Small businesses in Australia need to be aware of several key legislative changes coming into effect in 2025 that will impact your operations and employee management.

Wage Underpayment Criminalisation

From 1 January 2025, intentional underpayment of wages or entitlements will become a criminal offence. This includes deliberate failures to pay wages, leave entitlements, superannuation, or salary sacrifice arrangements on time. Make sure you review the small business wage compliance code which allows for unintentional mistakes by small businesses, recognising these sometimes do occur, so long as they are quickly rectified.

To avoid potential fines or worse, imprisonment, review your payroll processes and ensure strict compliance. Be aware the Fair Work Ombudsman is cracking down on deliberate underpayment of wages.

Right to Disconnect

Starting 26 August 2025, your small business must comply with the right to disconnect legislation. This protects your eligible employees from work-related contact outside their regular hours, with exceptions for on-call employees and emergencies. Remember, employees have a right to disconnect where the employer is making unreasonable after hours contact and/or not providing payment for being on call, for example.

Update your policies to support this change and promote work-life balance for your team.

Paid Parental Leave Expansion

From 1 July 2025, the Paid Parental Leave (PPL) scheme will expand. While the government will handle the 12% superannuation payment on PPL starting July 2026, you should prepare for more leave availability, including additional days for partners and shared leave options.

Superannuation Increases

Two significant changes are coming:

  1. From 1 July 2025, super contributions will increase from 11.5% to 12%.

  2. Starting 1 July 2026, the new ‘Payday Super’ rule will require you to pay super every pay period instead of quarterly.

Adjust your payroll practices accordingly to accommodate these changes.

Limited time for introductory classifications

From January 2025, introductory classifications (often called ‘C14’, ‘introductory’, or ‘Level 1’) in certain awards will be limited to a maximum of 6 months. These mainly apply to entry-level jobs and are generally temporary in nature. They cover periods like induction, training, or gaining basic skills.

After this period, employees must move to standard pay rates. Review your employment structures to ensure compliance with this change.

Casual Conversion Obligations

While the 26 February 2025 deadline for offering casual conversion does not apply to small businesses, it can be good commercial practice to consider offering permanent positions to long-term casual employees who work regular hours. This can save on paying unnecessary casual loading and can help with employee retention and satisfaction.