the outcomes are based on recalculation of the timesheets. Once all that is set up, recalculation of the timesheets is then the next phase. The auditor needs to assess what was paid to the employee and recalculate based on the agreed assumptions and interpretation that's in place. The payroll settings, the configuration needs to be reviewed to identify if there were any discrepancies, what the auditor calculated and what was paid. The payroll settings, the configuration needs to be reviewed to identify where that difference

Renee Arthur: came into place the findings then need to be communicated. You know, was there an overpayment? Was there an underpayment? What was either of those caused by? So you can then fix what's been identified as the payroll audit moving forward. And moving on to remediation and looking at back payment, if… if necessary. I've done plenty of payroll audits where I have not identified any underpayments, which is great. But if we have identified underpayments, we need to address fixing them for the past as well. I think we've touched on all this with the payroll audit findings and remediations the final thing here to touch on, the five checks to take back to your organization, you know, classification. If we rehired this person based on the duties and responsibilities that they were doing for us today, you know, would it would they be in the same level? Would they be at the same pay point?

Renee Arthur: Do rosters and timesheets match? The answer can be no, that's absolutely fine, but if it's a no, why, why don't they match, right? And having that documented. What are the pay events that we've got here? So are there penalties? Are there allowances? Are there rules? Are the SHADS rules in our payroll system or CRM or rostering system automatically triggering these? Or are we having to manually identify them? Understanding how you pay your employees. Am I paying my employees as per the award $43.20-something for shads, Saks Casual 2.1. Or am I paying them a loaded rate or a salary? Understanding how they're paid, again, ensuring that we get the pay right every pay period.

Renee Arthur: And then what are the controls? Like, what are we… are we auditing regularly? How are we checking? How are we stress testing our processes? And not just assuming that set and forget mentality, which we talked about at the top of the conversation. I'll pass back to Emma now. I know I've just I've gone over a couple of minutes, but yeah, so sorry, Emma.

Emma Dawson: I… that was such fantastic content and there's so much to cover in, gosh, what feels like a very short period of time. I think that message is really clear is it's you don't necessarily need or want to be waiting for a complaint or a payroll to start asking these types of questions. A proactive kind of check now is a lot easier than having to deal with a remediation project years down the track if today has highlighted an area where you think you might need some support, there are 2 ways in which we do help organizations in the sector. We have what we call our HR on Demand service, which is very flexible, operating on an hourly rate. There's no minimum spend or locking contracts, and it's really great for a business that is just needing very, ad hoc advice or project-based support

Emma Dawson: So, are very suitable for projects like payroll audits, classification reviews, contracts, remediations, or other HR workplace-related matters. HR Part A is more designed for organizations that are needing that ongoing support. So we then work on a fixed monthly rate and you get that access to dedicated advice and practice support throughout the year. And one of the things that our clients really value is that we're not… you're not ringing a call center and explaining your organizational challenges from scratch every time you're working with consultants like myself and Renee, who get to know your business, your workforce, and the way that you actually operate. And this is particularly important when you are operating under an award that is just so, so complex. So where to from here? If today has made you think I'm not completely sure our payroll is doing that correctly, or we probably haven't looked at that for a while, it is definitely a good reason to investigate. It doesn't automatically mean that there is a major problem

Emma Dawson: But it's much better to understand that position now, and rather than discover issues several years down the track and we can assist with things like payroll and wage audits, award interpretation, contracts, classification, rostering, training, remediation. The list goes on. If today has forgot a question, I'm more than happy to provide some support you can click on that QR code, and yeah, happy to organize that meeting with yourself. We've had some questions pop through the Q&A, so if you do have any final questions, quickly pop them through and we'll try and address as many as we can in the next couple of minutes. At the same time, if we don't get round to your question, or if you would prefer to take your question offline, happy to have that individual meeting with your business. All right, Renee, are you ready for a couple of questions?

Emma Dawson: So I've added a couple already as we've gone through, but one that has popped up, which is a really great question and one that we see across lots of different businesses is around travel in between clients. So if we have client A and there's only 30 min between shifts before they're going to client is that going to be considered a broken ship? Is travel time and travel kilometres paid in those circumstances?

Renee Arthur: Yeah, awesome, awesome question, Emma. Thanks for sharing this one. So unfortunately, it is going to depend. So I'm going to put aside, you know, I'm going to assume that shift A and Shift B have both met the minimum engagement and I'm going to put aside that as being an assumption. I've assumed both of these shifts have met the minimum engagement for the particular employee whether or not the time that 30 minutes is treated as time worked or as a broken shift or as something else is going to depend on what we are asking the employee to do in that 30 minutes. For example, let's put some numbers to it. So if we're asking that employee to travel 20 minutes Realistically, by the time they walk to their car, by the time they find a new parking spot at the next destination, it's going to be pretty much eating up that whole 30 minutes, and therefore that whole 30 minutes should be spent… should be treated, rather, as time worked and kilometer allowance is payable broken shift allowance is not playable, as it's one continuous shift from the start of A until the end of B.

Renee Arthur: On the other hand, if the employee is doing nothing between those that during that 30 minutes rather, if they are sitting there themselves and they're having a meal, you know, they're not moving location from participant A to participant B and in my experience, this is probably the lesser likely scenario, but it's still possible. It's quite possible that that should be treated as a meal break. Broken shift allowance payable, no kilometers payable, no travel time payable, 30 minutes meets the definition of a meal break. But unfortunately, the answer is going to depend, like I said at the beginning, on what are we asking the employee to do during that 30 min.

Emma Dawson: Fantastic. And is that the same across all of the different sectors? So when we say, for example, look at SACS, we also look at home care, we've got disability and aged care. Are the same provisions applying?

Renee Arthur: Unfortunately, no. They're not. Some provisions do apply across all sectors, but some provisions or entitlements or allowances are only applicable for certain sectors and also for certain types of employees within that sector. So it depends on the sector that we're talking about.

Emma Dawson: That's it. Okay, now talking into rest breaks between chefs. So if we've got a shift worker and they're doing three hours a day, but they're working every day so let's say they work 6 days a week for 3 hours per day. What are the rest break provisions? So we know we've got our 10 h rest breaks. We've got sleepover provisions by agreement. Would you be able to kind of talk a little bit more into that scenario?

Renee Arthur: Yeah, absolutely. So there are certain provisions within the SCHADS award that require an employee to have two consecutive days off again, they're not eligible for all employees. The two consecutive days off, but they are eligible for some employees. So if we were asking an employee to do that six days in a week, there could be issues with us breaching the award in those scenarios for some employees. In terms of when would overtime be payable, again, it's going to depend. Three hours per day, we obviously have not exceeded the daily maximum for triggering overtime and 3 times 6, what's that 6 12 18? We haven't exceeded the weekly overtime either. So it may be that there's no overtime applicable, but it will likely mean for some employees we've breached the two consecutive days off

Emma Dawson: Fantastic, and we'll wrap with one more question. What is the minimum time between where only a broken shift is applicable and not travel are not time and kilometres payable. Great question.

Renee Arthur: Yeah, great question. Unfortunately, I don't have the award doesn't define what that minimum time is. Again, in addition to that, and also just as equally as important it will also depend on how… what you are asking the employee to do between those 2 periods of roster work. So if we're asking the employee to travel for even if the minimum, even if the time between rostered work is 2 hours, but we're asking them to travel for 2 h between participant A and participant B we still haven't provided them any kind of rest between rostered work

Emma Dawson: Well, thank you everyone for attending our webinar this afternoon. We hope you found it really valuable. As I mentioned, if you do have any additional questions, more than happy to take it offline. Thank you, everyone.