Home >> Don’t hit snooze! What recent changes to sleepover arrangements under the SCHADS Award mean in practice

Don’t hit snooze! What recent changes to sleepover arrangements under the SCHADS Award mean in practice

Workplace Relations Regulatory Compliance and Investigations
Author Tim Cleaver & Skye Rose

This article was originally published by LexisNexis in the Employment Law Bulletin in June 2026.

After years of uncertainty, litigation and regulatory intervention, the treatment of sleepover shifts under the Social, Community, Home Care and Disability Services Industry Award 2010 (SCHADS Award) has entered a new phase. The Full Federal Court’s decision in Fair Work Ombudsman v Jats Joint Pty Ltd1 clarified how sleepovers were to be characterised under the SCHADS Award as it was drafted. Shortly afterwards, the Fair Work Commission (FWC) issued its final determination varying the SCHADS Award, with changes commencing from the first full pay period on or after 1 June 2026.

These developments do more than resolve a technical dispute about shift loadings or allowances. They reset assumptions that many organisations have relied on for years when rostering and paying employees who undertake overnight work. They also raise important questions for organisations operating under enterprise agreements that are underpinned by the SCHADS Award, particularly as those agreements approach variation or renewal.

This article explains what has changed, why itmatters, and how organisations should respond.

Why sleepovers have been so contentious

Sleepover shifts are a distinctive feature of work in disability support, residential care, and social and community services. They sit uncomfortably between active working time and periods of inactivity, creating long standing tension between operational practicality, employee protections and funding constraints.

Despite the SCHADS Award containing dedicated provisions dealing with sleepovers, it was not drafted with precision about how sleepovers interact with shift definitions, minimum breaks between shifts and shift loadings. The Fair Work Ombudsman (FWO) adopted an interpretation that treated work performed before and after a sleepover as part of a single continuous shift. Many employers structured rosters and payroll systems around that interpretation, often conservatively, and providers operated in an environment of intense funding pressure that discouraged legal challenge.

The Jats Joint litigation exposed just how fragile those assumptions were. To understand why, it is necessary to step back and be clear about what a “sleepover” actually is under the SCHADS Award.

What is a “sleepover” under the SCHADS Award?

A sleepover is a specific and carefully defined arrangement under the SCHADS Award. It is not simply any overnight work, nor is it interchangeable with a night shift, a broken shift or a 24-hour care arrangement.

Under the SCHADS Award, a sleepover occurs where an employee is required to remain overnight at the workplace, be available to respond if required, and is not engaged in active duties for the entire period.2

The sleepover period is a continuous eight-hour overnight period during which the employee is permitted to sleep but must remain on site.3

The defining feature of a sleepover is therefore the requirement of overnight presence and availability, rather than continuous active work. While the sleepover forms part of a broader rostered engagement, it is treated as distinct from ordinary working time, and the SCHADS Award draws a clear distinction between the sleepover period itself and any work performed before, after, or
during that period.

Asleepover should not be confused with a night shift, where work is actively performed during night hours, or with a broken shift or extended duty arrangement, which are regulated differently under the SCHADS Award.

Where no work is performed during the sleepover period, the employee is remunerated by way of a specific sleepover allowance prescribed by the SCHADS Award, rather than by payment of ordinary hourly wages.

This pay treatment, and the distinction between a sleepover and active working time, underpin the differing interpretations of how work performed before and after a sleepover should be characterised.

Differing interpretations of the sleepover provisions

The source of ambiguity arises from how periods of work prior to, and immediately following, a sleepover period are treated. If a sleepover constitutes a break between shifts, then the work on either side is treated as two separate shifts, each independently assessed for penalty rates and overtime. However, if a sleepover is not a break but forms part of a single continuous shift, the hours are considered together, and penalty and overtime rates are calculated on that basis.

