Jats Joint Pty Ltd v Fair Work Ombudsman [2025] FCA 473
Introduction
On 8 July 2025, in proceedings brought by Jats Joint Pty Ltd (Jats Joint) against the Fair Work Ombudsman (FWO), the Federal Court of Australia (the Court) found in favour of Jats Joint, which had challenged a Compliance Notice issued by the FWO. The Compliance Notice alleged that Jats Joint had contravened clause 29.3(b) of the Social, Community, Home Care and Disability Services Industry Award 2010 (the SCHADS Award) by failing to pay an employee the applicable night shift penalty for shifts associated with a sleepover.
The Court ultimately determined that Jats Joint had not committed the alleged contravention set out in the Compliance Notice.
The Background and Key Facts of the Case
Jats Joint is a national system employer providing disability support services, to which the SCHADS Award applies. The employee, Ms Kim Richards (Ms Richards), was employed by Jats Joint as a part-time employee from January 2020 to October 2023 (the relevant period).
During the relevant period, Ms Richards was rostered to work 123 sleepovers and was not paid the 15% night shift penalty (as per clause 29.3(b) of the SCHADS Award) for any shifts worked immediately before or after those sleepovers. The relevant sleepover arrangements undertaken by Ms Richards fell into two relevant categories before the Court:
- Category 1: Sleepover following a period of ordinary hours (e.g., Ms Richards would commence ordinary hours of work at 2:00pm and complete that period of work at 10:00pm. Ms Richards would then be rostered for a sleepover from 10:00pm until 6:00pm the following day).
- Category 3: Sleepover occurring between two adjacent periods of ordinary hours (e.g., Ms Richards would commence an adjacent period of ordinary hours at 2:00pm and complete that period of work at 10:00pm. She immediately commenced a sleepover at 10:00pm until 6:00am the following day. She would then work an adjacent period of ordinary hours at 6:00am to 11:00am the same morning).
The Court did not consider the sleepover arrangement classified as Category 2, as it was not relevant to these proceedings.
In November 2023, Ms Richards contacted the FWO, enquiring about the payment of penalty rates for night shifts. The FWO investigated the matter and issued a Compliance Notice to Jats Joint, alleging that they had breached clause 29.3(b) of the SCHADS Award by failing to pay the 15% night shift penalty rate for shifts adjacent to sleepovers.
Subsequently, Jats Joint challenged the Compliance Notice issued against them by the FWO and brought the application for review on two grounds:
- That the Compliance Notice failed to comply with s 716(3)(c) of the Fair Work Act 2009 (Cth) (the Act) as it did not adequately set out the alleged contraventions; and
- That it had not committed the contravention alleged in the notice.
Issues in Dispute
The central issue in this case concerned the interpretation of clause 25.7 of the SCHADS Award, which governs sleepover arrangements, and whether shifts performed immediately before or after a sleepover should attract the 15% night penalty under clause 29.3(b) of the SCHADS Award.
Jats Joint Position
Jats Joint argued that clause 25.7 is a self-contained clause, which provides no indication that sleepovers form part of a continuous shift. Jats Joint contended that clause 25.7 expressly permits the rostering of ordinary hours on either side of a sleepover, which supported the conclusion that these adjacent periods of work are separate and distinct from the sleepover.
Additionally, Jats Joint argued that in circumstances where employees are entitled to a fixed sleepover allowance under clause 25.7(d) of the SCHADS Award, an intention to impose additional penalties, such as the night shift penalty, would have been expressly provided for in the SCHADS Award. This interpretation was submitted to be reinforced by specific provisions in the SCHADS Award which identify when penalties or loadings apply. Jats Joint argued that the absence of such language in clause 25.7 further supported the conclusion that no further shift penalties were intended to apply to sleepovers.
Jats Joint also contended that sleepovers could properly be characterised as a break between shifts, which further reinforced the position that a sleepover does not form part of a continuous shift.
FWO’s position
In contrast, the FWO relied on clauses 29.4, 25.4 and 25.5 of the SCHADS Award to argue that sleepovers constituted part of a continuous shift rather than a break between adjacent shifts. The FWO pointed to clause 29.4, which provides that “shifts are to be worked in one continuous block of hours that may include meal breaks and a sleepover,” as clear support for the view that sleepovers can form part of a shift.
Furthermore, the FWO argued that because sleepovers must be formally rostered under clause 25.5, they should be treated as comparable to other shift periods and therefore attract the night shift penalty.
With respect to whether a sleepover classified as a break between shifts, the FWO maintained that sleepovers represent time spent at work and, as such, cannot be classified as rest breaks under clause 25.4 of the SCHADS Award.
The Court’s Considerations and Case Outcome
The Court held that, when considered as a whole, the SCHADS Award supported Jats Joint’s interpretation that sleepovers do not form part of a continuous shift and do not trigger the night shift penalty. As a result, the Court found that Jats Joint was not required to pay the night shift penalties under the Award and had complied with its obligations during the relevant period.
As such, the Court ultimately found that Jats Joint had not contravened the SCHADS Award as alleged, concluding that the appropriate order would be one cancelling the Compliance Notice. The Court provided the parties seven days following the date of judgment within which to provide written submissions on the order. Given this finding, Ground 1 was not addressed by the Court.
Compliance Impact
This decision provides clarity on the treatment of sleepovers under the SCHADS Award and rejects the FWO’s approach that work adjacent to sleepovers forms one continuous shift.
Organisations, specifically in the disability and community services sector, should ensure that their policies and procedures with respect to how sleepovers are classified and paid are up to date and consistent with the Court’s findings.
