Workplace and Employment Law Update – September 2025
As Australia’s workplace landscape continues to shift, staying informed is more important than ever.
This update outlines the key legislative changes affecting small and medium enterprises (SMEs), from wage theft penalties and casual employment reforms to new rights around after-hours contact and psychosocial safety. Whether you're advising clients or managing a team, these developments could have a direct impact on how businesses operate and engage their workforce.
Wage Theft Criminalisation: New Federal Offences and Penalties for Employers
Fair Work Legislation Amendment (Closing Loopholes) Act 2023 (Cth) | Introduced December 2023 (with effect from January 2025)
Deliberate wage theft is now a federal crime in Australia. Employers found to have intentionally underpaid wages or entitlements can face significant fines and even imprisonment. These rules target deliberate or reckless conduct such as falsifying records or failing to rectify underpayments once aware of them. They do not apply to genuine mistakes or underpayments made prior to 1 January 2025. The new laws also increase maximum civil penalties for ‘non-small business employers’ (up to three times the value of underpayments).
There are safeguards for small businesses and other employers acting in good faith. Speak to us about them if you are concerned.
Tips for SMEs and professional advisors:
- Audit recordkeeping processes and payment structures (including Modern Award classifications, if relevant). Ensure all employees are receiving at least their applicable minimum wages and entitlements under any Modern Award, enterprise agreement or the National Employment Standards.
- Address underpayments immediately with properly qualified legal advice and consider disclosing to the FWC if substantial.
“Same Job, Same Pay” Orders: Pay Equity for Labour Hire Workers
Fair Work Legislation Amendment (Closing Loopholes) Act 2023 (Cth) | Introduced December 2023 (with effect from November 2024)
New laws targeting pay disparities between direct employees and labour hire workers have allowed labour hire workers, unions, host businesses and their employees to apply for ‘Regulated Labour Hire Arrangement’ (RLHA) since December 2023; however, we are only recently seeing the effect of these changes with the Fair Work Commission (FWC) able to issue these orders since November 2024.
If the FWC determines that applicable labour hire workers are providing their labour (rather than a service), and it is fair and reasonable to do so, it may issue an RHLA order mandating that the labour hire workers be paid the same rate payable (under an enterprise agreement or Modern Award) to direct employees performing the same work. RHLA orders cannot be issued in respect of ‘small business employers’ (i.e., employers with less than 15 employees).
Tips for SMEs and professional advisors (if engaging labour hire workers):
- Review payroll records for any existing discrepancies to understand the value of any adjustments that may be requested or ordered. Consider aligning pay rates between equivalent roles to pre-empt disputes. Plan for increases in labour costs and requests for information from labour hire companies.
- Ensure labour hire contracts contemplate the possibility of an RHLA order being made and consider which party will absorb any order relating to an increase in pay. If close to the 15-employee threshold, be mindful that employee growth could bring these rules into play.
Right to Disconnect: Managing After Hours Work Expectations
Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 (Cth) | Introduced August 2024 (with effect from August 2025 for ‘small business employers’)
From August 2025, ‘small business employers’ (i.e., employers with less than 15 employees) are subject to the new ‘right to disconnect’ laws introduced for all other employers in August 2024.
All employees now have a legal right to disconnect from work communications outside their normal working hours, unless doing so is ‘unreasonable’. There are, however, sensible limits. Whether refusal is ‘unreasonable’ is determined by the legal or operational urgency of the communications, the employee’s role and seniority, the employee’s personal circumstances, and whether the employee is compensated for contactable outside ordinary working hours. Employees and employers can seek orders from the FWC to stop an employee from refusing contact or to stop an employer from taking certain actions.
Tips for SMEs and professional advisors:
- Review your employee after-hours expectations, relevant employment contract terms and communication policies. Consider establishing appropriate after-hours policies and ensure those in supervisory roles understand these policies. Treat complaints seriously to avoid disputes.
Casual Employment Updates: What Employers Need to Know
Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 (Cth) | Introduced August 2024 (with effect from August 2025 for ‘small business employers’)
From August 2025, ‘small business employers’ (i.e., employers with less than 15 employees) are subject to new casual employment laws introduced for all other employers in August 2024.
Casual Employment Redefined
Under new laws, an employee will be considered ‘permanent’ (and qualify for associated entitlements) unless the practical reality of the relationship and the terms of the employment contract are consistent with the new definition of ‘casual employment’. The old rules required reference to the contractual terms only.
Subject to certain limited exceptions, the new definition characterises ‘casual employment’ by an absence of a firm advance commitment to continuing and indefinite work, and the employee being entitled to a casual loading or specific rate of pay for casual employees under the contract of employment (or an applicable modern award or enterprise agreement).
Tips for SMEs and professional advisors:
- Review all ‘casual employment’ engagements to ensure that contractual terms and the relationship itself meet the new definition. Include and itemise casual loading rates in casual employment contracts.