Example

To illustrate, consider an employee that works 6 pm to 10 pm, sleeps over, and then works the following morning from 6 am to 10 am. Applying the first interpretation, where the sleepover period is a break, those are two separate four-hour shifts, each attracting their own penalty rate. Alternatively, where the sleepover period is not a break, the employee is treated as having worked a single continuous shift spanning that period, starting at 6 pm and finishing at 10 am the next day. Relevantly, shifts that finish after midnight, or commence before 6 am Monday to Friday, attract a night shift penalty.4

How did we get here?

For much of the SCHADS Award’s history, the FWO has taken the position that a sleepover forms part of a single continuous shift for the purposes of applying shift loadings.5 Under this interpretation, work performed on either side of a sleepover was treated as one continuous shift, and where that shift (inclusive of a sleepover) finished after midnight or commenced before 6 am, a night shift loading of 15 percent was payable on all ordinary hours worked.

AIG’s application to vary the SCHADS Award

The first challenge to the FWO’s position came in November 2023 when the Australian Industry Group (AIG) applied to vary the SCHADS Award to expressly clarify that work performed on either side of a sleepover constitutes separate shifts of ordinary hours.6 In its application, the AIG argued that making the variation would provide clarity and certainty to employers in implementing sleepover arrangements without incurring disproportionate shift penalties or requiring the routine performance of significant periods of overtime. In March 2024, Parkerville Children and Youth Care (Parkerville) joined the growing chorus of business groups advocating for change to the SCHADS Award by replicating AIG’s application.7

Unions’ application to vary the SCHADS Award

In July 2024, the Australian Services Union (ASU), Health Services Union (HSU), Australian Workers Union (AWU), United Workers Union (UWU) and Community and Public Sector Union (CPSU) (together, the Unions) made their own application to vary cll 25.4, 25.7 and 28.1 of the SCHADS Award, merging their application with the AIG and Parkerville applications.8

In a joint submission, the ASU and others argued that sleepovers are not breaks because workers are away from their families, struggle to get a restful night’s sleep and are frequently woken up at all hours to support clients in need.9 The Unions also claimed that AIG’s proposal would permit an employer to roster a 24/28- hour shift pattern with as few as eight hours between the commencement of each pattern (eg an employee could be rostered to work eight hours, sleepover, then work another eight hours the next day without penalties).10 Further, it would also be possible to roster as many as 17 consecutive 24/28-hour shift patterns in a 28-day roster period.11

FWO’s compliance notice

The issue was further complicated when the FWO issued a compliance notice to Jats Joint Pty Ltd (Jats Joint) regarding sleepover-related payments to an employee, Kim Richards.

The compliance notice sought to remedy Jats Joint’s alleged failure to pay Ms Richards night shift loading for shifts worked immediately before and/or after a sleepover between early January 2020 and December 2021, in breach of the Fair Work Act 2009 (Cth).

The FWO contended that Ms Richards was entitled to the 15 percent night shift loading under cl 29.3 of the SCHADS Award on each occasion that she worked on shifts before and/or after a sleepover. In summary, the FWO argued that a sleepover was not a break between shifts and always was, or should be treated as part of, the same shift as any ordinary hours of work either side of the sleepover, for the purpose of determining when the shift ended or began. Jats Joint challenged the FWO’s compliance notice by making an application for review the Federal Court.

Challenge in Federal Court

The Federal Court handed down its decision in Jats Joint Pty Ltd v Fair Work Ombudsman12 on 8 July 2025. Justice Stellios upheld Jats Joint’s challenge to the compliance notice and in doing so, accepted the construction of the SCHADS Award advanced by Jats Joint that Ms Richards was not entitled to payment of the night shift loading of 15 percent. Stellios J observed:

While the position is not free from doubt, and should be clarified by amendment to the SCHADS Award when the opportunity arises, I accept Jats Joint’s submissions that a sleepover period does not form part of a shift. That is the interpretation that is most cohesive with the SCHADS Award when understood as a whole. …13

