Federal Court of Australia

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

ORDERS

THE COURT ORDERS THAT:

1.    The appeal be dismissed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT:

1.    INTRODUCTION

1    In the relevant context of the home care services sector, an employee may from time to time be required to “sleepover” at a client’s premises. The central question raised by this appeal is whether an employee who works on shifts before and/or after a “sleepover” at a client’s premises is entitled to be paid a “night shift” loading in respect of those shifts of 15% of their ordinary rate of pay under cl 29.3(b) of the Social, Community, Home Care and Disability Services Award 2010 (SCHADS Award).

2    The question is not merely a theoretical one. It arose in the context of a dispute between the parties relating to the entitlements of a particular employee, Ms Kim Richards. Ms Richards was employed by the respondent (Jats Joint) on a part-time basis as a Social and Community Services Employee Level 2. During the period from 27 January 2020 to 12 December 2021, Ms Richards was:

(a)    paid at the applicable award rate for a Social and Community Services Employee Level 2 Pay Point 4;

(b)    rostered to sleep overnight at a client’s premises on 123 occasions; and

(c)    not rostered to work and did not work ordinary hours between 12.00 midnight and 6.00 am on Monday to Friday.

3    Ms Richards’ sleepovers were rostered in one of three ways:

(a)    first, immediately following a period of ordinary hours of work;

(b)    second, immediately preceding a period of ordinary hours of work; and

(c)    third, both immediately following and immediately preceding two separate periods of ordinary hours of work (ie in between two periods of ordinary hours of work).

4    Ms Richards was not paid the night shift loading in respect of the shifts she worked immediately before and/or immediately after a sleepover.

5    The appellant (FWO) contended that Ms Richards was entitled to the 15% night shift loading under cl 29.3(b) of the SCHADS Award on each occasion that she worked on shifts before and/or after a sleepover. The FWO contended, in short summary, that a sleepover was not a break between shifts and always was, or should be treated as part of, the same shift as any ordinary hours of work either side of the sleepover, for the purpose of determining when the shift ended or began.

6    An inspector of the FWO issued a notice under s 716(2) of the Fair Work Act 2009 (Cth) (FW Act) requiring Jats Joint to remedy the direct effects of what that inspector believed to be a contravention of the FW Act, namely, a breach of cl 29.3(b) of the SCHADS Award (Compliance Notice). Jats Joint exercised a right under the FW Act to challenge the Compliance Notice by making an application to this Court for a review. It is this application that was heard and determined by the primary judge.

7    The primary judge upheld Jats Joint’s challenge to the Compliance Notice and, in doing so, accepted its construction of the SCHADS Award that Ms Richards was not entitled to payment of the night shift loading of 15%: Jats Joint Pty Ltd v Fair Work Ombudsman [2025] FCA 743; (2025) 342 IR 328 (PJ or primary judgment). The FWO now appeals from the primary judge’s orders on the basis that the correct construction of the SCHADS Award entitled Ms Richards to payment of the night shift loading.

8    For the reasons that follow, the appeal should be dismissed.

2.    RELEVANT CLAUSES OF THE SCHADS AWARD

9    The relevant provisions of the SCHADS Award are as follows.

10    Part 5 of the SCHADS Award deals with “Hours of Work and Related Matters”. Clause 25 is headed “Ordinary hours of work and rostering”. Subclauses 25.1 and 25.2 provide:

25.1     Ordinary hours of work

(a)    The ordinary hours of work will be 38 hours per week or an average of 38 hours per week and will be worked either:

(i)     in a week of five days in shifts not exceeding eight hours each;

(ii)     in a fortnight of 76 hours in 10 shifts not exceeding eight hours each; or

(iii)     in a four week period of 152 hours to be worked as 19 shifts of eight hours each, subject to practicality.

(b)    By agreement, the ordinary hours in clause 25.1(a) may be worked up to 10 hours per shift.

25.2     Span of hours

(a)    Day worker

The ordinary hours of work for a day worker will be worked between 6.00 am and 8.00 pm Monday to Sunday.

(b)    Shiftworker

A shiftworker is an employee who works shifts in accordance with clause 29—Shiftwork.

11    Clause 29 of the SCHADS Award prescribes the terms and conditions that apply to shiftwork, including allowances and penalty rates that may apply depending on the type of shift worked.

