SCHADS Award Vehicle Allowance Increase Confirmed

As subscribers may recall, ABLA previously reported on the temporary fuel levy applications that arose following significant increases in fuel prices associated with the conflict in the Middle East. In those proceedings, unions sought increases to vehicle allowances across the modern award system, including a permanent increase based on movements in the ABS private motoring index.

What has happened?

The Full Bench has rejected the unions' application for a permanent increase to vehicle allowances in modern awards.

In particular, the Commission:

• rejected the ACTU's proposed methodology for calculating the increase;
• rejected the ACTU's arguments arising from the ABS' move to monthly CPI reporting; and
• declined to expand the proceedings to consider vehicle allowances in awards that were not the subject of applications.

The Commission was not satisfied that the evidence supported a permanent increase across the modern award system and found the applications were driven by a discrete increase in fuel prices associated with geopolitical events.

The Commission also found there was little or no evidence concerning private vehicle use in most of the industries covered by the applications.

Why was the SCHADS Award treated differently?

The Commission determined that a temporary increase was warranted for the Social, Community, Home Care and Disability Services Industry Award 2010 (SCHADS Award) and the Aged Care Award 2010.

The Commission accepted that:

• the use of employees' own vehicles is a fundamental feature of work covered by these awards, particularly for employees travelling between clients;
• many employees in these sectors remain a low-paid cohort, such that increased fuel costs have a material impact on their living standards and expenses incurred in performing work; and
• a temporary increase would assist low-paid employees, including the predominantly female workforce in these sectors, to absorb increased fuel costs.

How was the increase calculated?

The Full Bench did not accept the unions' proposed methodology. Instead, it adopted the methodology put forward by ABLA, representing Ageing Australia, Australian Business Industrial (ABI) and Business NSW. 

This methodology focused on the actual increase in retail fuel prices and applied that increase only to the fuel component of the existing vehicle allowance (approximately 30.7%), rather than treating the entire vehicle allowance as a fuel cost.

Using that methodology, the Commission calculated an adjusted allowance of 105.14 cents per kilometre, which was rounded to $1.05 per kilometre.

What does this mean for SCHADS employers?

The travelling, transport and fares allowance under the SCHADS Award will increase from:
$1.01 per kilometre to $1.05 per kilometre

The increase will apply from the first full pay period on or after 1 September 2026.

Importantly, the increase is temporary only and will remain in effect until 28 February 2027, at which point the variation will cease.

The Full Bench has also confirmed that the temporary increase will not affect the ordinary annual process for adjusting expense-related allowances.

Key action for employers

SCHADS Award employers should review payroll systems and reimbursement processes to ensure the revised vehicle allowance rate of $1.05 per kilometre is applied from the first full pay period on or after 1 September 2026, and note that the increase is scheduled to cease on 28 February 2027.

If you have any concerns, please get in touch at info@ablawyers.com.au or call the Workplace Advice Line if you have these entitlements.