Key Employment Law Changes in 2025: What Employers Need to Know
As 2025 begins, employers need to stay updated with key changes in employment law to ensure compliance and avoid penalties. From the right to disconnect to superannuation increases, these changes will significantly impact workplace policies. Below is a breakdown of the most crucial reforms and what they mean for your business.
1. The Right to Disconnect: Balancing Work and Life
A new workplace right came into effect on 26 August 2024 for non-small business employers and will apply to small business employers from 26 August 2025. The Right to Disconnect allows employees to refuse work-related communication outside their scheduled hours unless such refusal is deemed unreasonable.
Factors considered in determining reasonableness include:
- The nature and level of urgency of the contact
- The employee’s role and responsibilities
- Any additional compensation for after-hours availability
Employers should update their workplace policies and ensure managers are trained on handling out-of-hours communication. (Fair Work Ombudsman)
2. Redefining Casual Employment
From 26 August 2024, new definitions of casual employment under Section 15A of the Fair Work Act came into effect. Now, an employee is classified as casual if there is no firm advance commitment to ongoing work and they receive a casual loading or specific casual pay rate under an award or contract.
Employees who do not meet these criteria may be entitled to permanent employment benefits such as paid leave and unfair dismissal protections. Employers must review employment agreements to ensure correct classifications. (Fair Work Ombudsman)
3. Casual Conversion: New Employee Choice Pathway
From 26 August 2024, casual employees can now request permanent employment under the new employee choice pathway. Employers must respond in writing and can only refuse based on specific conditions such as insufficient ongoing work or business viability concerns.
For casual employees engaged before 26 August 2024, the old casual conversion rules apply until 25 February 2025 (or 25 August 2025 for small business employers). After these dates, employees will need to follow the new pathway to request permanent status. (Fair Work Ombudsman)
4. Changes to Independent Contractor Classification
The Fair Work Act now applies a multi-factorial assessment to determine whether an individual is an employee or independent contractor. The focus is on the true nature of the working relationship, beyond just contractual terms. Employers misclassifying employees as contractors may face significant penalties for sham contracting.
Businesses using independent contractors should review agreements and work practices to ensure they align with legal definitions. (Fair Work Ombudsman)
5. Restrictions on Fixed-Term Contracts for Casual Employees
From 6 December 2023, employers cannot hire casual employees on fixed-term contracts under certain conditions:
- The employee is academic or teaching staff in higher education.
- They are not employed in the state public sector.
- They are covered by the Higher Education Academic Staff Award or Higher Education General Staff Award.
There is an exception in place until 1 November 2025, allowing fixed-term contracts in some circumstances. Employers in higher education should ensure compliance with these new restrictions. (Fair Work Ombudsman)
6. Wage Theft Now a Criminal Offence
From 1 January 2025, intentional underpayment of wages is now a criminal offence under the Fair Work Act.
- Honest mistakes are excluded.
- The Fair Work Ombudsman can investigate cases and refer for prosecution.
- Severe penalties, including imprisonment, may apply to employers found guilty of wage theft.
The Voluntary Small Business Wage Compliance Code helps small businesses avoid inadvertent breaches. Employers should conduct internal payroll audits to ensure compliance. (Fair Work Ombudsman)
7. Superannuation Guarantee Increase
The Superannuation Guarantee (SG) rate will increase from 11.5% to 12% on 1 July 2025. This is the final step in the annual 0.5% increases introduced in 2021.
Employers should:
- Update payroll systems to reflect the new SG rate.
- Communicate changes to employees to avoid confusion over super contributions.
8. Paid Parental Leave Expands
From 1 July 2025, the Parental Leave Pay Scheme will increase from 22 weeks to 24 weeks. Key changes include:
- Three weeks of paid leave reserved for each parent.
- Up to four weeks of concurrent leave can now be taken by both parents at the same time.
- The Australian Government will pay 12% superannuation on Parental Leave Pay for children born or adopted from 1 July 2025.
Employers should update their leave policies to reflect these changes. (Services Australia)
Final Thoughts: Be Proactive in 2025
These new employment law changes will have a significant impact on businesses.
To remain compliant:
✔ Review and update workplace policies to reflect new laws.
✔ Train HR and managers on legal obligations.
✔ Conduct internal audits to avoid wage-related legal issues.
✔ Ensure employment contracts are updated with correct classifications.
✔ Adjust payroll systems for superannuation and leave entitlements.
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