12    Clause 29.2 sets out the following definitions of the various types of shifts contemplated by the SCHADS Award:

29.2    Definitions

(a)    Afternoon shift means any shift which finishes after 8.00 pm and at or before 12 midnight Monday to Friday.

(b)    Night shift means any shift which finishes after 12 midnight or commences before 6.00 am Monday to Friday.

(c)    A public holiday shift means any time worked between midnight on the night prior to the public holiday and midnight of the public holiday.

13    Relevantly, subclauses 29.3 and 29.4 provide as follows:

29.3    Shift allowances and penalty rates

(a)    An employee who works an afternoon shift will be paid a loading of 12.5% of their ordinary rate of pay for the whole of such shift.

(b)    An employee who works a night shift will be paid a loading of 15% of their ordinary rate of pay for the whole of such shift.

(c)    An employee who works a public holiday shift will be paid a loading of 150% of their ordinary rate of pay for that part of such shift which is on the public holiday.

29.4    Shifts are to be worked in one continuous block of hours that may include meal breaks and sleepover.

(Emphasis added.)

14    The parties were in dispute about the proper interpretation of cll 29.3(b) and 29.4.

15    Clause 25.4 is also relevant, especially to the FWO’s contentions. It provides as follows:

25.4    Rest breaks between rostered work

(a)    An employee will be allowed a break of not less than 10 hours between the end of one shift or period of work and the start of another;

(b)    Notwithstanding the provisions of subclause (a), by agreement between the employee and the employer, the break between:

(i)    the end of a shift and the commencement of a shift contiguous with the start of a sleepover; or

(ii)    a shift commencing after the end of a shift contiguous with a sleepover

may not be less than eight hours.

16    The balance of cl 25 deals with “Rostered days off” (cl 25.3), “Rosters” (cl 25.5), “Broken shifts” (cl 25.6), “Sleepovers” (cl 25.7), “24 hour care” (cl 25.8), “Excursions” (cl 25.9), and “Remote work” (cl 25.10).

17    Subclause 25.7 expressly deals with sleepovers. It provides as follows:

25.7    Sleepovers

(a)     A sleepover means when an employer requires an employee to sleep overnight at premises where the client for whom the employee is responsible is located (including respite care) and is not a 24 hour care shift pursuant to clause 25.8 or an excursion pursuant to clause 25.9.

(b)     The provisions of 25.5 apply for a sleepover. An employee may refuse a sleepover in the circumstances contemplated in 25.5(d)(i) but only with reasonable cause.

(c)     The span for a sleepover will be a continuous period of eight hours. Employees will be provided with a separate room with a bed and clean linen, the use of appropriate facilities (including access to food preparation facilities and staff facilities where these exist) and free board and lodging for each night when the employee sleeps over.

(d)     The employee will be entitled to a sleepover allowance of 4.9% of the standard rate for each night on which they sleep over.

(e)     In the event of the employee on sleepover being required to perform work during the sleepover period, the employee will be paid for the time worked at the prescribed overtime rate with a minimum payment as for one hour worked. Where such work exceeds one hour, payment will be made at the prescribed overtime rate for the duration of the work.

(f)     An employer may roster an employee to perform work immediately before and/or immediately after the sleepover period, but must roster the employee or pay the employee for at least four hours’ work for at least one of these periods of work. The payment prescribed by 25.7(d) will be in addition to the minimum payment prescribed by this subclause.

(Emphasis added.)

18    There were other clauses relevant to the parties’ respective arguments, but it is unnecessary to set them out here.

3.    THE COMPETING ARGUMENTS

19    There was no dispute between the parties as to the principles applicable to the interpretation of modern awards. It was accepted that the primary judge had correctly identified these principles at PJ[51]: citing and relying upon the principles summarised in Corporate Air Charter Pty Ltd v Australian Federation of Air Pilots [2025] FCAFC 45 at [8]–[12] (Logan, Dowling and McDonald JJ).

