Sleepovers and Shift Loadings under the SCHADS Award: The Story Continues

Sleepovers and shift penalties have long been a complex area of employment law and recent developments have continued to shape how employers and employees understand their rights and obligations. Following our recent article about the Jats Joint decision (Federal Court Decision) and how it shifted our understanding of sleepovers and shift penalties, there has been some further development in this area. 

Not only has the appeal of the Jats Joint decision now been decided, but a number of industry bodies have applied to the Fair Work Commission (FWC) to vary the sleepover provisions in the Social, Community, Home Care and Disability Services Industry Award 2010. 

Before we do a deep dive into what’s changing, let’s quickly recap the fundamental questions the Jats Joint decision tried to answer, which were: 

• Can you roster a staff member to work before and after a sleepover as two separate shifts, or is it all one big shift?
• What’s the correct pay treatment for these shifts?

How did the FWC deal with the Variation Application?

On 22 December 2025, the FWC issued its decision to the Variation Application (Variation Decision) and in doing so decided to vary the SCHADS Award to clarify how the sleepover provisions in the Award operate.

We want to note from the outset that the variations to be made as a result of the Variation Decision have yet to come into effect, at the time of writing. It is unclear when they’ll come into effect. The FWC has published a draft variation determination, and this will be subject to consultation and possible further changes before it is adopted as an official variation to the Award.

However, any changes will be minor and will not alter the main thrust of the decision. We therefore know the basic changes to the Award that will be made. If you manage staff who perform sleepovers, here’s a breakdown of what’s changing and how you might need to adjust your operations.

A sleepover is not a “break”

One of the most significant parts of the Variation Decision is the FWC’s clarification on whether a sleepover counts as a break away from work.

Under the Award, employees usually need an 8-to-10-hour break away from work between shifts. The Jats Joint decision provided some judicial commentary around the idea that a sleepover (where the employee is allowed to sleep but must remain on-site) may satisfy this break-from-work requirement, implying that a sleepover counts as a break away from work. 

This commentary was used by the industry bodies to argue that the Award should be  amended to state this is definitely how it operates.

The FWC disagreed. It ruled that because an employee is still responsible for the premises and must be ready to work if needed, a sleepover period should not be considered a break from work.

Following the changes being made to the Award, if an employee works before a sleepover and then works immediately after it, those two periods of work will now be considered part of the same single shift. At first glance, this would appear to pose challenges to employers who wish to roster employees to work periods of work of more than a few hours both before and after a sleepover, given the current rules that state that the maximum length of a shift (not including the sleeping part of a shift) can only be 8 or 10 hours.

New flexibility: The 12-hour agreement

Recognising that many services (especially youth residential care) rely on having the same person present in the evening and the following morning, the FWC is going to introduce a new flexible option.

Once the variation comes into effect, employers and employees can agree to extend the “ordinary hours” of a shift that includes a sleepover, as follows:

• The 12-hour rule: By agreement, a shift that includes a sleepover can consist of up to 12 hours of active work (excluding the sleepover itself).
• The cap: You cannot roster more than 8 hours of work on either side of the sleepover within that single shift.
• Example: A staff member could agree to work 6 hours before a sleepover and 6 hours after it as “ordinary hours,” provided they’ve agreed to this arrangement.

How to handle pay and penalties

The decision also clarified how to calculate shift loadings (extra pay for working “unsocial” hours like late nights) once the variation comes into effect.

1. Split loadings: You only pay shift loadings for the active work parts of the shift, not the sleepover itself. The two separate parts of the shift (before and after the sleepover) should be treated separately for the purpose of calculation shift loadings (confirming the court’s decision in Jats Joint).
2. Separate calculation: This means that if the part of the shift before the sleepover qualifies for an “afternoon shift” loading (12.5%), but the part after the sleepover is in the morning and doesn’t qualify for a loading, you only pay the extra 12.5% for the hours worked before the sleepover. This is good news for employers who had interpreted the Award as requiring the night shift penalty to be paid for both the period before and after the sleepover part of the shift.
3. Sleepover allowance: The standard sleepover allowance still applies as a flat fee in addition to the hourly rates for the active work.
4. Overtime: Any active work during the sleepover (e.g., waking up to assist a client) is still paid at overtime rates. Any work beyond the agreed 12 ordinary hours of active work is also overtime.

Practical steps for employers

Once this decision comes into effect, ensuring your business remains compliant and avoids “back-pay” risks likely means implementing the following measures.

1. Review your rosters: Review your current rostering arrangements, especially if your organisation operates on a 24-hour model. If you have staff working 8 hours before and 8 hours after a sleepover, the final 4 hours of that morning period may be considered overtime moving forward, unless you restructure.
2. Update your documents: Since the 12-hour ordinary shift relies on “agreement,” you should consider updating your standard employment contracts (by agreement with staff) or create a simple written agreement form for staff to sign if they are happy to work these extended shifts.
3. Adjust payroll settings: Confirm your payroll software is set up to treat the periods before and after a sleepover as a single shift for the purpose of calculating total daily hours, while still “splitting” the shift loadings correctly for the different times of day.
4. No need for retrospective pay: The FWC denied the request to make these changes retrospective (dating back to 2010). This means you only need to comply with these rules from the date the final variation is officially active in the Award. 

The Jats Joint decision: Where are we now?

Following the handing down of the original Jats Joint decision, the Fair Work Ombudsman (FWO) launched an appeal in the Full Court of the Federal Court (FCAFC). 

On 20 March 2026, the FCAFC handed down its decision regarding the appeal. It upheld the primary judge’s decision, meaning the position explained in our previous article remains unchanged. Although the Jats Joint decision will become largely irrelevant when the amendments being made to the Award come into effect.

The FWO still has one more avenue of appeal, which is to the High Court of Australia. At the time of writing, there is no indication that the FWO is seeking to further appeal the decision. If that changes, we will provide you with an update which you can receive by signing up to our newsletter in the footer. 

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Disclaimer: The information in this article is current as at 21 April 2026 and has been prepared by Employment Hero Pty Ltd (ABN 11 160 047 709) and its related bodies corporate (Employment Hero). The views expressed in this article are general information only, are provided in good faith to assist employers and their employees and should not be relied on as professional advice. The Information is based on data supplied by third parties. While such data is believed to be accurate, it has not been independently verified and no warranties are given that it is complete, accurate, up to date or fit for the purpose for which it is required. Employment Hero does not accept responsibility for any inaccuracy in such data and is not liable for any loss or damages arising either directly or indirectly as a result of reliance on, use of or inability to use any information provided in this article. You should undertake your own research and to seek professional advice before making any decisions or relying on the information in this article.