Key Employment law changes and reforms underway

Australian employment law is rapidly changing to catch up with modern workplace practices and developing technologies. In 2025, we saw a number of important changes that are particularly relevant to foreign owned subsidiaries and international businesses looking to expand into the Australian market. As we embark on 2026, it’s vital for Australian employers and FOS clients alike to touch base with employment law experts on what changes may be on the horizon, and what they can do to proactively manage their Australian workforce and compliance risks.

Wage theft provisions

This year has seen the introduction of new ‘wage theft’ provisions, as a result of the Fair Work Legislation Amendment Act 2023 (Cth) and Fair Work Legislation Amendment Act 2024 (Cth) (the “Closing Loopholes” legislation).

Employers who have intentionally underpaid their employees’ wages or other entitlements can now be criminally liable. The maximum civil penalties pertaining to underpayments have also increased.

Employee choice pathway for casual conversion

Since February 2025, there has been a new pathway for casual employees to convert to permanent employment. Casual employees can now provide written notice to their employers to change to full-time or part-time employment where they have been employed for at least 6 months and believe they no longer meet the requirements of the casual employee definition.

Employers are only permitted to refuse these requests for certain reasons, including that the employer has reasonable business grounds or if the employees still meet the casual employment definition.\

Payday Super

In September 2024, the Australian Government announced that it would introduce a new measure known as “Payday Super”. “Payday Super” has now become law with the recent passing of both the Treasury Laws Amendment (Payday Superannuation) Bill 2025 and the Superannuation Guarantee Charge Amendment Bill 2025 (together, the ‘Payday Superannuation Bills’) on 4 November 2025. The Payday Superannuation Bills provide for a number of key changes, including that superannuation contributions must be received by an employee’s superannuation fund within seven business days of the day on which the employer makes payments of qualifying earnings (the amount of earnings employees are paid on which the superannuation guarantee is calculated), with limited exceptions. The new regime will commence on 1 July 2026.

Privacy law reforms

The Privacy and Other Legislation Amendment Act 2024 (Cth) introduces changes to Australia’s privacy laws, including in relation to how businesses manage employees’ personal information. One of the key changes is the introduction of a statutory cause of action for ‘serious invasions of privacy’ whereby individuals (including employees) can pursue compensation through the courts if their privacy has been invaded, including with respect to the misuse of their personal information.

Although employers will still be able to rely on an employee records exemption, the Australian Government has agreed to ongoing consultation with employers and employees which may lead to further changes in how employee records are handled.

Bonus arrangements

In a recent Federal Court case, Wollermann v Fortrend Securities Pty Ltd [2025] FCA 103, the Court determined that contractual terms requiring a bonus payment to be deferred for up to seven months and subject to forfeiture if employment ceased during the deferral period were unlawful. This decision was made on the basis that section 323 of the Fair Work Act 2009 (Cth) requires amounts that are payable in relation to the performance of work to be paid in full, at least monthly.

Employers should consider reviewing their incentive arrangements to determine whether any deferral and/or forfeiture arrangements may be unlawful.

Proposed ban on non-competes

The Australian Government has announced that it will introduce a statutory ban on ‘non-compete’ clauses for workers earning less than the high-income threshold (currently $183,100) from 2027. The government has also indicated that it will close loopholes in competition law which permit businesses to fix wages and use non-poaching agreements.

If these proposed changes are implemented, employers will need to look at alternative ways of reducing the risk of former employees competing against them and protecting their confidential information and intellectual property.

Setting off and employee records

The Federal Court of Australia has recently handed down an important decision concerning underpayment claims against Coles and Woolworths. Among other things, the case has provided guidance on the proper application of set-off clauses and clarified record-keeping obligations, both important for mitigating underpayment risks.

Contact our Employment team for advice

If you would like to have a confidential chat about any of the above changes and how it may impact your business, don’t hesitate to get in touch with our experienced Employment team.

The above was prepared by Senior Associate, Stella Fordham and Principal Lawyer, Luke Gattuso.

The information contained in this article is general in nature and cannot be relied on as legal advice nor does it create an engagement. Please contact one of our lawyers listed above for advice about your specific situation.