20    The FWO’s submissions on appeal repeated many of the arguments which the primary judge had rejected. In essence and by way of summary, the FWO submitted that:

(a)    on its proper construction, cl 29.3(b) of the SCHADS Award requires the night shift loading to be paid in respect of the ordinary hours worked by an employee in a night shift where that shift inclusive of any sleepover finishes after midnight or commences before 6.00 am on Monday to Friday;

(b)    the period of a sleepover was a part of the shift, irrespective of whether it fell immediately prior to a shift, during a shift (including a broken shift) or immediately after a shift;

(c)    the night shift loading is not payable for the hours of the sleepover, however the period of the sleepover is counted as being part of that shift for the purpose of determining whether the night shift loading is payable in respect of ordinary hours that form part of the shift;

(d)    a period of a sleepover is not a “break” within the meaning of cl 25.4 or otherwise as such a period is an aspect of work in that it requires an employee to be present at a client’s premises and be required to work if needed, even though the employee may not in fact perform work;

(e)    cl 25.7(d) and (e) entitles an employee to be paid a “sleepover allowance” of 4.9% of the standard rate for the night and also prescribes that overtime rates will be paid if work is performed during a sleepover, which recognises that the sleepover is a period of work and further recognises that overtime rates will be payable when the employee in fact performs work; and

(f)    the points in (a) to (e) above are consistent with cl 29.4 which provides that shifts are to be worked in one continuous block of hours that may include meal breaks and sleepovers.

21    It is useful to illustrate the operation of the FWO’s construction of the relevant provisions of the SCHADS Award by reference to two examples of the rostering of Ms Richards’ shifts and sleepovers referred to by the primary judge at PJ[30] and [35].

22    The first example (at PJ[30]) was an occasion when Ms Richards was rostered to commence a shift at 2.00 pm on 29 January 2020, finish that shift at 10.00 pm and then sleepover at the client’s house. She was not rostered to commence a shift at the conclusion of the sleepover. The FWO contended that Ms Richards was entitled to be paid a night shift loading in respect of the shift because, while the shift was said to end at 10.00 pm, the shift in fact ended after 12.00 am because it was immediately followed by a sleepover which was taken to form part of the shift. The shift and sleepover were said to constitute “one continuous block of hours”, to use the language of clause 29.4.

23    The second example (at PJ[35]) was an occasion when Ms Richards was rostered to commence a shift on 19 February 2020 at 2.00 pm, finish that shift at 10.00 pm, immediately commence a sleepover at the client’s house, commence a shift at 6.00 am at the conclusion of the sleepover, and complete that shift at 11.00 am. The FWO contended that Ms Richards was entitled to be paid a night shift loading in respect of the ordinary hours worked both before and after the sleepover. That was said to be because the sleepover was properly considered part of the same shift as those hours, and was not a break between shifts within the meaning of cl 25.4 or otherwise. In effect, the shifts and the sleepover were said to constitute one shift (or “one continuous block of hours”) that both finished after 12.00 am and commenced before 6.00 am.

24    In relation to both examples, the FWO did not contend that Ms Richards was entitled to be paid either her ordinary rate of pay or a night shift loading for the sleepover. That was because, while the sleepover was to be treated as part of the shift or shifts (and was not a break in the case of the second example), it did not form part of Ms Richards’ ordinary hours of work (cf cl 25.1) and she did not work or perform work during the sleepover, at least for the purposes of cl 29.3 or cl 25.7(f). If she did perform work during the sleepover she was entitled to be remunerated for that work in accordance with cl 25.7(e).

25    The FWO submitted that the primary judge erred by failing to construe the SCHADS Award in the manner set out above. During the course of oral submissions, the FWO further submitted that the construction preferred by the primary judge and advanced by Jats Joint would lead to the unintended and counter-intuitive circumstance where an employee could be engaged on consecutive rolling shifts with sleepover periods in between them, without those sleepover periods being regarded as parts of those shifts and thereby entitling the relevant employees to additional penalties for working such arrangements. It was submitted that the period of sleepover was properly to be regarded as a period of work to be counted as part of a shift and not a break.

