SCHADS Award Sleepovers: What the Appeal and Proposed Changes Could Mean

On 8 July 2025, the Federal Court handed down its decision in Jats Joint Pty Ltd v Fair Work Ombudsman [2025] FCA 743. This decision found that under the provisions of the SCHADS Award sleepovers are separate and distinct periods of time that do not form part of a shift. The FWO filed a notice of appeal against this decision on 11 August 2025. 

The decision is contrary to the FWO's long-standing position. The appeal of the decision may impact: 

• how work performed either side of a sleepover is classified for shift allowance purposes 

• whether sleepovers are treated as part of a shift or as separate engagements 

• payroll configuration and historical compliance positions across the sector 

In response to the ambiguity created by the decision and the appeal, the Fair Work Commission has issued proposed variations to the SCHADS Award aimed at clarifying how work performed either side of a sleepover should be paid. At the time of writing, those variations have not been finalised whilst the Award is under review for a range of proposed changes impacting SCHADS employers. 

This means employers are operating in a live risk environment. The law has shifted at first instance, the regulator has appealed, and the Commission is actively considering changes to the award terms. 

Payment for Work Performed Either Side of a Sleepover 

In accordance with the sleepover provisions of the SCHADS Award, when rostering an employee to work a sleepover, an employer must roster or pay an employee for a minimum of four hours immediately before the sleepover period, or immediately after the sleepover period. Provided four hours work is provided or paid at one end of the sleepover period, there is no requirement to provide any work to the employee at the other end of the sleepover period (although an employee may be rostered to work on both sides of a sleepover period where award requirements are met). 

When determining how an employee should be paid for work performed either side of a sleepover, the Fair Work Ombudsman (FWO) has traditionally held that a sleepover and any work performed either side of it will be considered as one shift. The FWO's position has therefore been that all work performed Monday to Friday immediately before or after a sleepover should be paid at the night shift penalty rate, on the basis the employee is working a shift that finishes after midnight. 

However, in July 2025, a Federal Court decision found that under the SCHADS Award, sleepovers are separate and distinct periods of time that do not form part of a shift. On this basis, the Federal Court expressed a view that work performed Monday to Friday immediately prior to a sleepover period should likely be paid at afternoon shift rates (provided the shift finished after 8.00pm and before 12 midnight) and work performed Monday to Friday immediately following to a sleepover period should likely be paid at ordinary rates (provided the shift commenced at or after 6.00am).

This contradicted the FWO's longstanding position on the payment of work immediately before and/or after sleepovers, and as a result the FWO subsequently appealed this decision. 

In light of the July 2025 Federal Court decision and subsequent appeal, the Fair Work Commission (FWC) identified that there is ambiguity in relation to how work performed either side of a sleepover period should be paid and is now considering how to vary the award terms to remove this ambiguity. In late December 2025, the FWC issued proposed variations to the SCHADS Award, under which work prior to and following a sleepover will be considered as separate engagements for the purposes of calculating shift allowances. The variations proposed at this time appear to be in line with the Jats Joint decision.

However, these variations have not yet been confirmed, and at this time the proposed changes are included as part of a suite of updates to the Award which are likely to have a material difference on the wages and entitlements of SCHADS workers. 

 Practical Position for Employers Conducting Sleepovers  

Given the recent Federal Court decision, the appeal, and the proposed award variations, the position for employers conducting sleepovers remains unsettled. 

The SCHADS Award itself has not yet been amended, the Federal Court decision is currently under appeal, and the Fair Work Commission is considering whether variations to the sleepover clause are necessary to remove ambiguity. As a result, employers across the sector are currently navigating a period where the legal interpretation, regulatory position, and potential future award drafting are not fully aligned. 

For many organisations, the appropriate approach to payment for work performed either side of a sleepover will depend on a range of factors including existing payroll practices, rostering models, internal systems, and the organisation’s appetite for regulatory risk while the appeal and award review process continue. 

Some employers may take a more conservative position and align closely with the Fair Work Ombudsman’s long-standing interpretation, while others may look to the reasoning expressed in the July 2025 Federal Court decision and the potential direction of the proposed award variations.  

It is also relevant that, in the course of the current proceedings, the Fair Work Commission has indicated that any variation to clarify the sleepover clause is not intended to operate retrospectively. While this may provide some reassurance to employers acting on a reasonable interpretation of the award as it presently stands, the ultimate outcome of the appeal and the Commission’s review process remains to be seen. 

Given this uncertainty, there is unlikely to be a one-size-fits-all approach that will be appropriate for every organisation. Employers should ensure they understand how their current payroll and rostering practices interact with the sleepover provisions of the SCHADS Award and monitor developments closely as the legal and regulatory process progresses. 

Where there is uncertainty around the interpretation of award provisions, or where sleepovers form a significant part of an organisation’s rostering model, it may be prudent to seek specialist advice to ensure current practices remain appropriate as the landscape continues to develop. 

Payment for Work Performed During a Sleepover 

In accordance with the sleepover provisions of the SCHADS Award, where an employee is required to perform work during a sleepover period (such as toileting), the employee must be paid at the prescribed overtime rate. 

The overtime rate that applies will depend on various factors including the time of the wake up, and the the day of the week. 

There are lots of issues with businesses not complying here. Where a minimum 10 or 8 hour rest break is not provided, the shift could be considered a broken shift, which can easily trigger double time payment (OTE), and put the company at risk of Award breaches. 

What This Means for SCHADS Award Employers 

The upcoming Fair Work hearing has the potential to: 

• Clarify how work either side of a sleepover is classified for shift allowance purposes 

• Confirm whether sleepovers are separate engagements or part of a single shift 

• Remove ambiguity that has led to inconsistent industry practice 

• Increase staffing costs depending on the final variation 

• Trigger retrospective review questions in businesses that adjust practice 

The practical risk for employers is not just about paying the correct allowance. It is about payroll configuration, award interpretation consistency, broken shift exposure, rest break compliance, and ensuring internal rostering systems align with the award as interpreted at the time. 

If you operate in the SCHADS sector, this is a clause to watch closely. 

We will provide updates once the Fair Work process progresses and any formal variation is made to the award. 

With the Federal Court appeal underway and the Fair Work Commission considering potential variations to the SCHADS Award, employers who rely heavily on sleepovers should keep a close watch on developments over the coming months. Changes to the interpretation or drafting of the clause could have implications for payroll settings, rostering models, and compliance positions across the sector. 

Effective HR are specialists in the SCHADS Award and support organisations across the disability, community, and home care sectors. Our team regularly assists employers with award interpretation, classification reviews, and payroll system configuration to ensure complex SCHADS rules are applied correctly in practice. 

Where uncertainty exists, getting the foundations right early can prevent costly compliance issues down the track.

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