Full bench of FWC: draft variations to the SCHADS Award

Five months after the Federal Court’s decision in Jats Joint Pty Ltd v Fair Work Ombudsman, and while the FWO sought to appeal, the Full Bench of the Commission handed down draft variations to the SCHADS Award in response to submissions made by the relevant parties.14 The Full Bench noted:

It might be thought that, once relevant provisions of a modern award have been construed by a court, their meaning is then clear, and no ambiguity or uncertainty can be said to arise. However, that is not necessarily the case. A provision may be ambiguous even though it is capable of interpretation.
. . .
“Plainly, his Honour regarded the provisions to be ambiguous and, although compelled to reach a conclusion as to the preferred interpretation, favoured the position being clarified. With respect, we agree that the relevant provisions we have set out are ambiguous and their operation is uncertain.”15

Having regard to the SCHADS Award’s objective, and weighing up the parties’ submissions, the FWC determined that a variation to the SCHADS Award was warranted, including:16

  • Sleepovers are not a break. Clause 25.4 is to be varied to make clear that where an employee is rostered to work immediately before and after a sleepover, both periods of work form one continuous shift for the purposes of the Award.
  • Extended ordinary hours by agreement. Clause 25.1 is to be varied to allow an employer and employee to agree to a shift inclusive of a sleepover of up to 12 ordinary hours, provided no more than eight hours is worked on either side. Clause 28.1(b) is also to be varied so that part-time and casual employees may work up to 12 hours without overtime where the shift includes a sleepover.
  • Overtime for work exceeding 12 hours. Active work before and after a sleepover exceeding 12 hours in total must be paid at overtime rates under cll 28.1(a) and 28.1(b). Work performed
    during the sleepover itself still attracts overtime.
  • Shift penalties calculated on active work only. Clause 29.3 is to be varied so that shift penalties are calculated separately for each period of active work, rather than across the shift as a whole.

Appeal decision of full Federal Court

In March 2026, and in opposition to the FWC’s draft variations, the Full Court of the Federal Court, comprising Wigney, Shariff and McDonald JJ, handed down its decision in Fair Work Ombudsman v Jats Joint Pty Ltd, which dismissed the FWO’s appeal against the primary decision in Jats Joint.17 This left employers in a difficult position, with uncertainty as to whether to apply the Jats Joint interpretation or prepare for the incoming award variations, with the risk of substantial back pay exposure depending on the way the law ultimately settled.

FWC’s final decision on variation to sleepover clauses

Fortunately, that uncertainty was resolved in early April 2026 when the full bench of the FWC handed down its final decision regarding variations to sleepover clauses in the SCHADS Award.18

The current position

It is important to distinguish between what the Federal Court decided and what the FWC has now prescribed.

The FWC’s decision formally varies the SCHADS Award with effect from the first full pay period on or after 1 June 2026.19 The full Federal Court’s decision in Fair Work Ombudsman v Jats Joint Pty Ltd20 remains authoritative in interpreting how the SCHADS Award operates until that time. It also informs how historical compliance issues should be assessed and explains why many practices driven by regulatory guidance were not legally required.

The FWC’s determination, by contrast, changes the SCHADS Award prospectively. From the first full pay period in June 2026, employers are no longer construing ambiguous provisions; they are applying a revised and more prescriptive framework under the SCHADS Award.

This distinction matters in practice. Historical exposure and back-pay risk must be assessed against the SCHADS Award as it applied at the relevant time. Prospective compliance must now align with the varied SCHADS Award, even where that approach departs from how a court previously interpreted the text.

For most employers, this will mean the new rules apply from around mid-June 2026. Importantly, the FWC’s approach reflects a deliberate recalibration of the framework governing sleepovers under the SCHADS Award, rather than an endorsement of the Federal Court’s interpretation.