26    Jats Joint’s submissions embraced various aspects of the primary judge’s reasons. In essence and by way of summary, it submitted that:

(a)    cl 29.3(b) only makes provision for the payment of the night shift loading to an employee who “works” a night shift;

(b)    a period of sleepover is not a period of work and is properly to be regarded as a break, as expressly contemplated in cll 25.4 and 25.7(f), other than where an employee is required to perform work during that period which is to be regarded as overtime, as provided for in cl 25.7(e);

(c)    cl 25.7 of the SCHADS Award regulates the payments that are to be made to employees in respect of any period of sleepover by prescribing the allowance that is payable for that period and also prescribing the overtime rates that are payable if work is performed during such periods;

(d)    cl 29.4 of the SCHADS Award is (as the primary judge found) a provision that is not definitional and facilitates the arrangement where a sleepover period falls during a rostered shift; and

(e)    there was an inherent inconsistency in the FWO’s argument in that, on the one hand, the FWO contended that an employee such as Ms Richards is to be paid a night shift allowance only for ordinary hours actually worked during a night shift which did not include the sleepover period and, on the other hand, the FWO contended that the sleepover period is nevertheless part of the shift or a period of “work” as opposed to being a “break between rostered shifts” as contemplated by cl 25.4.

27    Jats Joint submitted that the primary judge was correct to conclude that the night shift allowance was not payable in the circumstances applicable to Ms Richards.

4.    CONSIDERATION

28    We commence by recognising (as the primary judge also did) that in several respects, the drafting of the SCHADS Award lacks clarity and precision. That is regrettable in circumstances where the SCHADS Award applies to an important sector of the Australian economy and the community more broadly.

29    The primary judge accepted, as do we, that the clauses of the SCHADS Award should be read cohesively so that they promote, as far as possible, a harmonious reading and operation of the relevant interlocking provisions that bear upon the dispute between the parties: eg PJ [65]. In this regard, it is relevant by way of context and purpose to recognise that cl 4.1 of the SCHADS Award provides that it is an industry award that covers employers in, amongst other things, the “crisis assistance and supported housing sector” and the “home care sector”. The “home care sector” is defined to mean the “provision of personal care, domestic assistance or home maintenance to an aged person or a person with a disability in a private residence” (cl 3.1). It follows that the SCHADS Award was clearly intended to apply in circumstances where employees would be required to perform work in private residences.

30    Part 5 of the SCHADS Award relating to “Hours of Work and Related Matters” seeks to regulate a number of aspects of the working arrangements and relationship between an employer covered by that award and its relevant employees. For present purposes, it is relevant that Part 5 seeks to regulate (a) the payment of wages for ordinary hours of work, (b) the arrangements in relation to rosters and the working of shifts, (c) the penalties applicable to shiftwork and overtime, and (d) the payment of allowances applicable to particular aspects of the working relationship such as sleepovers.

31    Within Part 5, cl 25.1 prescribes what the “ordinary hours of work” will be (ie 38 hours per week, worked in particular ways as there outlined) and that they will be “worked” in the ways specified in subclauses (a) and (b) including that they may be worked in a “week of five days in shifts not exceeding eight hours each”. Clause 25.2 specifies that the span of “ordinary hours” will be “worked” between 6.00 am and 8.00 pm Monday to Friday for a “day worker” and that a “shiftworker” is an “employee who works shifts in accordance with clause 29”.

32    It will be immediately apparent that these clauses introduce the concepts of “ordinary hours of work” and “work”. Nothing within cll 25.1 and 25.2 expressly provides that a “sleepover” is to constitute “ordinary hours of work” or “work”. Nor does it expressly state that a period of sleepover is to be regarded as part of a shift.

33    The subject of sleepovers is expressly dealt with in cl 25.7. That clause also does not expressly state that a period of sleepover is to be regarded as part of the “ordinary hours of work”, or “work”, or as part of a shift. In fact, as the primary judge identified at PJ [70]-[71], cl 25.7 draws a contradistinction between “work” and the period of “sleepover”. That is made plain by the text of cl 25.7(f) which provides that “An employer may roster an employee to perform work immediately before and/or after the sleepover period, but must roster the employee or pay the employee for at least four hours’ work for at least one of these periods of work” (emphasis added). The textual contradistinction between the words “perform work” and the “sleepover period” is indicative of an intention that the rostering of a period of sleepover is not regarded as the performance of work for the purposes of these clauses of the SCHADS Award.

