Full Federal Court clarifies Sleepover Payments under the SCHADS Award

The recent decision by the Full Court of the Federal Court of Australia in Fair Work Ombudsman v Jats Joint Pty Ltd [2026] FCAFC 25 (Decision) has clarified that homecare, disability and social workers should not be paid night shift penalty rates for shifts immediately before or after sleepovers. This is contrary to the Fair Work Ombudsman’s (FWO) longstanding position that Social, Community, Home Care and Disability Services Industry Award 2010 (SCHADS Award), sleepovers cannot count as a break between rostered work periods or as a break in a broken shift.¹ The situation is fluid, and employers should closely monitor future changes to the SCHADS Award to ensure they are meeting their pay obligations for employees performing sleepovers.

Background

Jats Joint Pty Ltd (Jats Joint) is a national disability support provider covered by the SCHADS Award

Following a complaint from an employee, Ms Richards, the FWO investigated and issued a compliance notice in January 2024 alleging that Jats Joint had failed to pay a 15% night shift loading for work performed immediately before and after Ms Richards’ sleepover shifts.

Jats Joint successfully challenged the notice at first instance in July 2025. The FWO appealed.

Decision

The question raised by the appeal was whether an employee who works on shifts before and/or after a “sleepover” at a client’s premises is entitled to be paid a “night shift” loading in respect of those shifts of 15% of their ordinary rate of pay under cl 29.3(b) of the SCHADS Award.

Jats Joint argued a period of sleepover is not a period of work and should be regarded as a break, as expressly contemplated in cl 25.4 and 25.7(f). The FWO disagreed, arguing that on its proper construction, cl 29.3(b) of the SCHADS Award requires the night shift loading to be paid in respect of the ordinary hours worked by an employee in a night shift where that shift inclusive of any sleepover finishes after midnight or commences before 6am on Monday to Friday.

The Full Court (Wigney, Shariff and McDonald JJ) dismissed the appeal finding that:

• A sleepover is a break between shifts, not part of a shift;
• The text of cl 25.7(f) draws a distinction between the words “perform work” and the “sleepover period” and is indicative of an intention that the rostering of a period of sleepover is not regarded as the performance of work; and
• The night shift loading under cl 29.3(b) is payable to an employee “who works a night shift” and the loading is to be payable for the “whole of such shift”. The loading is payable for periods in which work is actually performed.
• The Court’s reasoning turned on the proper construction of the SCHADS Award and the meaning of a “shift”, rather than simply whether work was performed during a sleepover. The Court held that a sleepover is a discrete period between shifts, not part of a shift itself, and therefore does not affect whether adjoining shifts attract a night shift loading.

In making its decision, the Court acknowledged that the relevant terms of the SCHADS Award lack clarity and precision, but nonetheless preferred the construction advanced by Jats Joint.

Key takeaways for employers

For employers covered by the SCHADS Award, the decision has a number of practical consequences worth noting. In particular:

• A sleepover before, after or either side of a shift does not make that shift a ‘night shift’ or an ‘afternoon shift’ unless the shift crosses the relevant hours threshold;
• Any work performed during a sleepover must still be paid at overtime rates under clause 25.7(e), in addition to the sleepover allowance; and
• Payroll systems configured in line with the FWO’s previous guidance may need to be reviewed.

A word of caution for employers

While this decision provides welcome clarity for employers covered by the SCHADS Award, the position may not remain settled for long. Three applications are currently before the Fair Work Commission (FWC) seeking to vary the sleepover provisions in the SCHADS Award. In its initial decision, the FWC found that the SCHADS Award should be varied so that a sleepover is not treated as a break from work. If finalised in their current form, those variations would effectively reverse the outcome in Jats Joint.

How we can help

Employers covered by the SCHADS Award should review their current sleepover rostering and payroll arrangements in light of this decision and monitor further developments. Our Workplace Relations team are available to support you to understand the decision and what this may mean for your workforce.

Contact us

Contact us

Please contact us for more detailed and tailored help.

Subscribe to our email updates and receive our articles directly in your inbox.

^{Disclaimer: This article provides general information only and is not intended to constitute legal advice. You should seek legal advice regarding the application of the law to you or your organisation.}

1. See Sleepovers in the Social, Community, Home Care and Disability Services Award, Fair Work Ombudsman, https://library.fairwork.gov.au/viewer/?&krn=K600551. ↩︎