A recent decision in the Federal Court of Australia has significant implications for the treatment of sleepover periods under the Social, Community, Home Care and Disability Services Award 2010 (SCHADS Award) overruling long-standing guidance from the Fair Work Ombudsman.
The Full Federal Court has confirmed that under the SCHADS Award, sleepovers are separate and distinct periods of time that do not form part of a shift. The Court agreed with earlier findings made by the Federal Court that sleepover periods do not constitute time worked for penalty purposes.
The Full Court’s finding sharply contrasts to the guidance provided by the Fair Work Ombudsman (FWO) for over a decade. The FWO’s guidance on sleepovers (FWO’s Library Article – K600551) is currently under review so employers must exercise caution regarding the sleepover provisions.
Procedural History
On 8 July 2025, the Federal Court ruled that sleepover periods are separate and distinct from ordinary work shifts and should not be treated as part of a continuous shift when calculating night shift penalties under clause 29.3(b) of the SCHADS Award.
The Full Federal Court of Australia has dismissed the appeal filed by the Fair Work Ombudsman in relation to the Federal Court’s decision, and upheld the primary judge’s findings in a unanimous joint decision.
How Sleepovers Were Rostered
In Jats Joint Pty Ltd v Fair Work Ombudsman [2025] FCA 743, the employee was employed on a part-time basis and rostered to sleep overnight on 123 occasions during the employment.
The employee worked a sleepover period usually between 10.00pm and 6.00am, during which she was not rostered to work and did not work ordinary hours. The employee was rostered to work ordinary hours in three ways:
- a period of ordinary hours of work immediately prior to a sleepover;
- a period of ordinary hours of work immediately after a sleepover; and
- a sleepover between two periods of ordinary hours of work.
By way of context, night shifts mean any shift which finishes after midnight or starting before 6.00 am on Monday to Friday.
The employer treated the periods of ordinary hours of work as separate to the sleepover period. An afternoon loading was paid for ordinary hours of work prior to a sleepover, and the ordinary rate was paid for ordinary hours of work after a sleepover for periods between Monday to Friday.
The Fair Work Ombudsman issued a Compliance Notice that the employer did not pay the employee a 15% loading that applies to a night shift for the whole of the shift worked before and/or after the sleepover period. This is based on the assumption that the sleepover and the hours before and/or after the sleepover are counted as one continuous shift.
The question is whether a night shift penalty is payable in relation to category 1 above, and whether a night shift penalty is payable in relation to category 3 above.
Key Reasons of the Federal Court Decision
The Court held that the employer did not contravene clause 29.3(b) of the SCHADS Award by failing to pay the employee a 15% loading for night shifts when rostered to work ordinary hours before and/or after a sleepover period.
Justice Stellios found that sleepovers do not constitute part of a shift based on a holistic interpretation of the SCHADS Award. The judge reasoned that the premise of shiftwork is that ordinary hours are worked by an employee, and an employee works a shift. A shift cannot include time during a sleepover period, which does not involve ordinary hours of work.
The language adopted by the Award is that an employee who works a shift will be paid a loading for the whole of such shift and the whole of the shift is constituted by ordinary hours of work, which would not include a sleepover.
Justice Stellios leaned towards the employer’s interpretation that should the entire period of sleepover and adjacent periods of ordinary working hours comprises one shift, such a shift would likely exceed the capped hours of 8 hours, or 10 hours by agreement, prescribed by clause 25.1.
Moreover, sleepover periods are dealt with separately in clause 25.7 of the SCHADS Award, which outlines specific conditions and allowances for sleepovers.
While clause 29.4 provides that shifts are worked in one continuous block of hours that may include sleepovers, this clause provides a mode for working shifts rather than a definition. This does not necessarily mean that a shift includes a sleepover.
The Court favoured an interpretation of sleepovers as periods of break rather than periods of work. It held that the interpretation of clause 25.4 of the SCHADS Award to treat sleepovers as separate and distinct periods of time that do
Full Federal Court Upheld the Federal Court Decision
In Fair Work Ombudsman v Jats Joint Pty Ltd [2026] FCAFC 25, the Full Federal Court upheld the reasoning by the primary judge, Justice Stellios, that a period of sleepover is not regarded as the performance of work for the purposes of these clauses of the SCHADS Award and attracts different entitlements.
In the particular context of the SCHADS Award, the Full Court held that such a period is a rest as between periods when an employee is required to perform ordinary hours of work.
The Full Court noted that the drafting of the SCHADS Award lacks clarity and precision, but preferred a reading that distinguishes work from sleepover periods.
Practical Impact on Shift Loading and Pay
Work performed before or after a sleepover must be treated independently meaning that:
- Work preceding the sleepover is assessed separately and an afternoon loading may apply;
- Sleepover period compensated via the sleepover allowance and work during it may attract overtime rates; and
- Work after sleepover is assessed separately, and a loading may apply.
The duration worked including the pre-sleepover, sleepover and post-sleepover periods are not considered one continuous shift for loading purposes.
Bottom Line for Employers and Providers
The Full Federal Court’s interpretation of the sleepover provisions as a separate and distinct period to ordinary hours worked is currently in force, pending possible variation to the SCHADS Award.
The Fair Work Commission is considering three applications made by Australian Industry Group (Ai Group), Parkerville Children and Youth Care Incorporated and Australia Services Union before an Expert Panel for the Care and Community Sector to vary the sleepover arrangements in the SCHADS Award.
If you employ any staff who work sleepover shifts, it is important to review your rosters and payroll systems to ensure they break down sleepovers and adjacent periods of work into separate pay segments with appropriate allowances and penalties.
As there are applications made with the Fair Work Commission, ensure to keep monitoring this space about the treatment of sleepover periods.
Please contact the solicitors at WilliamsonBarwick for the latest updates on the SCHADS award.
