Why Xero Isn’t Enough for Modern Award Payroll (and what to use instead)

If you’re running a business covered by a modern award — like SCHADS, HIGA, Construction or any other Fair Work award — choosing the right payroll software isn’t just about features. It’s about compliance.

And here’s the hard truth: using Xero Payroll alone for an award-covered workforce is irresponsible.

Let’s break down why — and what makes Pay Cat the better choice for businesses that care about doing payroll right.

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Xero doesn’t offer built-in award interpretation. That means it can’t calculate penalty rates, overtime, or allowances based on timesheets — unless you add another tool to do it for you. Xero relies on the interpretation to take place outside of the payroll module.

The solution?

• You pay for an additional subscription to capture and interpret timesheets
• You maintain two sets of employee, leave and pay data
• You risk sync issues and errors
  
  

With Pay Cat, award interpretation is built in. From the moment timesheets are submitted, the system knows how to calculate every shift: broken, sleepover, public holiday, or otherwise. No external tools, no manual checking, no spreadsheets.

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Xero is a solid choice for businesses with:

• Salaried employees
• Flat hourly rates
• No award obligations
  
  

Xero has a robust set of features for handling straight forward employment scenarios.

But for the rest of us? Especially NDIS providers and other businesses under SCHADS? Relying on Xero Payroll without built-in award interpretation just doesn’t cut it. 

Businesses are often forced to piece together compliance using spreadsheets or third-party tools, which introduces complexity, double handling, and a greater chance of mistakes. 

Here’s what we see time and time again:

Businesses using Xero Payroll are “managing compliance” with a spreadsheet.

That spreadsheet usually lives with one person in the company. It’s based on someone’s interpretation of the award (often years out of date). Or places the hopes of getting award interpretation correct for your organisation with one key payroll administrator.

And it creates a single point of failure.

One mistake. One shift overlooked. One miscalculated sleepover.

That’s all it takes to trigger a Fair Work breach.

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Pay Cat is the only payroll solution that guarantees accurate interpretation of Australian modern awards — with a focus on SCHADS.

What You Get:

• Built-in award interpretation (no add-ons)
• Real-time updates to stay compliant as awards change
• Automated shift calculations from submitted timesheets
• A team of compliance experts behind the software
• Seamless integration with Xero for accounting — without using Xero Payroll
  
  

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Pay Cat completely replaces the need to use Xero’s payroll module. You can switch it off entirely and continue using Xero purely for your accounting. 

Pay Cat handles everything from issuing payslips and submitting Single Touch Payroll (STP) directly to the ATO, to sending detailed payroll journals automatically to your Xero chart of accounts. This means no double handling, no manual uploads, and no need to maintain two separate systems. 

It’s also worth noting that Xero has a hard cap of 209 employees, a limitation that makes it difficult to scale with fast-growing NDIS providers. Pay Cat is purpose-built to grow with your team and the complexity of award-based payroll.

Switching isn’t just about features.

It’s about:

• Removing risk
• Saving time
• Protecting your business and your staff
  
  

NDIS providers, care businesses, and award-covered employers choose Pay Cat because they want:

• Peace of mind
• Accurate pay runs
• Zero guesswork

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If your business is covered — or even underpinned — by a modern award, Xero Payroll isn’t the right tool. It’s not built for it, and patching it together with spreadsheets or add-ons doesn’t solve the problem.

It creates more work. More risk. More cost.

Pay Cat is built for modern award compliance. Xero isn’t.

If you're currently using Xero Payroll to manage SCHADS compliance, we recommend turning off Xero’s payroll module and switching to Pay Cat. Pay Cat is purpose-built for modern award interpretation and ensures accurate, automated compliance without the need for external tools or spreadsheets. You can continue using Xero for your accounting, while Pay Cat handles payroll, STP, and award interpretation.

Yes, we only need time and attendance records, we don’t need interpreted earnings or pay calculations, as Pay Cat handles that internally based on SCHADS award rules. This helps reduce errors and ensures compliance is maintained from timesheet to payslip.

No. Pay Cat is a standalone payroll and compliance solution. However, many of our clients choose to continue using Xero for accounting purposes. Pay Cat integrates seamlessly by sending payroll journals directly into your Xero chart of accounts, so you get the best of both worlds without using Xero’s payroll module.

Pay Cat does. We handle full payroll processing, including payslips, super calculations, and Single Touch Payroll (STP) reporting to the ATO. You don’t need to process payroll or lodge STP through Xero, it’s all taken care of within Pay Cat.

Xero has a hard limit of 209 active employees in its payroll module. For fast-growing NDIS providers or businesses with larger casual workforces, this can become a real barrier. Pay Cat doesn’t have that limitation. Our platform is built to support businesses at scale, whether you have 10 or 1,000+ employees.

Our award engine is built specifically for modern awards like SCHADS and is independently reviewed for compliance. We don’t rely on generic rules or manual workarounds — every shift, allowance, and condition is calculated according to Fair Work obligations. On top of that, our compliance team continuously monitors SCHADS updates to ensure the system stays current, so you don’t have to.

Who Is Pay Cat?

Pay Cat are payroll specialists dedicated to helping Australian businesses simplify payroll and ensure 100% compliance with modern awards. As Employment Hero Payroll experts, we provide tailored solutions that streamline payroll processes, reduce errors, and save time. For SCHADS businesses, our industry-first, 100% compliant SCHADS interpreter template guarantees accurate award interpretation and automation.