Employee Classifications, Levels and Pay Points

There are many different classifications, levels and pay points your employees can be classified as, so it’s common to misinterpret how to set up employees in your payroll software. And this can then lead to employees being paid incorrectly.

As an example, an employee may be classified under disability or home care. They then need to be entered at the correct level (L1/2 etc.) and pay point (PP1 PP2) based on their experience and contract details. It’s important that employees move through the levels and pay points as they gain more experience and time with the company. In most cases, a new employee with little industry experience would start on Level 1 PP 1 but would move to Level 1 PP2 after 6 months. They would likely move to Level 2 after 12 months. Higher levels are dependent on experience and qualifications.

Entering workers at the wrong level, pay point or classification (e.g. social worker vs. disability support worker) can result in under or overpayment, so it’s imperative to ensure the employee is set up correctly in the payroll system from the start.

Unfortunately, when we first start to work with our new NDIS service providers, we regularly find employees have been entered incorrectly.

Overtime Miscalculations

It’s common for us to see companies not applying the correct overtime rules, in particular for broken shifts, sleepovers and when employees work across multiple shifts in a day.

Always consider the importance of employees taking their assigned breaks. If an employee does not have a break within a five hour shift, all work after that break was due until they do take a break, must be paid at overtime rates.

There are exceptions though. If an employee shares a meal break with a participant, it can be classed as a break, so no overtime would be payable and the rules of breaks would be satisfied.

If in any doubt, talk to an NDIS payroll professional, like us at WestBAS, to ensure you understand your obligations.

It’s common for us to see employers missing entitlements like travel allowance, laundry, first aid and meal allowances which are specific under the SCHADS award.

It can be complex to determine who does get an allowance, however if an employee has a First Aid certificate, for example, the allowance is to be paid per hour.

Travel allowance entails a payment per kilometre. Under the SCHADS award, employees are to be paid 99c per kilometre for their work-related travel in their own vehicle. Importantly, the ATO tax free travel allowance is 88c, so the difference of 11c would be taxed and two pay rates need to be set up in your payroll software.

Sleepover and On-Call Errors

There is often confusion about when and how to pay for sleepover shifts, as well as what counts as time worked versus time available for duty.

If an employee is rostered to work before or after a sleepover, a minimum of four hours must be paid. During weekdays, this four hours would be paid at night rate, as it is part of a shift (sleepover shift) that ends after midnight.

If an employee is woken during a sleepover and must attend the client, they are to be paid a minimum of one hour, even if they work for only 15 minutes.

Broken Shift Mismanagement

We’ve seen incidences of companies incorrectly applying the broken shift allowance or failing to identify shifts that qualify as ‘broken’ under SCHADS definition.

As an employee must be allowed a break within a five-hour period, a half-hour period between shifts may not necessarily constitute a broken shift. If the break is longer, like one hour, then a broken shift allowance must be paid. It will however depend on the Company’s policy regarding breaks.

Minimum Engagement Not Met

Some NDIS service providers make the mistake of not providing the minimum shift lengths required, especially for casual or part-time staff.

In the disability sector of the SCHADS award, a minimum shift of two hours must be rostered, and for all other classifications, three hours must be rostered. What does this mean to the employer? It means that if an employee is rostered for a 1 hour shift, they must be paid a minimum of 2 hours if in the disability sector.

Inaccurate Timesheet Data and Inadequate Record Keeping

Manual errors or inconsistent time-tracking systems can result in payroll discrepancies where the data must be accurate. These discrepancies will flow through causing errors to payroll and invoicing. It is particularly important to ensure all invoices are accurate, so they are accepted without delay.

Please note that not maintaining accurate records of hours worked, breaks taken or allowances paid is a compliance risk and will have consequences.

Failure to Keep Up with Award Updates

Missing Fair Work changes (e.g. pay rate increases, new rules) and not updating payroll systems accordingly, is a common error we see among our new clients.

Awards have been known to change throughout the year, however, the most common update is on 1st July each year. Note that rate increases in the Award update will only apply to the first FULL pay run after the 1stJuly. So, if you have a payrun on 30th June to 6th July, the pay increases will not apply till the following payrun starting on 7th July.

Underpayment of Penalty Rates

Paying correct rates for evening, night, weekend or public holiday work can be a minefield.

Remember that a shift from 4pm to 10pm will all be paid at afternoon shift rate - you cannot split the shift to four hours at day rate and two hours at afternoon rate. If you have a shift that starts at 5am to 10am, the whole shift must be paid at night rate, as the night rate applies to shifts finishing after midnight but also if a shift starts before 6am.

Superannuation on Incorrect Earnings

It’s easy to misunderstand and make errors when calculating super. Superannuation is payable on all ordinary time earnings and many allowances do not have super applied, however some do. Be aware of all payroll categories where superannuation is applicable.

As you can see, complying with payroll obligations can be a minefield. WestBAS use PayCat payroll software for full compliance with award interpretation. Our focus is on knowing our clients have full peace of mind and knowing you will always pay your employees correctly. This can protect companies from a Fair Work audit or wage theft allegations, as well as us at WestBAS being protected too, knowing we will always get your payroll correct.

If you have any questions about payroll within the NDIS industry, don’t hesitate to give Susan at WestBAS a call. We are happy to support you.