34    This textual contradistinction is also evident as between cl 25.7(d) and (e). Subclause (d) entitles an employee to the payment of a flat allowance of 4.9% of the standard rate for each period of sleepover. Subclause (e) provides for the payment of overtime rates in the event that the employee is “required to perform work during the sleepover period”. Again, the text in these subclauses reinforces the distinction as between the sleepover period and the “work” that may be performed during the sleepover period. The language of cl 25.7(d) implies that sleeping over does not itself constitute performing work.

35    There are other textual indicators within Part 5 of the SCHADS Award which make provision for a payment of rates, penalties or allowances contingent upon (a) the performance of work, or (b) the existence of a circumstance or event. For example:

(a)    cl 25.10 makes provision for employees to “perform remote work” and entitles employees to minimum payments where the employee “performs work”;

(b)    cl 26 specifies the payments to be made for “ordinary hours worked” on Saturdays and Sundays;

(c)    cl 28.1(a) entitles full-time employees to be paid overtime rates for “all work done in addition to their rostered ordinary hours on any day …”;

(d)    cl 28.1(b) entitles part-time employees to be paid overtime rates for all “time worked” in excess of 38 hours per week or 10 hours per day; and

(e)    other entitlements and allowances are payable upon an occurrence or event and not on the performance of work, such as meal breaks in cl 27.1(a) and sleepovers in cl 25.7(d).

36    Although different words have been used to refer to the performance of work, it is clear that the SCHADS Award distinguishes between work performed and other circumstances. Notably, cl 27.1(c) specifies that one kind of meal break is, exceptionally, to be “counted as time worked”, and cl 27.2(b) expressly states that tea breaks are to be “counted as time worked”. These provisions may be contrasted with the absence of any provision stating that a sleepover is to be counted as time worked.

37    These textual distinctions are important because ultimately the FWO’s claim (as asserted in the Compliance Notice) was that cl 29.3(b) entitled Ms Richards to payment of a night shift loading. The night shift loading under cl 29.3(b) is payable to an employee “who works a night shift” and the loading is to be payable for the “whole of such shift” (emphasis added). That makes it plain the loading is payable for periods in which work is performed.

38    However, this is not the end of the analysis. That is because the FWO (accepting the text of cl 29.3(b)) contended that the night shift loading was payable for the “whole of the shift” and that the period of a sleepover was part of a shift. The question this raised was whether a sleepover period, even if not amounting to the performance of work, was nevertheless a period that is part of a shift. The primary judge recognised this point and addressed it at PJ [72]ff.

39    The critical dispute between the parties in relation to this issue related to the proper construction of cll 25.4 and 29.4. The FWO’s contentions emphasised the fact that, by cl 29.4, it was made express that shifts are to be worked in “one continuous block of hours” and “may include meal breaks and sleepovers”. The FWO contended that this clause was definitional and that the period of sleepover, like a meal break, attracted a separate allowance but nevertheless counted as part of the period of the relevant shift. On the other hand, Jats Joint emphasised that cl 25.4 expressly contemplated that a sleepover was a rest break between shifts. The FWO countered these submissions by contending that a sleepover could not be a rest break in circumstances where an employee was required to sleep at a client’s premises and be available to perform work, if required.

40    The rival contentions raised by the parties demonstrate the lack of clarity and precision in the drafting of the relevant clauses. They also demonstrate the need for care in construing the relevant clauses in the context of the SCHADS Award as a whole. By reference to the text and context, like the primary judge, we prefer the construction advanced by Jats Joint.

41    In our view, it is significant that cl 25.7(f) expressly contemplates and provides for an employer to roster an employee to “perform work immediately before and/or immediately after” the sleepover period, which indicates that the sleepover period is one that is distinct from a shift on which an employee may be required to perform work. That is not to disregard the fact that an employee may be required to perform work during a sleepover period, but to recognise that any such period attracts different entitlements, including a flat allowance for the period of the sleepover and overtime rates applicable for any work performed during that period.

