You might be aware that on 1 June 2026, the Fair Work Commission handed down a significant decision that will reshape pay and classification structures for most of Australia’s social, community, and disability services employers.

Back in June 2024, the Commission launched a review of five modern awards to understand whether they had been undervaluing work because it was done predominantly by women.

The FWC found that the previous system – inherited from older awards – was outdated, overly complex, confusing, and frequently led to misclassifications and workplace pay disputes due to unclear role descriptions.

The result of the review is a complete overhaul of the Social, Community, Home Care and Disability Services (SCHADS) Award – the most significant reform to the award in more than 15 years. With a new classification structure, changes to pay progression and the formal recognition of lived experience, the reforms will benefit thousands of community sector employees across Australia.

While some changes begin in October 2026, the new Final Classification Structure will come into effect on 1 October 2027, giving NFP employers time to prepare – but also leaving many wondering what they need to do now.

To help unpack the changes, we spoke with Ben McAlpine, director of policy and advocacy at the NSW Council of Social Service (NCOSS).

Why is this the biggest change to the SCHADS Award in decades?

Ben McAlpine: The Fair Work Commission (FWC) handed down its decision on changes to the SCHADS Award on 1 June 2026, representing the most significant overhaul of the award since it was modernised in 2010.

The changes follow the FWC’s review of five modern awards to determine whether they had been affected by gender-based undervaluation, alongside the Australian Services Union’s ‘Skilled, Respected, Equal’ campaign to modernise the SCHADS Award.

The current SCHADS Award contains several separate classification streams inherited from pre-2010 awards, each with different pay rates. Over time, this has created a complex system that values similar work differently across streams and has contributed to disputes, confusion and non-compliance.

The FWC found that the existing classification descriptions are difficult to interpret, increasing the risk of widespread worker misclassification. The key changes in the FWC decision include:

• An interim pay increase of around 15 percent for homecare disability workers (currently covered by Schedule E of the SCHADS award) from 1 October 2026.

And more significant changes that will take effect on 1 October 2027:

• A new single Final Classification Structure (FCS) replacing Schedules B, C, E and F, with 10 classification levels and multiple pay points within most levels.
• Formal recognition of lived experience alongside qualifications when determining classifications.
• Protection for existing employees so no worker’s minimum pay rate will decrease during the transition.
• Employee progression based primarily on 12 months of service rather than hours worked, providing fairer progression for part-time and casual employees.

What should NFP leaders and HR teams be doing to prepare?

Organisations covered by the SCHADS Award, or with enterprise agreements based on it, should begin planning as soon as possible. Key preparation steps include:

• Familiarising managers and HR teams with the Fair Work Commission’s decision and determination released on 1 June 2026 (you can read the full decision here);
• Communicating the changes and implementation timeline clearly with employees [Feel free to share this blog post with them!];
• Reviewing position descriptions and confirming each employee’s current classification under the existing award, taking into account their responsibilities, qualifications, length of service and relevant experience, including lived experience; and
• Beginningtranslating existing classifications to the new Final Classification Structure using the Fair Work Commission’s translation tables in time for 1 October 2027 (around 13 months away)

The translation process will assess factors including duties, responsibilities, supervision, qualifications, lived experience and autonomy.

Are there particular parts of the sector that are likely to feel the impact more than others?

It is still too early to say which parts of the sector will be most affected. The impact will become clearer as organisations begin translating roles into the new classification structure.

What kinds of changes should organisations expect beyond updating pay rates?

The reforms will require much more than payroll adjustments. Organisations should review their payroll systems and HR processes to ensure they can accommodate the new classifications, pay points and transition arrangements. This includes checking that systems can correctly translate staff, apply the appropriate pay rates and maintain accurate employment records.

Some organisations may also need to renegotiate enterprise agreements and update internal policies and procedures that reference the SCHADS Award.

How significant is the task of translating existing roles into the new classification structure?

For many organisations, this is likely to be one of the most challenging aspects of the reform. Some positions may translate directly into the new framework, while others may span multiple classification levels depending on the duties performed and each employee’s qualifications and experience.

Organisations should also assess whether their payroll and HR systems are ready to support the new framework. In more complex cases, seeking advice from an industrial relations specialist may be necessary to ensure classifications are applied correctly.

What do we know so far about the likely financial impact?

The sector has just over a year (until 1 October 2027) to transition fully to the new SCHADS Award.

Organisations should begin discussions with government funders about the likely financial implications, including funding to cover any increases in employee costs as well as the administrative work involved in implementing the changes.

NCOSS and other peak bodies are advocating for governments to provide adequate funding to meet these additional costs and are working closely with organisations such as the Australian Services Union to support that advocacy.

How might these changes affect recruitment, retention and career pathways?

It is too early to predict the long-term workforce impacts. However, the new classification structure introduces clearer role descriptions, formal recognition of lived experience, and more transparent progression pathways, including clearer pay progression.

Together, these changes may improve recognition of the skills and responsibilities involved in community sector work and contribute to stronger workforce retention over time.

What concerns are you hearing most often from organisations?

Two concerns are emerging consistently. The first is the potential impact of increased wage costs on organisations already operating under significant funding pressures while facing growing demand for services. The second is whether organisations have sufficient time, capacity and expertise to complete the significant work required before the transition deadline of 1 October 2027.

What role will peak bodies such as NCOSS play over the next 18 months?

NCOSS, together with other members of the Council of Social Service network, will continue advocating for governments to fully fund any wage increases arising from the SCHADS Award changes.

The organisation will also continue providing guidance and updates through our website, fortnightly newsletter and sector briefings, while working closely with members, the COSS network and the Australian Services Union to develop practical tools and resources that support organisations through the transition.

For organisations seeking more information, the Fair Work Commission’s Gender-based undervaluation – priority awards review webpage provides detailed information about the review, the Commission’s decision, the Final Classification Structure, role descriptors and translation tables. Organisations can also subscribe to receive updates as implementation progresses toward 1 October 2027.

Thanks Ben!

Helpful resources:

• Fair Work Commission decision (1 June 2026) – including Classification Descriptions for the 10 levels of the new SCHADS Award
• Fair Work Commission’s translation tables
• Fair Work Commission guidance note

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