The 2026–27 financial year introduces several important changes to the Social, Community, Home Care and Disability Services (SCHADS) Award. These updates affect employee wages, overtime calculations, sleepover arrangements, and classification structures, making it essential for employers to review their payroll and workforce practices.

This guide explains what is changing, when the new rules apply, and the practical steps employers should take to remain compliant.

Key SCHADS Award Changes in 2026

The major changes include:

• 4.75% increase to SCHADS Award minimum wages
• Updated sleepover overtime rules
• Introduction of a new classification framework
• Schedule E pay increases beginning October 2026
• Higher national minimum wage thresholds

Each change has different commencement dates, so understanding the timeline is critical.

1. SCHADS Award Pay Rates Increase by 4.75%

Following the Fair Work Commission’s 2026 Annual Wage Review, minimum pay rates under the SCHADS Award will increase by 4.75%.

Effective date:
The increase applies from the first full pay period starting on or after 1 July 2026.

This increase affects more than just ordinary hourly rates.

Updated payroll calculations should include:

• Base hourly wages
• Casual loading
• Weekend and public holiday penalty rates
• Overtime payments
• Broken shift allowances
• Sleepover allowances
• Vehicle and travel allowances
• Uniform and laundry allowances
• Any payment calculated from the standard rate

Many payroll systems store certain allowances as fixed dollar amounts rather than percentages. Employers should verify that every affected payment has been updated rather than assuming automatic adjustments have occurred.

2. New National Minimum Award Wage

From July 2026, Australia’s new minimum award wage becomes:

Permanent employees

• $26.44 per hour
• $1,004.90 per week

Entry-level employees (first six months where applicable)

• $25.74 per hour
• $978.10 per week

These figures represent the minimum wage floor across modern awards and should not be confused with individual SCHADS classification rates, which vary according to employee level and pay point.

3. Sleepover Rules Have Changed

One of the biggest operational changes arrived before the July wage increase.

Effective date:
First full pay period on or after 1 June 2026.

Work Before and After Sleepovers Is Now One Continuous Shift

Previously, many employers treated work performed before a sleepover and work completed afterwards as two separate shifts.

Under the revised SCHADS Award, those hours are generally considered one continuous shift when calculating overtime.

This means:

• Total hours are combined.
• Overtime is assessed using the combined shift length.
• Splitting shifts to reduce overtime is no longer compliant.

For organisations operating Supported Independent Living (SIL), group homes, or overnight disability services, this change may significantly affect payroll costs and roster planning.

Up to 12 Ordinary Hours by Agreement

The updated Award also allows employees to work up to 12 ordinary hours in connection with a sleepover, provided the required agreement conditions are satisfied.

Providers should review:

• Employment contracts
• Enterprise agreements
• Rostering practices
• Payroll calculations

to ensure they align with the revised provisions.

4. Classification Structure Is Being Rebuilt

The Fair Work Commission is implementing a major restructuring of SCHADS classifications following its gender undervaluation decision.

The objective is to create one integrated classification system, replacing several existing schedules and simplifying how employees are classified across community services.

The transition will occur over multiple stages.

5. Schedule E Employees Receive Additional Pay Increase

The first phase focuses on Schedule E (Home Care Employees – Disability Care).

Effective date: 1 October 2026

Eligible Schedule E employees are expected to receive an interim pay increase of approximately 15%.

The change aims to reduce historical pay disparities between disability support workers and comparable care occupations.

Employers with Schedule E staff should begin preparing well before October by:

• identifying affected employees
• reviewing current classifications
• planning payroll updates
• budgeting for increased labour costs

The remaining classification reforms are scheduled to commence in October 2027.

Compliance Checklist for Employers

To minimise compliance risks, employers should review the following areas.

Update Payroll Rates

Ensure every applicable payment reflects the new 4.75% increase, including:

• hourly rates
• overtime
• penalties
• allowances
• casual loadings

Review Sleepover Payroll Calculations

Confirm payroll software treats work performed before and after sleepovers as one continuous shift when calculating overtime.

Identify Schedule E Employees

Determine which workers fall under Schedule E and prepare for the October 2026 classification and pay changes.

Audit Previous Payroll Records

Review historical payroll data to identify potential underpayments, particularly where sleepover shifts may have been incorrectly split for overtime purposes.

Early detection can help reduce future compliance risks.

Why These Changes Matter

The 2026 SCHADS Award updates affect both payroll accuracy and workforce management.

Incorrect implementation may lead to:

• employee underpayments
• payroll compliance issues
• Fair Work investigations
• costly back-pay obligations
• increased administrative workload

Taking proactive steps now can help organisations avoid errors before the new requirements take full effect.

Frequently Asked Questions

How much are SCHADS Award wages increasing in July 2026?

Minimum SCHADS Award wages increase by 4.75% from the first full pay period starting on or after 1 July 2026. The increase also affects penalty rates, overtime, casual loadings, and many allowances.

When do the new pay rates apply?

The updated rates begin from the first complete pay period that starts on or after 1 July 2026. If a pay period begins before 1 July, the increase applies from the next full pay cycle.

What changed for sleepovers?

From the first full pay period on or after 1 June 2026, work performed immediately before and after a sleepover is treated as one continuous shift when determining overtime entitlement.

Which employees receive the additional 15% increase?

The interim increase applies to Schedule E (Home Care Employees – Disability Care) from 1 October 2026, subject to the Fair Work Commission’s implementation arrangements.

Is the national minimum wage the same as every SCHADS pay rate?

No. The national minimum award wage sets the legal minimum across modern awards. Individual SCHADS Award rates depend on an employee’s classification level, pay point, and employment type.

Final Thoughts

The SCHADS Award changes introduced throughout 2026 represent one of the most significant updates in recent years. Employers should not limit their review to wage rates alone. Payroll systems, overtime calculations, sleepover arrangements, employee classifications, and allowance calculations all require careful attention.

By reviewing payroll processes early and preparing for upcoming classification reforms, providers can remain compliant while ensuring employees receive their correct entitlements.