Aged Care Pay Rise: What Australian Providers Need To Know

If you run an aged care business, you’ve probably felt the pressure building for a while: workforce shortages, compliance demands, rising operating costs, and ongoing reform across the sector.

Against that background, an aged care pay rise can be both a welcome step for your workforce and a serious operational challenge for your business. The numbers aren’t just “payroll numbers” either - they can affect your pricing, funding models, rostering, recruitment strategy, and legal compliance.

The good news is that with the right planning, you can implement changes smoothly, avoid underpayment risk, and keep your business running sustainably. Below, we’ll walk through what an aged care pay rise can mean in practice, who it typically impacts, and the practical steps you can take now to prepare.

What Does The Aged Care Pay Rise Actually Mean For Providers?

In simple terms, an aged care pay rise means you may need to pay higher wages (and sometimes higher allowances and penalty rates) to some or all of your aged care workforce.

For providers, the key is that pay rises in aged care often don’t happen in isolation. They are usually linked to one or more of the following:

• A modern award change (for example, changes made by the Fair Work Commission (FWC) to minimum rates under relevant modern awards, such as the Aged Care Award 2010, Nurses Award 2020, and other awards that may cover allied health, administration, cleaning, kitchen staff and more).
• Enterprise agreement outcomes (where your business has an enterprise agreement (EA) in place).
• FWC decisions and government policy/funding changes (for example, where the FWC makes sector-wide decisions - including work value decisions affecting aged care classifications - and government funding adjustments are designed to support higher wages, sometimes with conditions or reporting expectations).
• Market pressure (where you choose to increase wages to attract/retain staff, even if not strictly required by law).

From a legal perspective, the biggest risks for providers tend to come from two directions:

• Underpayment risk: if your payroll system or classifications don’t reflect the updated minimum rates, penalties, allowances, and loadings.
• Contract misalignment: if your employment contracts or policies don’t match what you are actually doing in practice (or don’t allow the flexibility you need while staying compliant).

It’s also worth remembering that a pay rise can flow into other employment costs. Depending on how the change is structured, you may see increases to things like:

• penalty rates and overtime calculations
• superannuation contributions (because higher ordinary time earnings typically increase super amounts)
• leave accrual costs (annual leave, personal/carer’s leave, long service leave depending on the state/territory)
• workers compensation premiums (as these are often linked to wage spend)

Who Is Covered By The Aged Care Pay Rise (And When Does It Apply)?

Aged care is a “multi-award” environment. That means even within the same facility or service, different employees may be covered by different industrial instruments depending on their role, qualifications and duties.

So when you’re preparing for an aged care pay rise, your first job is to work out exactly which parts of your workforce are affected.

1. Identify The Industrial Instrument For Each Role

For many providers, employees may be covered by:

• the Aged Care Award (commonly covering personal care workers and certain direct-care roles)
• the Nurses Award (for enrolled nurses and registered nurses in certain settings)
• other awards for operational roles (admin, cleaning, hospitality, maintenance)
• an enterprise agreement (if your business has one in place)

This is where businesses often get caught out: two employees working in the same building may be on completely different minimum rates due to award coverage and classification.

If you’re not confident your business has the right award coverage and classifications, this is usually the time to get it checked properly. Many underpayment issues start with a “small” classification mistake that compounds over months or years. This is also where award compliance work can be incredibly valuable, because it forces you to map roles to the correct legal framework before you apply new rates.

2. Check The Effective Date And Any Staged Increases

Pay rises (particularly award-based changes) can have specific start dates and may be staged.

As a provider, you’ll want to confirm:

• the exact date the new rates apply (based on the relevant award/EA variation or determination)
• whether there are multiple increase dates over time
• whether allowances or penalties have also changed
• whether back pay is required in any circumstances

Even when you have funding support available, your legal obligation to pay correctly generally depends on what the relevant industrial instrument requires - not when your internal budgets “catch up”.

