Employment Law: 2025 Recap

Employment Law: 2025 Recap

2025 was a big year for workplace law changes, and many of them directly affect how you pay, manage and communicate with your employees. If you run a small or medium-sized business, staying across these updates is essential to managing risk and running your business with confidence.

Below is a practical summary of the key workplace law changes introduced in 2025, and what they mean for your business heading into 2026.

Intentional wage underpayments became a criminal offence

From 1 January 2025, intentionally underpaying employees became a criminal offence under federal law.

This marked a major shift in how serious underpayment breaches are treated. While honest mistakes are not criminalised, deliberate conduct is now subject to criminal investigation and prosecution.

What this means for you:

  • Deliberately underpaying wages or entitlements can now result in criminal penalties. For companies, fines of up to the greater of $8.25 million or three times the underpayment. For individuals, fines of up to 10 years’ imprisonment, or $1.65 million, or both.
  • Serious cases may involve large fines and, for individuals, potential imprisonment.
  • Genuine mistakes are treated differently, but you’re still expected to take reasonable steps to comply.
  • Small businesses can rely on the Voluntary Small Business Wage Compliance Code as evidence of good-faith compliance.

Minimum wages increased from July 2025

The 2024–2025 Annual Wage Review increased minimum wages by 3.5%, effective from 1 July 2025.

  • The National Minimum Wage increased to $24.95 per hour.
  • Modern award minimum rates increased by the same percentage.
  • These increases apply from the first full pay period on or after 1 July.

If you employ award-covered staff, your payroll should already reflect these updated rates. Salaries that were close to award minimums may now need reviewing to avoid underpayment issues.

The right to disconnect now applies to small businesses

From 26 August 2025, the right to disconnect started applying to small businesses.

  • Employees can refuse to monitor, read or respond to work contact outside their working hours if the contact is unreasonable.
  • Whether contact is unreasonable depends on factors such as urgency, the employee’s role, how contact is made and whether they’re paid to be available.
  • The right doesn’t ban after-hours contact, but it does require fairness and clarity.

Informal expectations around after-hours availability can now create disputes. Clear communication and realistic boundaries are more important than ever.

Casual employees gained more choice

From 26 August 2025, casual employees of small businesses became eligible to request conversion to permanent employment through the employee choice pathway.

Eligible casual employees can notify you in writing that they wish to become full-time or part-time. Workforce planning and budgeting should take potential conversions into account.

New parental leave protections under Baby Priya’s Law

From 7 November 2025, Baby Priya’s Law introduced new protections for employer-funded paid parental leave in cases of stillbirth or the death of a child.

This law dictates that employer-funded paid parental leave generally can’t be cancelled in these circumstances, and employees are now entitled to greater certainty and support during an extremely difficult time. This means parental leave policies may need updating.

What SMEs Should Do Next

With so many changes taking effect in a single year, now is a good time to step back and review how your business is set up.

We recommend you:

  • Review payroll systems to ensure wages, classifications and award rates are correct.
  • Check employment contracts and casual arrangements to ensure they reflect current laws.
  • Update workplace policies, particularly around communication, working hours and parental leave.
  • Train managers and supervisors so they understand these changes and apply them consistently.
  • Seek advice early if you’re unsure – fixing issues sooner is always easier than dealing with them later.

Workplace laws continue to evolve, and penalties for getting it wrong are higher than ever. Keeping informed and proactive is the best way to protect your business and support your people.

For ongoing updates, the Fair Work Ombudsman website maintains a comprehensive and regularly updated list of workplace law changes.

Source: Fair Work Ombudsman

Compiled & Edited by: Tailored Account

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