TL;DR: From the first full pay period on or after 1 September 2026, the vehicle allowance under the SCHADS Award rises from $1.01 to $1.05 per kilometre. The Fair Work Commission made the change in [2026] FWCFB 224 on 26 August 2026 because of fuel price rises. It is temporary and ends on 28 February 2027, when the rate reverts to $1.01. NDIS price limits did not move with it, so the extra 4 cents comes out of provider margin. Two payroll changes, six months apart, and the second one is the one organisations forget.
Please note: Disability Insights is an independent publisher. We are not affiliated with the NDIA, the NDIS, the NDIS Quality and Safeguards Commission, the Fair Work Commission or the Fair Work Ombudsman, and we are not an NDIS provider or a registered provider. This article is general information only, not legal, payroll or industrial relations advice for your organisation. Check the sources listed at the end before acting.
What changed on 1 September 2026?
The Fair Work Commission has temporarily increased the vehicle allowance in the Social, Community, Home Care and Disability Services Industry Award 2010 from $1.01 to $1.05 per kilometre.
The change came out of a Full Bench decision, [2026] FWCFB 224, handed down in Melbourne on 26 August 2026 by Deputy President Clancy, Deputy President Farouque and Commissioner Tran. The Fair Work Ombudsman published its guidance on 31 August 2026 and has already updated its pay tools.
Here is the rate history, which matters more than it looks:
| Period | Vehicle allowance | What drove it |
|---|---|---|
| Until 30 June 2026 | $0.99 per km | Standard expense-related allowance rate |
| 1 July 2026 | $1.01 per km | Annual Wage Review 2026 adjustment |
| First full pay period on or after 1 Sep 2026 | $1.05 per km | Temporary increase, [2026] FWCFB 224 |
| From 1 March 2027 | $1.01 per km | Temporary increase ends 28 February 2027 |
The Aged Care Award 2010 received the same increase, at clause 15.7(a). For SCHADS, the affected clause is 20.7(a), the travelling, transport and fares allowance.
Worth noting how narrow this is. The applications before the Commission covered 41 modern awards. The Full Bench varied two of them. Applications relating to the Fire Fighting Industry Award 2020, the Manufacturing and Associated Industries and Occupations Award 2020 and the remaining awards were all refused. If you run services across multiple awards, only your SCHADS-covered and aged care-covered staff are affected.
When exactly does the new rate start in your payroll?
Not on 1 September. The increase applies from the first full pay period starting on or after 1 September 2026, and that is where most payroll errors will happen.
The Fair Work Ombudsman gives the worked example. If a provider runs a Monday to Sunday pay cycle, the next full pay period beginning on or after 1 September 2026 does not start until the following Monday. Staff keep receiving $1.01 per kilometre until then, and the new rate applies from the start of that period. If your pay period happens to start on Tuesday 1 September 2026, the new rate applies immediately.
Three practical consequences:
- Do not back-pay to 1 September unless your pay period actually starts that day. Overpaying an expense allowance is a smaller problem than underpaying, but it still fouls your reconciliation.
- Do not split a pay period. The rate applies to the whole period once that period qualifies, so there is no part-week at the old rate inside a qualifying period.
- Check what your payroll system does with effective dates. Systems that apply allowance changes on a calendar date rather than a pay period boundary will get this wrong by default.
Who does the vehicle allowance apply to?
The allowance is payable to employees who are required to use their own motor vehicle in the course of their duties. That is the group the Full Bench described when it set out what the applications were about.
For a disability services provider, that typically means support workers driving between participants, transporting participants to appointments and activities, or running errands as part of a support. It does not apply to staff driving an organisation-owned vehicle, and it does not apply to ordinary travel between home and a single fixed workplace.
If you already pay above $1.05 per kilometre, whether through an enterprise agreement or an over-award policy, nothing changes for those employees. One thing to check: if an enterprise agreement or contract sets the vehicle allowance by reference to the award rate rather than a fixed number, the increase flows through automatically and your payroll needs to reflect that.
Why did the Commission increase the vehicle allowance?
Fuel prices, and specifically the end of temporary relief.
The Full Bench pointed to the temporary reduction in fuel excise ceasing on 3 August 2026, alongside continuing volatility linked to conflict in the Middle East. Average national petrol retail prices rose 20.20% between the week ending 1 March 2026 and the week ending 23 August 2026, the most recent data available when the decision was written.
The arithmetic behind the $1.05 is unusually explicit, and it explains a detail that would otherwise look like a mistake. The Commission applied the increase to the pre-1 July 2026 rate of $0.99, not to the current $1.01, to avoid double-counting the Annual Wage Review adjustment that had already lifted the allowance in July. Fuel makes up 30.70% of the private motoring sub-group index, which puts 30.39 cents of that $0.99 in the fuel component. Applying the 20.20% petrol price increase to that component adds 6.14 cents. Adding the result back to the 68.61 cents of non-fuel components produces 105.14 cents, rounded to $1.05.
The Full Bench accepted that this raises employment costs for providers and weighed that against the increase. It concluded that an increase of 5 cents per kilometre for a few months would not have a material effect on business viability. Whether that holds for your organisation depends on how many kilometres your workforce actually drives.