The key changes can be categorised into four key areas:

Sleepovers are not a break

Firstly, the most important aspect of the FWC’s decision is the clarification that sleepovers do not count as a break under the SCHADS Award. In other words, if an employee works before a sleepover and then works immediately after it, those two periods of work will now be considered part of the same single shift. This represents a departure from how the SCHADS Award was
interpreted in Fair Work Ombudsman v Jats Joint Pty Ltd, and reflects the FWC’s intention to provide greater structural clarity going forward.

At first glance, if an employee performs periods of work immediately before and immediately after a sleepover period, and the sleepover is not considered a “break” under the SCHADS Award, this could give rise to a contravention of cl 25.4(a). That clause requires that employees be allowed a break of not less than 10 hours between the end of one shift or period of work and the start of another.

However, recognising the potential unintended con- sequences, the FWC amended the draft variation to add a new subclause at the end of cl 25.4, which will read:

Clause 25.4(a) does not prevent an employee from performing work immediately before and immediately after a sleepover period (as provided for in clause 25.7) where the periods of work include ordinary hours which are part of the same shift.21

Extended ordinary hours by agreement — cll 25.1(c) and 28.1(b)

Before the variation, ordinary hours for a shift were capped at 8 hours,22 or up to 10 hours by agreement.23 The new cl 25.1(c) introduces a further option to address shifts that include a sleepover.

By written agreement, the ordinary hours of a shift that is performed partly before and partly after a sleepover can now be up to 12 hours in total, provided no more than 8 ordinary hours are worked either side of the sleepover. For example, an employee could work 8 hours before a sleepover and 4 hours after, or 6 hours either side, but once they exceed the 12-hour threshold, this will trigger an entitlement to overtime.

Importantly, an employee is entitled to refuse a request to enter into such an agreement. While the SCHADS Award does not yet require that agreement to be in writing, the Full Bench has flagged this requirement may be introduced.24

Clause 28.1(b)(iii) of the SCHADS Award has also been amended so that part-time and casual employees may work up to 12 hours in a shift that includes a sleepover without attracting overtime, consistent with the new cl 25.1(c) framework.25

Application of penalties

Under the previous framework there was uncertainty about whether shift penalties applied across the entire shift (inclusive of a sleepover) or whether it was limited to only the active periods of work.

Clause 29.3(d) resolves this by providing that where an employee is rostered to perform work immediately before and after a sleepover period, the portion of work prior to and following the sleepover will be treated separately for the purposes of determining the loading to be paid under cl 29.3.26

In effect, the sleepover does not extend the application of shift penalties across the full span of the engagement. It follows that if the pre-sleepover portion of the shift finishes after 8 pm and before midnight, the 12.5 percent afternoon shift loading applies only to that portion. The post-sleepover work performed during ordinary morning hours will not attract any shift loading as each period is assessed independently under cl 29.3(d). This is likely to be welcomed by employers who were paying the night shift penalty on all hours worked as part of the sleepover shift.

Implications for rostering and payroll systems

For many organisations, the most immediate impact of the FWC’s determination is operational. Rostering arrangements and payroll systems that were developed over time frequently embed assumptions that were never critically tested.

In light of the imminent commencement of amendments to the SCHADS Award, organisations should consider whether:

  • rosters assume that a sleepover functions as a break between shifts;
  • shift loadings are applied consistently with the characterisation of work before and after a sleepover; and
  • payroll systems distinguish appropriately between sleepover periods and active working time.

In practice, this may require more than minor adjustments to existing rostering and payroll models.

