Aged care award increases: What payroll professionals need to know now

The Fair Work Commission’s recent Work Value Case – Aged Care Industry decision marks a historic shift in the valuation of work in aged care, with direct implications for payroll professionals responsible for ensuring compliance and accuracy. The decision significantly increases minimum wages for direct care and some support employees covered by the Aged Care Award, Nurses Award and Social, Community, Home Care and Disability Services (SCHADS) Award.

The first increase took effect from 30 June 2023, with further changes commencing 1 January 2025. This staged implementation demands close attention from payroll teams, particularly those supporting residential aged care providers, home care operators and community services organisations. These changes are not just about rate updates in your payroll system. They signal a broader compliance obligation and a new layer of complexity that payroll professionals must navigate with precision and clarity.

Getting the data right is only the beginning

Updating award rates is not just a technical task. Payroll professionals need to understand the classifications, allowances, penalties and loadings impacted by the changes. With the Commission’s decision grounded in work value principles and gender equity considerations, the implications go beyond wage tables and affect enterprise agreements, job design and workforce strategy.

It is critical to undertake a full review of how employee classifications are mapped against award levels in your payroll system. Don’t assume this was done correctly in the past. Where employees are covered by multiple awards or transitional instruments, this becomes even more complex.

Compliance cannot be assumed

Aged care providers are already under scrutiny from multiple regulators. The introduction of mandatory care minutes, funding reform, and increased attention from the Aged Care Quality and Safety Commission means any payroll inaccuracies may trigger a broader compliance response. If Fair Work inspectors identify underpayments linked to incorrect award application, the financial and reputational cost could be significant.

We’ve seen that where organisations are found to be non-compliant with award obligations, fines are typically calculated per breach, per employee. That means even relatively minor errors, when scaled across a workforce, can become a major liability.

Proactive steps for payroll leaders

Payroll leaders should be taking the following steps now:

1. Undertake a classification audit
   Review employee classifications across the affected awards to ensure they reflect the new descriptors and work value findings. This may involve collaboration with HR or operational managers.

2. Map system updates carefully
   Ensure your payroll system is configured to apply the correct minimum rates, loadings and allowances from 1 January 2025. Don’t just apply the new rates, verify that rounding, accruals and back pay calculations are accurate.

3. Prepare communication plans
   Employees will likely have questions about how the changes affect them. Prepare FAQs and ensure frontline managers understand the changes so they can answer queries confidently and consistently.

4. Review enterprise agreements
   If you operate under enterprise agreements, ensure they still pass the Better Off Overall Test (BOOT) in light of the award increases. Payroll should be involved in this review to validate pay outcomes under different scenarios.

5. Revisit payroll documentation
   Accurate documentation of payroll decisions and processes is your insurance policy. Update your position descriptions, process maps and risk controls to reflect the new award structure.

6. Benchmark costs and review budgets
   The award increases will impact your labour costs. Use this opportunity to benchmark your total cost of payroll processing per employee, and model the downstream impact on rostering, overtime and penalty rates.

This is what professional payroll looks like

The Fair Work Commission’s decision reinforces the critical role payroll professionals play in ensuring not only compliance but organisational integrity. Getting it right is not just about avoiding fines. It’s about reinforcing trust with employees, safeguarding the organisation’s reputation and ensuring aged care workers are paid fairly for the critical work they do.

This is what professional payroll looks like, being across legislative change, managing system impacts, guiding internal stakeholders and delivering accurate, timely and compliant outcomes. These are not administrative tasks. They are strategic responsibilities.