SCHADS Award - Fixing the ‘broken’ shifts

The Social, Community, Home Care and Disability Service Industry Award 2010 (SCHADS Award) is regarded as one of the more complicated industrial instruments. The SCHADS award can apply across a broad spectrum of organisations and social and community services. 

Accurately configuring and applying the provisions of the SCHADS Award can be challenging for employers. By taking the time to understand the scope and complexity of SCHADS Awards, you can avoid common mistakes and problems.

In this article, we review:

What is a Broken Shift?

Broken shifts are shifts consisting of multiple periods of work, separated by an unpaid break (other than an unpaid meal break). Employees working in disability services, home care, aged care, and the community services sector often work these shifts.

Broken shifts are an often overlooked aspect of the SCHADS Award.

What are the changes to Broken Shifts?

After a four-year review, the Fair Work Commission introduced changes to the SCHADS Award from 1 July 2022. Two of these changes impacted broken shifts:

  1. Broken shift allowances,
  2. Longstanding pitfalls for broken shifts spanning more than 12 hours.

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). The employee must agree before the start of their shift unless the broken shift is part of the employee’s regular pattern of work.

The second introduced a broken shift allowance, which, in our experience, some employers have yet to implement.

New issues surrounding broken shift allowances

Recognising the inconvenience of multiple shift starts in a day, the SCHADS Award introduced 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 previously mentioned, the employee must agree to these broken shifts before their shift starts.

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 is entitled to a 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. Employees working a shift over 12 hours 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 last shift's end, including break times.

Commonly, employers apply the double-time rate only where employees work more than 12 hours. This can be a costly mistake.

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. Although the employee worked a total of eight hours, the total span of the broken shift exceeds 12 hours (8am to 10pm).

Because the broken shift exceeds 12 hours, the employee must be paid at double their ordinary rate of pay.

Considerations for employers

If an employer regularly schedules their employees across broken shifts, then these allowances can have a significant financial impact.

To ensure compliance with the SCHADS Award requirement for appropriate allowance and double-time penalties, it is essential to:

  1. Review existing employment contracts and update the terms and conditions as needed to comply with the award,
  2. Ensure the payroll system is configured to align with the obligations outlined in the SCHADS Award
  3. Facilitate a process for obtaining employee agreement where multiple breaks will arise in a shift
  4. 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 resolve uncovered issues and help you do the right thing for your employees. We work with employment lawyers to ensure our clients are best protected from penalties and reputational damage.

Contact the team at BDO today to learn more about Fair Work compliance. Learn more about our Payroll Advisory services or Subscribe to receive updates on the latest developments in workplace compliance.

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