Employee Choice Pathway to Casual Conversion
The traditional employer-offer-based casual conversion process has been replaced with the new ‘Employee Choice Pathway’ which allows casual employees to elect to notify their employer of their intention to change to permanent employment (provided they have been employed for prescribed periods and are not covered by a Modern Award or enterprise agreement). An employer can only refuse the notice for certain reasons and on reasonable grounds.
Tips for SMEs and professional advisors:
- Prepare to deal with conversion requests from long-term casuals by establishing appropriate processes to respond within applicable timeframes (including template response letters and criteria to assess requests fairly). Consider converting suitable casual staff to casual employment to avoid disputes and improve retention.
Protection of Penalty and Overtime Rates: ‘Rolled-Up Rates’ at Risk
Fair Work Amendment (Protecting Penalty and Overtime Rates) Act 2025 (Cth) | Introduced August 2025
Brand new laws move to enshrine penalty and overtime rates for Modern Award workers by preventing the FWC (when making, varying or revoking a Modern Award) from reducing existing penalty or overtime rates or including terms allowing substitution of penalty or overtime rates. This appears to target ‘rolled-up rates’ (where an employer pays a single higher base rate in lieu of separate penalty rates) which unions argue often lead to employees being worse off than if they received each separate rate per the Modern Award.
These changes apply only to the FWC's ability to change Modern Awards and do not affect existing Modern Award provisions allowing annualised wage arrangements or contractual set-off clauses. For now, there are no new compliance obligations for employers, and businesses still have flexibility to negotiate suitable pay rates (provided minimum Modern Award entitlements are met).
Tips for SMEs and professional advisors:
- Ensure pay arrangements, employment contracts and payroll systems continue to meet Modern Award obligations. Confirm any current ‘rolled-up’ pay rates result in employees being ‘better off’ than if they were to receive penalty and overtime rates per the Modern Award.
Psychosocial Hazards: New WHS Regulations in Victoria
Proposed Occupational Health and Safety (Psychological Health) Regulations (Vic) | Expected October 2025 (with effect from December 2025)
Recent and upcoming legal developments at the federal and state levels demonstrate an increased focus on psychological safety in the workplace. After the Federal Government introduced the new Work Health and Safety (Managing Psychosocial Hazards at Work) Code of Practice 2024 focused on managing psychosocial risks and risks of sexual and gender-based harassment in the workplace, most Australian jurisdictions (e.g., NSW, QLD, WA) have introduced their own Work Health and Safety (WHS) regulations or Codes of Practice to explicitly require proactive identification and management of harmful workplace ‘psychosocial hazards’ such as bullying, violence, conflict, poor management, and inadequate reward or recognition. Victoria will become the latest jurisdiction to adopt similar measures, with new ‘Occupational Health and Safety (Psychological Health) Regulations’ expected to be introduced in October 2025 (with effect from December 2025).
Tips for SMEs and professional advisors:
- Keep abreast of regulations and, if operating in Victoria, use the lead-up to prepare. Consult the Australian Human Rights Commission’s ‘Guidelines for Complying with the Positive Duty’ for guidance on meeting proactive obligations.
- Review and update operational policies and procedures to ensure they facilitate proactive identification, assessment, control and review of workplace psychosocial hazards.
- Conduct risk assessments to identify psychosocial risks (consider consulting with employees, if appropriate). Train managers and supervisors to recognise and respond to psychosocial hazards.
- Treat complaints about psychosocial hazards as seriously as physical incidents. Investigate them, take corrective action, and keep records.
Pending Ban on Non-Compete Clauses: Preparing for 2027 Changes
Legislation TBC | Expected circa. 2027
In their 2025/26 Budget, the Albanese Government announced plans to introduce a legislative ban on post-employment ‘non-compete’ clauses for workers above ‘High Income Threshold’ (currently $175,000) with effect from 2027. These planned changes form part of the current Government’s ongoing pro-competition and pro-worker initiative that aims to improve labour mobility and encourage wage growth.
In practice, this will restrict employers’ ability to prevent workers from leaving to join competitors or starting their own competing businesses (except for high-paid roles above the threshold). Although few details are known at this stage, the proposed reforms are expected to include transitional arrangements (allowing businesses and workers time to adjust) and they are not expected to impact the ability of businesses to use other post-employment restraints to protect legitimate business interests (e.g., non-solicitation and confidentiality terms).
Tips for SMEs and professional advisors:
- Stay informed of legislative developments to understand how and when the ban will apply, and what exemptions may apply.
- Identify affected contracts and roles. Prepare to remove ‘non-compete’ terms for roles under the high-income threshold (including these terms once they are unenforceable may be seen as bad faith).
- Potentially review and update confidentiality and non-solicitation post-employment restrictions (if appropriate). Consider alternate positive retention strategies (e.g., incentives, culture and career pathways).
Need legal advice or assistance with your business?
If you have concerns about how these changes may impact your business, we encourage you to contact us to arrange a consultation with our commercial team. We are available to discuss the changes as they relate to your business and provide practical advice your business can implement to prepare for them.
