New data shows 18 per cent of Australian employers found a payroll error last year as the Children's Services Award reshapes pay rules
The Australian Government's $3.6 billion commitment to extend the 15 per cent pay rise for early childhood educators has settled a question the sector had been anxious about for months – but it has opened a harder one for the country's approved Early Childhood Education and Care (ECEC) services, according to Citation Group: proving those new rates are actually being paid correctly.
New research from Citation Group's Workforce Pulse 2026 report suggests confidence in payroll accuracy may be running ahead of reality. While 87 per cent of Australian businesses say they are confident their payroll is accurate, 18 per cent found a payroll error in the past 12 months – a gap that carries particular weight for a sector where 38 per cent of small businesses operate without a dedicated HR function.
Why the pay rise doesn't guarantee correct pay
For ECEC providers, the federal government's $3.6 billion extension of the childcare pay rise is only one piece of a payroll puzzle that has been rebuilt several times over the past year.
Since 1 March, 2026, the Children's Services Award 2010 has moved to a new eight-level classification structure, replacing a previous 30-tier system, as part of the Fair Work Commission's (FWC) gender-based undervaluation review.
Staged wage increases tied to that review are being phased in through 2028 and 2029, layered on top of separate annual increases delivered each 1 July under the Fair Work Commission's 2026 Annual Wage Review lifting award wages more broadly.
Rowena McIver, a product solution specialist at Brisbane-based workforce management platform foundU, part of Citation Group, says the pace of change has been the real challenge for operators. "It's been a lot of change for them," she said. "[There have] been a lot of changes in a fairly short period of time."
McIver, who previously worked in the sector herself, said the reforms sit on top of a workforce that is overwhelmingly female – one reason childcare was targeted in the Fair Work Commission's broader undervaluation review.
"Childcare has long been a sector where it's typically had lower wages, so it was probably overdue for some reform," she said, adding that the public scrutiny that follows any misstep makes the sector especially sensitive to error. "It's a fairly, fairly emotive sector."
Where payroll errors creep in
According to McIver, most problems are not one dramatic failure but small, compounding mistakes. Providers reclassifying staff under the new eight-level structure need to check whether an employee's old rate was higher than the new one, in which case it must be preserved rather than reduced.
The Worker Retention Payment (WRP), introduced by the Commonwealth to lift wages ahead of the award changes, needs to sit as its own line on the payslip rather than being folded into the base rate, and must be recalculated every time award rates move.
Overtime rates and allowances calculated as a percentage of the base rate need to rise in step with the headline rate, and from the correct effective date.
McIver says the sector's structure compounds the risk, given many centres are small, independently run businesses without a dedicated payroll or HR function, juggling classification changes alongside the payroll compliance risks businesses continue to underestimate and the daily demands of running a centre.
Building a payroll audit trail before Fair Work comes knocking
Her advice to providers is to get ahead of problems rather than wait for an employee to flag them, recommending they "get ahead of these changes, select a few people each month and go through from the very, very beginning" – tracing an employee's classification, pay rate and hours from onboarding through to their most recent payslip.
"Payroll people genuinely want to get it right all the time," she said, noting errors are more often the product of disconnected systems and manual processes than a lack of diligence.
