Sleepover and related entitlements are features of the Social, Community, Home Care and Disability Services Award (SCHADS Award) which covers many community, disability and social services organisations and providers. Following a long running litigation involving disability provider Jats Joint, the Federal Court of Australia decided an appeal in March 2026 relating to the interpretation of sleepover and shift penalties under the award. Following that decision but separately, the Fair Work Commission decided on variation applications to the SCHADS Award which impact the application of sleepover entitlements.

What is a sleepover allowance in the SCHADS Award?

The SCHADS Award regulates the working arrangements between employees and employers in the social, community, home care and disability services sector. Many of those sectors involve care for others in residential or home settings and the necessity for evening and early morning work. The SCHADS Award provides for a ‘sleepover allowance’, which is enlivened where a worker is required to sleep overnight at the care or clients home premises. The award also provides for shift penalties for particular shift arrangements, some of which may precede or follow a sleepover period.

Federal Court decision

On 20 March 2026, the Full Court of the Federal Court (Federal Court) resolved a longstanding dispute about the proper construction of the SCHADS Award, finding that sleepover shifts do not form part of a shift and are to be treated as a break between surrounding rostered work periods.

The case involved Ms Richards who was employed by national disability support provider, Jats Joint Pty Ltd (Jats Joint). In January 2024, the FWO issued a Compliance Notice to Jats Joint in relation to a failure to pay Ms Richards a 15% night shift loading for her work performed immediately before and after her sleepover shifts. The FWO’s view was that the sleepover period was to be regarded as part of the work period and shift penalties are calculated based on the period of work, inclusive of the sleepover period. Jats Joint challenged the FWO and the Federal Court decided in favour of the employer.

The FWO appealed the decision and the question raised on appeal and considered by the Federal Court was: ‘Is an employee who works shifts before and/or after a ‘sleepover’ at a client’s premises entitled to be paid a ‘night shift’ loading (that is, paid a loading of 15% of their ordinary rate of pay under cl 29.3(b) of the SCHADS Award)?’

The Full Court noted that the provisions in the SCHADS Award should be read cohesively. The Court found that:

• a sleepover is separate to the shift work performed before and after it; it is to be treated as a break
• the distinction between the words “perform work” and the “sleepover periods” in the SCHADS Award indicate the intention that the sleepover period is not to be regarded as part of the performance of shift work (clause 25.7(f))
• the “sleepover period” attracts a 4.9% loading, whereas the “night shift” period attracts a 15% loading,
• the night shift loading is payable to an employee who “works a night shift” where work is actually performed (cl 29.3(b)).

Fair Work Commission decision

While the litigation in the Jats Joint case was progressing, there were several applications made to the Fair Work Commission to vary the SCHADS Award, including to clarify sleepover entitlements.

On 13 April 2026, the Fair Work Commission issued a decision following its previous decision on 24 December 2025, to vary the award as follows:

• A period of sleepover does not constitute a break within the meaning of a rest break between periods of work. Periods of work performed immediately before and immediately after a sleepover period shall be treated as part of the same shift
• New clause 29.3(d) providing that work before and after a sleepover is treated separately for the purposes of shift loadings and loadings may only apply to the shift before or after the sleepover
• New subclause 25.4(d) expressly providing that the rest break between shift entitlement (in clause 25.4(a)) does not prevent an employee from performing work immediately before and after a sleepover period
• Variation to clause 28.1 so that eligible employees would not inadvertently be denied overtime simply because a shift spans two calendar days
• Inclusion of a new clause 25.1(c) that provides that by agreement between the employer and employee, the ordinary hours (in clause 25.1(a)) may be worked up to 12 hours per shift where part of the shift is performed immediately before and part of the shift immediately after a sleepover period (noting a maximum of 8 ordinary hours of work may be worked before or after a sleepover period).

Other variations will also be made. The variations commence on 1 June 2026.

The Fair Work Commission’s decision noted the Federal Court's decision in Jats Joint to support the variations on the basis that the SCHADS Award provisions lacked clarity and precision.

Practical implications for employers

The result of the Jats Joint and award variation decisions is that an employer’s treatment of shift penalties for work before and after sleepover periods require careful review and consideration, leading up to and then after the variations take effect.

Ahead of the 1 June 2026 variation, we recommend that employers review their payroll systems, roster arrangements and operational requirements to implement the award changes.

The Gadens Workplace Advisory and Disputes team can assist with any queries you have in relation to sleepover provisions and any impacts in your workplace.