Fair Work Ombudsman v Jats Joint Pty Ltd [2026] FCAFC 25

This case was a dispute between the Fair Work Ombudsman and Jats Joint Pty Ltd about how the SCHADS Award applies when a home care employee sleeps overnight at a client’s premises. The central commercial question was whether ordinary hours worked immediately before and or after that overnight stay should attract the 15% night shift loading, even though the employee was not rostered to work ordinary hours between midnight and 6.00 am.

The employee at the centre of the dispute was Ms Kim Richards. She worked part-time for Jats Joint as a Social and Community Services Employee Level 2. Over the relevant period, she was rostered to sleep over at a client’s premises on 123 occasions. Her rosters followed three patterns: work followed by a sleepover, a sleepover followed by work, or work then a sleepover then more work.

She was paid the sleepover allowance, but not the night shift loading for the ordinary hours worked immediately before and or after the sleepover.

The Fair Work Ombudsman said that was wrong. Its position was that the sleepover should be treated as part of the same shift as the ordinary hours on either side, so that the shift could count as finishing after midnight or commencing before 6.00 am. Jats Joint said the Award treated a sleepover differently. On its reading, the sleepover was not ordinary work, had its own allowance, and only attracted overtime if the employee actually had to perform work during the sleepover period.

The case turned on several clauses in the Social, Community, Home Care and Disability Services Award 2010. The Court set out the definitions of afternoon shift and night shift, the clause saying an employee who works a night shift is paid a 15% loading for the whole of that shift, the clause saying shifts are to be worked in one continuous block of hours that may include meal breaks and sleepover, and the clauses dealing specifically with sleepovers and breaks between rostered work.

The Fair Work Ombudsman argued that the Award should be read so that a sleepover counted as part of the shift for classification purposes, even if the employee was not paid ordinary rates or a night shift loading for the sleepover hours themselves. In practical terms, that meant a shift ending at 10.00 pm but immediately followed by a sleepover could still be treated as a night shift because, on that approach, the shift really ended after midnight.

Likewise, ordinary hours before and after a sleepover could be treated as one continuous shift that both finished after midnight and commenced before 6.00 am.

Jats Joint argued that this reading did not fit the structure of the Award. It pointed to the separate sleepover allowance and the separate overtime rule if work is actually performed during the sleepover. It also relied on the rest break clause, which it said treated a sleepover as a break between shifts, even if it was contiguous with work immediately before or after it.

The legal issue was whether, on the proper construction of the SCHADS Award, a sleepover at a client’s premises forms part of a shift for the purpose of deciding whether the employee has worked a night shift under clause 29.3(b).

Put more simply, the Court had to decide whether ordinary hours worked before and or after a sleepover could be treated as part of a single shift that finished after midnight or commenced before 6.00 am, even though the employee was not rostered to work ordinary hours during the overnight period itself.

The issue mattered because the Award uses several different concepts that do not always line up neatly: ordinary hours of work, work, shifts, breaks between rostered work, sleepover allowances and overtime for work performed during a sleepover. The Court said the Award drafting lacked clarity and precision in some respects, so the clauses had to be read together in a way that produced a coherent overall operation.

The Full Federal Court dismissed the appeal. It agreed with the primary judge that the better construction of the SCHADS Award was the one advanced by Jats Joint. The Court held that the Award text distinguishes between a sleepover period and work. In particular, the sleepover clause provides a flat allowance for the night and separately provides overtime if the employee is required to perform work during the sleepover period. That structure pointed away from treating the sleepover itself as work.

The Court also relied on the wording of the sleepover clause that allows an employer to roster an employee to perform work immediately before and or immediately after the sleepover period. The Court said that wording indicates the sleepover period is distinct from the shift on which the employee performs work. It accepted that an employee may be required to perform work during a sleepover, but said that possibility does not turn the whole sleepover period into work.

Instead, the Award gives that period its own allowance and gives any actual work during it separate overtime treatment.

The Court then considered the clause about rest breaks between rostered work. It said that clause supports the view that a sleepover can operate as a break between shifts, even if it may seem unusual in ordinary language to call an overnight stay at a client’s premises a break. In the context of this Award, the Court said it is a rest as between periods when the employee is required to perform ordinary hours of work, even though the employee may be called on to work if needed.

As for the clause saying shifts are to be worked in one continuous block of hours that may include meal breaks and sleepover, the Court did not treat that clause as a universal definition. Instead, it said the clause is permissive and mainly serves to make clear that a continuous block of hours is not necessarily interrupted by meal breaks or sleepovers. It does not mean a sleepover must always be treated as part of a shift for every purpose.

If you run a care business, this decision is not a licence to oversimplify overnight payroll. It is a case about the construction of particular SCHADS Award clauses in a particular dispute. What it does tell you is that you should not automatically classify ordinary hours before or after a sleepover as attracting the night shift loading just because the employee remains overnight at the client’s premises.

The most practical point is to separate categories that are often blurred in payroll systems. The Court's reasoning depended on the difference between ordinary hours worked, the sleepover period itself, and any actual work performed during that sleepover. If your roster, timesheet or payroll setup collapses those categories into one block, you increase the risk of paying incorrectly and make later reviews much harder.

Record-keeping is especially important. You should be able to show when the employee was rostered for ordinary work, when the sleepover period started and ended, what allowance was paid for that sleepover, and whether any actual work was performed during the overnight period. Those distinctions were central to the Court's analysis. They are also the sort of details that matter if a regulator, employee or adviser later reviews your pay practices.

The case also shows that a compliance notice can turn on a genuine award interpretation dispute. That does not mean employers should ignore notices. It means they should be reviewed carefully and promptly, especially where the issue depends on detailed award wording and roster structure.

Businesses using sleepover arrangements should review the documents and conduct that actually drive payroll outcomes. Start with the roster. Does it clearly identify the ordinary hours worked before the sleepover, the sleepover span itself, and any ordinary hours worked after the sleepover? Then check the timesheets and payroll codes. Are sleepover allowances recorded separately from ordinary hours and separately again from any overtime for work performed during the sleepover?

You should also compare your current setup against the current SCHADS Award wording, because this case was decided on the text before the Court. If your business has unusual roster patterns, rolling overnight arrangements or mixed day worker and shiftworker classifications, those details may affect how the Award applies in practice. The judgment itself acknowledges that difficult questions can arise in the practical operation of particular rosters.

The Full Federal Court delivered judgment on 20 March 2026. The appeal was from Jats Joint Pty Ltd v Fair Work Ombudsman [2025] FCA 743. The Court dismissed the appeal and left standing the primary judge’s conclusion that Ms Richards was not entitled to the 15% night shift loading in the circumstances before the Court.

The judgment is a Federal Court authority on the interpretation of the SCHADS Award clauses considered in the case. Businesses should still check the current Award wording and their own roster arrangements before making payroll decisions based on this result.