Jats Joint Decision Explained: What It Means for SCHADS Sleepovers in the NDIS Sector

What Is the Jats Joint Decision Under the SCHADS Award?

On 8 July 2025, the Federal Court handed down its decision in Jats Joint Pty Ltd v Fair Work Ombudsman [2025] FCA 743.

If you manage payroll under the SCHADS Award, this decision directly affects how sleepovers interact with:

• Night shift penalties
• Overtime thresholds
• Shift definitions

There has been confusion because the decision overturns the Fair Work Ombudsman’s long-standing position. There is also an appeal underway, and the Fair Work Commission is considering changes to the Award itself.

Here is what actually happened and what it means right now.

Jats Joint Pty Ltd, Disability Provider

Jats Joint is a disability support provider operating under the SCHADS Award. It challenged a compliance notice issued by the Fair Work Ombudsman.

Fair Work Ombudsman (FWO)

The FWO alleged that Jats Joint underpaid a worker by failing to apply the 15% night shift loading to hours worked before and after sleepovers.

The FWO’s position was that a sleepover and the surrounding work formed one continuous shift.

Federal Court of Australia

The Federal Court reviewed the compliance notice and ruled in favour of Jats Joint. The Court held that the SCHADS Award does not require sleepovers to be treated as part of a shift for penalty purposes.

Fair Work Commission (FWC)

Separately, the Fair Work Commission is hearing applications to vary the sleepover provisions of the SCHADS Award, including clauses 25.4, 25.7 and 28.

These proceedings may introduce clearer structural rules around sleepovers.

The dispute centred on how sleepovers affect night shift penalties under clause 29 of the SCHADS Award.

A night shift is defined as a shift that:

• Finishes after midnight, or
• Commences before 6am Monday to Friday

Under the FWO’s interpretation, if a worker:

• Worked before a sleepover
• Completed a sleepover
• Worked again after the sleepover

The entire period was treated as one shift. If that span crossed midnight, night shift penalties applied to the ordinary hours.

Jats Joint argued that this was incorrect.

The Court found that sleepovers are dealt with separately in clause 25.7 of the Award.

Key findings included:

Sleepovers Are Separate From Shifts

A sleepover does not automatically form part of a shift.

Ordinary hours must be assessed separately from the sleepover period.

Night Shift Penalties Are Based on Worked Hours

Night shift penalties apply only if the actual worked shift:

• Finishes after midnight, or
• Starts before 6am

If the employee did not work during those hours, the sleepover does not trigger the penalty.

Sleepover Allowance Still Applies

The sleepover allowance of 4.9% of the standard rate remains payable for each sleepover.

Active Work During a Sleepover Is Overtime

If an employee performs active work during a sleepover, that work is paid at overtime rates under clause 25.7(e).

For NDIS and disability providers, this decision affects:

• How sleepover penalties are calculated
• Whether adjacent shifts trigger night loadings
• How payroll systems classify sleepovers

If your payroll system automatically combines sleepovers with surrounding work to determine shift penalties, it may not reflect the current Federal Court interpretation.

However, this is not settled law yet.

No.

The Fair Work Ombudsman filed a notice of appeal on 11 August 2025.

The appeal may affect:

• Whether penalties apply to work on either side of a sleepover
• Whether a sleepover can count as a break between rostered shifts

In addition, the Fair Work Commission is currently considering applications to vary the sleepover provisions of the SCHADS Award.

Further changes are possible.

At this stage:

• The Federal Court decision reflects the current legal position
• The appeal may change that position
• The SCHADS Award itself may be varied

NDIS and disability providers should ensure their payroll systems reflect the current interpretation, while monitoring the appeal and Commission proceedings before making major structural changes.

Sleepovers are not being removed.

The sleepover allowance still applies.

Overtime for active work still applies.

What has changed is how sleepovers interact with shift penalties.

And that distinction matters for payroll compliance under the SCHADS Award.

The FWO publicly acknowledged that the Court’s decision is contrary to its long-standing position.

On 11 August 2025, the FWO filed a notice of appeal.

The appeal may affect:

• Whether penalties apply to work on either side of a sleepover
• Whether a sleepover can count as a break between rostered work periods

Until the appeal is decided, the Federal Court ruling reflects the current legal position.

• The Jats Joint decision does not remove sleepovers.

• It does not remove the sleepover allowance.

• It does not remove overtime for active work during a sleepover.

• What it changes is how sleepovers interact with shift penalties.

• Under the Federal Court’s interpretation, sleepovers are separate and distinct periods that do not automatically form part of a shift for penalty purposes.

• Until the appeal is determined or the Award is varied, that is the current position.

Who is Pay Cat?

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