Does the increase flow through to NDIS price limits?
No. This is the part that costs money.
The vehicle allowance sits in a modern award, set by the Fair Work Commission. NDIS price limits and provider travel claiming rules sit in the NDIS Pricing Arrangements and Price Limits, set by the NDIA and reviewed through the Annual Pricing Review. They are separate instruments with separate processes, and the Commission's decision does not touch the second one.
The result is a gap for six months. Your wage cost per kilometre goes up on 1 September, while what you can claim for provider travel does not change. Under the current arrangements, providers can claim travel labour time and non-labour travel costs within set limits, and those limits were set in the 2026-27 pricing round. Our 2026-27 NDIS pricing arrangements guide covers what those claiming rules allow.
To size it for your organisation, the sum is simple. Four cents multiplied by your reimbursed kilometres. A support worker driving 200 kilometres a week costs an extra $8 a week, or roughly $208 across the six months. Forty such workers is about $8,300. Those figures are an illustration using assumed kilometres, not a published rate, so run them against your own allowance ledger rather than ours.
This also makes the Annual Pricing Review submission process more relevant than usual. Under the new NDIS laws passed in August 2026, price limits are now set by ministerial determination on NDIA advice, and that advice comes through the Annual Pricing Review. Documented travel cost evidence from this six-month window is exactly the material that process runs on. Our guide to what the new NDIS laws mean for providers sets out how that pricing pathway now works.
What happens on 28 February 2027?
The rate reverts to $1.01 per kilometre.
The Full Bench was explicit that the variation operates for a six-month period only, from the first full pay period on or after 1 September 2026 until 28 February 2027. There is no automatic extension and no review date built into the decision. If fuel prices stay high, a fresh application would have to be made.
Put 28 February 2027 in the payroll calendar now, with a named owner. The reversion is a second rate change that arrives when nobody is thinking about it, and an organisation that keeps paying $1.05 into March is quietly running an unbudgeted over-award payment. That is not unlawful, but it is a cost you did not decide to carry, and unwinding it later means telling staff their allowance is dropping twice.
Does this count as the last adjustment for the 2027 Annual Wage Review?
No, and this is the detail most likely to be missed.
The Full Bench stated that the temporary increase is not to be regarded as the last adjustment of the vehicle allowance in clause 20.7(a) of the SCHADS Award for the purposes of the relevant adjustment factor in clause 20.1(a). Expense-related allowances are normally indexed at each Annual Wage Review by applying a movement in the private motoring sub-group index since the allowance was last adjusted.
In plain terms: when the Annual Wage Review 2027 indexes the vehicle allowance, it will index from $1.01, not from $1.05. The temporary increase does not become the new baseline and it does not compound.
For budgeting, that means you should not model the 2027-28 vehicle allowance as $1.05 plus indexation. Model it as $1.01 plus indexation. Getting this wrong overstates your forward labour cost by several cents a kilometre for every year after.
What should providers do this week?
- Update the allowance rate in payroll to $1.05, with an effective date set to the start of your first full pay period on or after 1 September 2026, not to 1 September itself.
- Confirm your system honours pay period boundaries for allowance changes rather than calendar dates. Run a test payslip before the period closes.
- Diarise 28 February 2027 as a reversion to $1.01, with a named owner and a calendar reminder that is not attached to one person's inbox.
- Tell your staff. The Fair Work Ombudsman specifically recommends employers communicate the change, and telling people where the allowance appears on their payslip heads off the queries.
- Check enterprise agreements and contracts for vehicle allowance clauses that reference the award rate rather than a fixed figure.
- Check your kilometre records. A rate rise is a good moment to confirm that logs are being kept properly, because allowance records are pay records and they are testable in an audit. Our guide to what happens during a compulsory NDIS audit covers how that evidence gets examined.
- Start a travel cost file for the six-month period. If provider travel funding is a problem for your service model, the Annual Pricing Review is where the evidence has to land.
- Do not adjust your NDIS claiming. Price limits have not changed, and claiming above them because your costs rose is a compliance problem, not a solution.
Key Takeaways
- $1.01 to $1.05 per kilometre, from the first full pay period on or after 1 September 2026, under SCHADS clause 20.7(a).
- Six months only. The rate reverts to $1.01 on 28 February 2027, with no automatic extension.
- The start date is a pay period, not a calendar date. A Monday to Sunday cycle does not switch over until the following Monday.
- NDIS price limits did not move. The extra 4 cents per kilometre is absorbed by the provider for the full six months.
- It does not reset the indexation baseline. The Annual Wage Review 2027 will index from $1.01, so do not budget forward from $1.05.
- Only SCHADS and the Aged Care Award were varied, out of 41 awards in the applications.
Where to check the official information
- Temporary increase to vehicle allowance for Aged Care Award and SCHADS Award, the Fair Work Ombudsman news item published 31 August 2026, including the pay period worked example.
- [2026] FWCFB 224, the Fair Work Commission Full Bench decision of 26 August 2026, available through the Commission's page for matter AM2026/10 and others.
- The Fair Work Ombudsman Pay and Conditions Tool and its updated pay guides carry the current allowance figures.
- NDIS pricing arrangements and price limits remains the source for what you can claim, which the award change does not alter.