3. Consider Your Workforce Mix (Casual, Part-Time, Full-Time, Labour Hire)

Aged care providers often rely on a mix of:

• permanent full-time and part-time employees
• casual staff (especially for short notice cover and peak periods)
• labour hire or agency workers
• contractors (less common for direct care roles, but sometimes used for allied health or specialist services)

A pay rise might affect each group differently. For example, casual loading is generally calculated as a percentage of the base rate, so increasing the base rate can increase casual costs even if your casual loading percentage stays the same.

If you engage contractors, you should also be careful: a contractor arrangement that is actually “employment-like” can create major legal risk. If you’re using a contractor model, it’s worth ensuring the paperwork and the day-to-day reality align, often via a properly drafted Contractors Agreement.

How To Prepare For The Aged Care Pay Rise: A Practical Business Checklist

Once you know which parts of your workforce are affected, the next step is implementation. The best approach is to treat this like a project: allocate responsibility, set deadlines, and document what you’re doing.

Step 1: Model The Real Cost Increase (Not Just The Hourly Rate)

The hourly rate is only part of the picture. You’ll want to estimate the “fully loaded” impact, including:

• penalty rates (weekends, public holidays, nights)
• overtime and shift extensions
• allowances (where applicable)
• superannuation
• leave accrual cost increases over time

If your rostering regularly includes overtime or split shifts, the flow-on effect can be much higher than expected.

Step 2: Update Payroll Systems And Pay Rules

Most pay problems aren’t “bad intent” - they’re system problems. Before the effective date:

• update your payroll software pay tables
• confirm classifications in the system match classifications in your HR records
• re-check penalty rate rules and overtime triggers
• ensure allowances are applied correctly
• run test pays before you go live

If you’re using a third-party payroll provider, don’t assume they’ll “handle it all” without instruction. Make sure you’re giving them the correct award/EA details and updated classifications.

Step 3: Review Rosters And Staffing Strategy

Aged care pay rises often push businesses to look harder at rosters. That can be sensible - but you need to do it carefully.

For example, if you plan to:

• reduce overtime
• change shift patterns
• increase part-time coverage to reduce casual spend
• redistribute duties across classifications

…you’ll want to check what your award/EA allows, and whether consultation obligations apply.

Changing rosters and hours is a common “flashpoint” for disputes, especially in a sector where staff are already stretched. If you’re making changes, it can help to update your workplace policy framework so expectations are clear and consistently applied.

Step 4: Plan Your Communications (Internal And External)

How you communicate pay changes matters. Staff will want clarity, not vague assurances.

Consider preparing:

• a staff announcement outlining what is changing and when
• updated employment letters or contract variations where needed
• a manager/roster coordinator briefing sheet (so messaging is consistent)
• responses to common questions (for example, “Does this change my penalties?”, “Will my classification change?”, “What happens to salary arrangements?”)

If you have clients/residents or families who may be affected indirectly (for example, through service fees or operational changes), you may also need a carefully worded external communication plan.

Employment Law Risks Providers Should Watch During A Pay Rise

An aged care pay rise is not just a payroll event - it’s also a compliance risk moment. These are the most common legal issues we see businesses face during wage updates.

1. Incorrect Classifications And “Duties Drift”

In aged care, roles can evolve. A worker might start as a personal care assistant and gradually take on higher-responsibility tasks.

If your classification doesn’t match what the employee is actually doing, you can end up underpaying even if you’re using the “correct” pay table for the classification you’ve assigned.

A good internal step is to:

• review position descriptions
• check day-to-day duties against award classification descriptors
• document any changes to duties and update classifications where needed

2. Salaried Staff And Set-Off Clauses

Some providers pay certain staff a salary “all inclusive” of penalties and overtime. This can be lawful, but only if it’s structured correctly and the salary is actually sufficient to cover what the employee would have earned under the award/EA.

If an aged care pay rise lifts minimum rates, a salary that used to be safely above the minimum might no longer be enough - particularly if the employee regularly works nights, weekends, or overtime.

This is a common area for underpayment claims, so it’s worth reviewing salaried arrangements carefully (and documenting how the salary is intended to be applied).