42    This construction is also consistent with cl 25.4 which requires an employee to have a 10-hour “break” between shifts but recognises that, by agreement, the “break between” a shift may be 8 hours, including where such a break is between the end of a shift and the commencement of a shift that “is contiguous with the start of a sleepover” or a shift commencing “after the end of a shift contiguous with a sleepover”. This clause indicates that a sleepover is regarded as a “break” between shifts. Although, in an ordinary sense, it may seem unnatural to regard a period of sleepover at a client’s premises as a “break” between periods of work, in the particular context of the SCHADS Award (involving provision of home care services), such a period is a rest as between periods when an employee is required to perform ordinary hours of work, even though it is a period when the employee may be required to perform work. The drafters of the SCHADS Award clearly identified that the sleepover period was one which, in the special circumstances of the sector, warranted additional payments, for which they made provision by way of an allowance in cl 25.7(d) and by requiring overtime rates to be payable under cl 25.7(e) if any work is performed during that period. In light of the specific text and context of the SCHADS Award, we agree with the primary judge’s reasons at PJ [95]-[96] that the decisions in Warramunda Village Inc v Pryde [2002] FCA 250; 116 FCR 58, Fair Work Ombudsman v Foot & Thai Massage Pty Ltd (in liq) (No 4) [2021] FCA 1242 and Corporate Air Charter are readily distinguishable and are of limited utility as they relate to clauses in different industrial instruments.

43    More generally, we agree with the primary judge’s reasons at [92]-[98] in relation to cl 25.4 and discern no error. As the primary judge reasoned, cl 25.4 does not characterise a sleepover as a “period of work”: PJ [93]. Rather, cl 25.4(a) identifies the necessity for a “break” between shifts or periods of work. And cl 25.4(b) creates a contradistinction between the “commencement of a shift” or the “end of a shift” and a period of sleepover being contiguous with either of those points in time. Clause 25.4(b)(i) and (ii) reinforces that the sleepover in these instances is contiguous with a shift, ie as being temporally connected to but separate from the shift. This is indicative of the fact that, in these instances, the sleepover period is separate from and not part of a shift.

44    Within this context, we broadly agree with the primary judge’s reasons that cl 29.4 is permissive in the sense that it makes facility for one mode for working shifts: PJ [80]. We consider that cl 29.4 serves the primary purpose of providing that a shift must be worked in “one continuous block of hours”. It elaborates on this to make clear that such a continuous block of hours may include meal breaks and sleepovers. In other words, the continuous block of hours is not interrupted by any meal breaks or sleepover periods that may be rostered. In our view, the clause does not thereby mandate that a sleepover period must always be part of a shift for all purposes.

45    The FWO contended that the primary judge erred because it was “not evident why the framers [of the SCHADS Award] would wish to leave open” the facility under cl 29.4 to permit employers to “roster single breaks (let alone single sleepovers) and thereby treat a sleepover or a meal break as not forming part of the employees’ shift”. The FWO’s contentions miss the point. As we have stated, the primary purpose of cl 29.4 is to provide that shifts are to be worked in “one continuous block of hours”. The relevant shift may include a period of a meal break or sleepover. Clause 29.2 identifies the different types of shifts that may be worked. For example, cl 29.2(b) makes plain that a night shift is one which finishes after midnight or commences before 6.00 am on Monday to Friday. What cl 29.4 does is to specify that where an employer is preparing a roster, it is to ensure that the shifts are worked in a continuous block, but that for those purposes, such a continuous block of hours may include a period for a meal break or sleepover. This is also consistent with cl 25.7(f). These clauses say nothing about whether a sleepover that falls on either side of a relevant shift must be taken to be part of that shift. The better view is that their evident purpose is to prevent the discontinuity arising from particular periods in which work is not performed (namely meal breaks or sleepovers) as necessarily marking the end of a continuous block of hours worked and thus engaging the requirement in cl 25.4 that there then follows a break of at least 10 hours (or, where there is agreement, of at least 8 hours).

46    We accept that, in the practical operation of particular rosters and depending on when a shift is notified to commence and conclude on either side of a sleepover, difficult questions may arise as to whether the employee has in substance performed ordinary hours of work as a day worker, or has worked an afternoon shift or night shift. That conundrum arises because cl 29.2(a) defines an afternoon shift as finishing after 8.00 pm and before midnight, and cl 29.2(b) defines a night shift as finishing after midnight or commencing before 6.00 am on Monday to Friday. However, these practical difficulties do not mean that a period of sleepover must be regarded as part of a shift.

5.    DISPOSITION

47    The appeal should be dismissed.

Associate:

Dated:    20 March 2026