For small businesses across Australia, staying informed about the evolving human resources (HR) landscape is essential. The year 2025 brings significant legislative changes that impact employment practices intended to improve fairness, transparency, and work-life balance. Here's a concise overview to help you navigate and respond to these developments effectively.
1. Changes to Award Classifications
Updates to 37 modern awards encompassing revised pay rates and limits on the duration employees can remain in entry-level positions came into effect on January 1, 2025.
HR Response:
- Adjust payroll systems to reflect new pay rates and classification structures
- Inform affected employees about how these changes impact their roles and compensation.
2. Criminalization of Wage Underpayment
Now in effect since January 1, 2025, intentional underpayment of wages, including superannuation and other entitlements, is classified as a criminal offense. Penalties are severe, with fines up to $7.825 million for companies and up to 10 years imprisonment for individuals.
HR Response:
- Regularly review and ensure compliance with wage and entitlement obligations according to the Fair Work Act
- Adopt the Voluntary Small Business Wage Compliance Code to mitigate risks of prosecution.
3. Casual Employment Conversion
From August 26, 2025, the ‘Employee Choice Pathway’ will be available to casual employees requesting conversion to permanent employment after 12 months of service. Employers must respond within 21 days, providing valid reasons for any refusal.
HR Response:
- Review current casual arrangements and prepare for potential conversion requests.
- Establish clear protocols to handle conversion requests promptly and fairly.
4. Right to Disconnect
Starting August 26, 2025, employees in small businesses gain the right to refuse work-related communications outside their regular hours, promoting work-life balance.
HR Response:
- Update contract and policies to define acceptable contact times and ensure all staff are informed.
- Encourage a culture that respects personal time boundaries, reflecting values of employee wellbeing.
5. Tax and BAS Agent Reforms
Significant reforms to tax agent regulations take effect from January 1, 2025, introducing stricter ethical and operational requirements.
HR Response:
- Engage with tax professionals to ensure compliance with new standards.
- Enhance documentation practices to meet enhanced requirements.
6. Privacy Law Reforms
Key changes coming into effect between 2025 and 2026 include the introduction of a statutory tort for serious invasions of privacy, allowing plaintiffs to seek damages for intrusions into seclusion or misuse of personal information, with courts able to award up to $478,550 in damages. Additionally, from December 2026, privacy policies must clearly disclose the use of automated decision-making systems and the types of personal information involved.
HR Response:
- Monitor these reforms in real-time, review and update privacy policies to ensure compliance and mitigate legal risks.
A proactive compliance strategy will ensure your business adapts to new requirements while minimising potential disruptions. Treating it as a strategic imperative to practice fairness, respect, and responsible leadership can reinforce trust with your employees and protect your brand’s reputation.
For more information, see:
HRM: The news site of the Australian HR Institute