3. Changes To Hours, Roles, Or Headcount

Some businesses respond to increased wages by adjusting hours or restructuring teams. That may be commercially necessary, but it can trigger legal obligations.

If you’re reducing headcount or roles, you may need to consider redundancy obligations, including consultation requirements and redundancy pay (where applicable).

Getting the process right is critical - particularly in a heavily regulated, reputation-sensitive sector like aged care. If redundancy is on the table, it’s often worth getting tailored redundancy advice early, before communications begin.

Also, if you are ending employment and paying out notice rather than requiring the employee to work it, you’ll want to ensure any payment in lieu of notice calculations and documentation are correct.

4. Record Keeping And Payslip Accuracy

Providers should be especially careful about record keeping. In Australia, employers must keep certain employment records, and payslips must include required details.

During a pay rise rollout, errors like incorrect base rates, missing allowances, or unclear ordinary hours can create confusion and escalate into disputes.

A practical approach is to audit a sample of payslips after the change goes live to confirm:

• base rate is correct
• ordinary hours are correctly recorded
• penalties/overtime are being triggered as expected
• allowances (if any) are showing correctly
• super is being calculated correctly

What Documents And Contracts Should You Update?

When wages move, your paperwork should keep up. This doesn’t always mean you need brand new documents across the board - but it does mean you should review key documents to ensure they match your current pay and rostering practices.

Employment Contracts

If you’re updating rates, changing classifications, or moving staff between casual/part-time/full-time arrangements, you may need updated contracts or variation letters.

For example, if you employ permanent staff, a well-drafted Employment Contract can help clarify:

• ordinary hours of work
• how overtime and penalties apply (and where award terms apply)
• any salary or “all inclusive” arrangements (where appropriate)
• requirements around confidentiality, policies, and conduct

For casual staff, make sure your casual terms reflect the correct loading and engagement conditions, and match what your business is doing in practice.

Policies And Staff Handbook

In aged care, consistency is everything. Policies and handbooks help your managers apply rules consistently across shifts, locations and teams.

During pay-rise preparation, this is a good time to check whether your internal documents cover:

• rostering processes and shift changes
• overtime approvals
• time and attendance requirements
• break entitlements and fatigue management
• classification and role change processes

Many providers consolidate these expectations in a staff handbook, supported by specific policies for higher-risk issues.

Contractor And Labour Hire Arrangements

If you use contractors or labour hire, check:

• whether contractor rates need adjustment (commercially or contractually)
• whether your service agreements clearly allocate responsibility for pay and compliance
• whether your staffing model increases the risk of “sham contracting” allegations

This isn’t about making your workforce model rigid - it’s about ensuring your arrangements are clearly documented and legally defensible if questions arise.

Enterprise Agreements And Variations (If Applicable)

If your business operates under an enterprise agreement, the pay rise may require you to:

• interpret how the EA interacts with new award minimums (where relevant)
• review whether your EA is still meeting legal requirements overall
• consider whether a variation or renegotiation is needed

This is an area where getting specific advice is important, because enterprise agreements can be complex, and the strategy will depend heavily on your current terms and workforce profile.

Key Takeaways

• An aged care pay rise can affect not only base rates, but also penalties, overtime, allowances, super and leave costs - so providers should model the full financial impact.
• Aged care workforces are often covered by multiple awards and/or enterprise agreements, so you should confirm coverage and classifications role-by-role before applying new rates.
• Implementation is usually where problems happen: payroll systems, pay rules, record keeping and payslip accuracy should be tested before and after the change takes effect.
• Rostering changes and restructuring responses should be handled carefully, as they can trigger consultation obligations and (in some cases) redundancy and termination risks.
• Employment documentation should keep pace with operational reality - updated employment contracts, policies, and contractor agreements help reduce disputes and underpayment risk.

If you’d like help preparing your aged care business for an aged care pay rise - including reviewing your contracts, policies, and award compliance - you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.

This article is general information only and does not constitute legal advice. For advice about your specific situation, speak with a lawyer.