Last month a settlement was reached in the four year dispute between Idea Services (IHC) and the Service and Food Workers Union in what has become known as the "sleepovers case" (see our previous FYI regarding this case).

The settlement forms the basis of a new Sleepover Wages (Settlement) Act which came into force on 17 October 2011.

Act details

Part 1 of the Act extinguishes claims by Idea Services' employees for minimum wages for sleepovers which occurred before the commencement of the Act and any such future claims.

Part 2 of the Act creates entitlements to back pay for specified employees and provides for the staged increase of payments for sleepovers, which are intended to reach the statutory minimum wage by 25 December 2012.

The government is committing $27.5m to assist Crown-funded employers in the health and disability sector to settle valid back pay claims and up to $90m over three years to support phasing in the minimum wage.

Implications for employers outside the health and disability sector

The Act allows the Governor-General to extend the application of Parts 1 and/or 2 to any other employer in the health and disability sector and some other government-funded employers in other sectors. However, the Governor-General must act only on the recommendation of the designated Minister and consult with the Minister of Labour.

Any employers not covered by the Act remain bound by the Court of Appeal decision in the sleepovers case. This means employers need to review situations where employees are required to sleepover, and assess:

  • the degree of constraints placed on the employee's freedom (for example, whether they have the ability to carry on a normal family life, socialise with friends, or access the comforts and resources of home);
  • the nature and extent of the employee's responsibilities while sleeping over; and
  • the benefit to the employer of having the employee perform the role.

The greater the constraints, the more likely it will be that the sleepover will be regarded as work time and the minimum wage will apply to every hour of that sleepover.