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:
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 is a disability support provider operating under the SCHADS Award. It challenged a compliance notice issued by the Fair Work Ombudsman.
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.
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.
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:
Under the FWO’s interpretation, if a worker:
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:
A sleepover does not automatically form part of a shift.
Ordinary hours must be assessed separately from the sleepover period.
Night shift penalties apply only if the actual worked shift:
If the employee did not work during those hours, the sleepover does not trigger the penalty.
The sleepover allowance of 4.9% of the standard rate remains payable for each sleepover.
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:
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:
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:
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:
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.
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