Key takeaways for employers

For employers covered by the SCHADS Award, there are a number of key steps you can take now to ensure compliance when the variations take effect in June 2026:

  • Check work patterns and rosters. Any active work before and after a sleepover that exceeds 12 ordinary hours in total must be paid overtime rates. Employers running 24-hour care models should model the cost of this change carefully.
  • Shift penalties can be calculated separately. Employers with payroll systems which currently apply afternoon or night shift loadings to all hours worked either side of a sleepover, should consider a timely review of their system’s configuration.
  • Written agreement. If an employer wants to roster an employee for more than 10 hours of ordinary work across a sleepover shift, they need to reach agreement with the employee under the new cl 25.1(c). While the Award does not yet require the agreement to be in writing, employers should document it as a matter of best practice.
  • Retrospective pay. Given the conflicting position on the issue in recent years, the FWC declined to implement a retrospective variation. This means that employers will only need to comply with the changes from the commencement date.
  • Consultation. Under the SCHADS Award (cll 8 and 8A) and enterprise agreements underpinned by the SCHADS Award, employers must consult on “major changes” (eg, restructuring, technology, or significant roster changes) that likely impact employees. Employers should carefully consider whether terms regarding sleepovers were incorporated into contracts of employment, which may warrant new contracts being issued for consideration by relevant employees.

Where to from here?

The Full Bench of the Federal Court has indicated that a subsequent stage of proceedings will address the remainder of the Unions’ application, though these are not expected to result in substantive changes beyond those already made.

While the FWO retains one further avenue of appeal from the full Federal Court’s decision in Fair Work Ombudsman v Jats Joint Pty Ltd, a further appeal appears unlikely in the near term given that the relevant provisions will, by that point, have been varied.

Employers should continue to monitor developments and ensure their payroll systems and rostering arrangements are updated ahead of 1 June 2026.

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.

Footnotes

  1. Fair Work Ombudsman v Jats Joint Pty Ltd [2026] FCAFC 25; BC202603643. ↩︎
  2. Re Social, Community, Home Care and Disability Services Industry Award 2010 [2025] FWCFB 292 at 1. ↩︎
  3. Above. ↩︎
  4. SCHADS Award, cl 29.3(b). ↩︎
  5. Fair Work Commission, Social, Community, Home Care and Disability Services Industry Award 2010 [MA000100] (Fair Work Library, 2026) https://library.fairwork.gov.au/viewer/?krn=K600726. ↩︎
  6. Australian Industry Group, Application to Vary the Social, Community, Home Care and Disability Services Industry Award 2010 (Form F46, AM2023/28, 2 November 2023). ↩︎
  7. Parkerville Children and Youth Care Incorporated, Application to Vary the Social, Community, Home Care and Disability Services Industry Award 2010 (Form F46, AM2024/16, 7 March 2024). ↩︎
  8. Australian Services Union (ASU), Health Services Union (HSU), Australian Workers Union (AWU), United Workers Union (UWU) and Community and Public Sector Union New South Wales Branch, Application to Make, Vary or Revoke a Modern Award (Form F46, Fair Work Commission, Matter No AM2024/30, 15 July 2024). ↩︎
  9. ASU, AWU, HSU and UWU, Outline of Submissions, (Submissions,AM2023/28,AM2024/16 andAM2024/30, Fair Work Commission, 3 September 2024) 12. ↩︎
  10. Above. ↩︎
  11. Above n 9. ↩︎
  12. Jats Joint Pty Ltd v Fair Work Ombudsman (2025) 342 IR 328; [2025] FCA 743; BC202509872. ↩︎
  13. Above, at 106. ↩︎
  14. Re Social, Community, Home Care and Disability Services Industry Award 2010 [2025] FWCFB 292. ↩︎
  15. Above, at 79–80. ↩︎
  16. Above n 14, at 189. ↩︎
  17. Above n 1. ↩︎
  18. Re Social, Community, Home Care and Disability Services Industry Award 2010 [2026] FWCFB 79. ↩︎
  19. Above, at 48. ↩︎
  20. Above n 1. ↩︎
  21. Above n 18, at 21. ↩︎
  22. Above n 4, cl 25.1(a). ↩︎
  23. Above n 4, cl 25.1(b). ↩︎
  24. Above n 18, at 9. ↩︎
  25. Above n 18, at 36. ↩︎
  26. Above n 18, at 42. ↩︎

Authors