SCHADS sleepovers simplified: Federal Court dismisses FWO appeal, Fair Work Commission reacts swiftly

Fair Work Ombudsman v Jats Joint Pty Ltd [2026] FCAFC 25

On 20 March 2026, the Full Court of the Federal Court handed down its decision in Fair Work Ombudsman v Jats Joint Pty Ltd [2026] FCAFC 25, dismissing the Fair Work Ombudsman’s (FWO) appeal of the earlier 2025 decision (Jats Joint Pty Ltd v Fair Work Ombudsman [2025] FCA 743) (Jats Joint Decision), in which the Court accepted that a sleepover period is a separate period of time and does not form part of a shift.

The dismissal of the FWO Appeal left the Jats Joint Decision standing, which means that a sleepover period does not form part of a shift for the purpose of determining the applicable shift penalty under clause 29.3 of the Social, Community, Home Care and Disability Services Award 2010 (SCHADS Award).

This has significant implications for employers in the sector, particularly in relation to rostering and payments for shifts worked immediately prior to and after sleepover periods.

This article explores those impacts, with changes to the SCHADS Award having taken effect on 1 June 2026. A copy of the Fair Work Commission’s determination amending the SCHADS Award can be found here.

What is a sleepover?

Before turning to the dispute and the Court’s decisions, it is helpful to note that clause 25.7 of the SCHADS Award defines a sleepover as requiring an employee to sleep overnight at the premises where the client for whom they are responsible is located.

A sleepover period must run continuously for 8 hours, and the employee is paid a sleepover allowance. If the employee performs work during the sleepover, rather than sleeping, they are paid overtime rates for that work.

The SCHADS Award also allows rosters that include work immediately before and/or after the sleepover period, provided the relevant minimum hours are met (being 4 hours for at least one of the periods).  It is the application of the shift penalty rates to such hours which has been uncertain since the commencement of the SCHADS Award.

The FWO has historically taken the view that the sleepover period counts when determining the relevant shift penalty to the periods of work immediately preceding and following a sleepover period.

In many cases this meant the FWO considered that night shift penalties applied instead of afternoon shift penalties for work immediately prior to and after a sleepover period where the timing of those shifts fit the night shift definition in the SCHADS Award (Historical View).

How did this dispute over sleepovers arise?

An employee of Jats Joint Pty Ltd (a disability support provider) (Jats Joint) raised a complaint with the FWO that she was entitled to be paid the night shift loading of 15% , as opposed to the afternoon shift loading of 12.5%, in respect of work she was performing before and/or after a sleepover period.

The FWO issued a Compliance Notice to Jats Joint that they should be paying night shift penalties for night shifts performed, consistent with the FWO’s Historical View.

Jats Joint disagreed and asked the Federal Court for orders to overturn the FWO’s Compliance Notice. 

What were some of the shifts under examination in the Jats Joint Decision?

Some examples of the rostering arrangements that were the subject of the Jats Joint Decision, included:

• A shift commenced at 2pm and finished at 10pm, and the employee then immediately commenced a sleepover period and was not rostered to commence a shift at the conclusion of the sleepover (Example 1).
• A shift commenced at 2pm which ceased at 10pm, slept at the client’s house for the sleepover period, and then immediately commenced a shift at 6am which finished at 11am (Example 2).

The employee was not rostered to work and did not work ordinary hours between 12 midnight and 6am Monday to Friday (which would have entitled them to the 15% night shift penalty. The employee was not required to perform work during the sleepover (which would have entitled to them to overtime penalties).

It should be noted that the above examples that were examined by the Court are commonly seen in rostering patterns in the industry sectors that utilise sleepover periods.

Jats Joint argued in the original dispute that the shifts in the above examples were correctly remunerated at the afternoon shift penalty, whereas the Fair Work Ombudsman argued that the night shift penalty applied instead to periods of work occurring both before and after sleepover periods.

The outcome

The key issues in dispute in the Jats Joint Decision were:

• Whether a sleepover period forms part of a shift; and
• By extension of the above issue, whether work performed before and after a sleepover period is one continuous shift.

In the Jats Joint Decision, Justice Stellios agreed with Jats Joint’s submissions that a sleepover period does not form part of a continuous shift for the purposes of determining the applicable shift penalty.

The result of that finding was that the periods of work immediately before and after a sleepover must be considered separately when determining the applicable shift penalty and in the Jats Joint Decision did not find that any night shifts had been performed by the Jats Joint employee in Example 1 or Example 2. However, the Court also made it clear that the sleepover period itself is not a “break” for rostering or minimum break purposes.

The dismissal of the Fair Work Ombudsman’s appeal of the Jats Joint Decision left the Jats Joint Decision standing.

The Fair Work Commission reacts: amendments to the SCHADS Award

Following the dismissal of the appeal, the Fair Work Commission moved quickly to amend several SCHADS Award clauses. The following key changes that are now in effect as of 1 June 2026 include:

• The 8-hour sleepover period is not treated as a break for rostering and break purposes (clause 25.4 (c));
• However, the periods of work immediately before and after a sleepover period are considered separately when determining the applicable shift penalty(ies) (clause 29.3(c)).In practice, this may mean the work before a sleepover attracts a shift penalty, while the work after the sleepover may or may not. The outcome will depend on the timing of each period of work and whether a shift penalty is triggered as set out in the shift definitions in clause 29.2, which have remained unchanged.

*It is important to note that despite these changes the term “shift penalty” and “shift loading” are still used interchangeably and mean the same thing, including in the SCHADS Award.

• Ordinary hours can now be worked up to 10 hours per shift, but only where the employer and employee agree (clause 25.1(b)).
• A new option allows up to 12 hours per shift when the shift is worked immediately before and after a sleepover, again only by agreement (clause 25.1(c)).

When using the 12‑hour option, a maximum of eight ordinary hours of work may be worked by the employee before or after a sleepover period.

• Rest break between the end of one shift / period of work and the start of another rules have been updated:
• The standard minimum break remains at 10 hours between shifts; and
• The standard minimum break can be reduced to 8 hours by agreement when the shift is directly before or after a sleepover (clause 25.4(b)).
• Overtime calculation rules for Casual and Part-time employees have been changed:
• Overtime now applies after 10 hours per day or per shift (clause 28.1(b)(ii)).
• If linked to a sleepover (and agreed), overtime applies only after 12 hours per day or per shift (clause 28.1(b)(iii)).

So, if we consider Example 2 from the Jats Decision it would result in the following shift penalties:

A similar example to the Example 2 in the above table, now features at clause 29.3(d) of the SCHADS Award.

How can Citation Legal assist?

It is essential that you update your practices to reflect the correct application of the SCHADS Award to your rostering and payroll systems. In some cases, this may mean consulting with employees regarding the changes to shift penalty payments and rostering arrangements where required.

Even with the above SCHADS Award changes that have clarified the sleepover provisions, it remains a complex instrument to interpret and apply correctly in your business, and this is where Citation Legal can assist. Contact us here.