Introduction
2025 has been a significant year for employers. Major cases were handed down that redefined how employers can pay an annual salary and how redundancies must be approached. There were also substantial changes to workplace laws across Australia. The Fair Work Commission reported a record number of claims against employers this past year, including over 16,000 unfair dismissal claims and nearly 2,000 disputes.
This article summarises key points from 2025 relevant to employers and outlines important considerations for 2026.
Legislative reforms
Mandatory prevention plans for sexual harassment
Queensland businesses must now proactively manage risks of sexual and sex or gender-based harassment at work by preparing a written prevention plan that:
- identifies the risks
- details control measures implemented or planned
- explains how control measures were decided
- describes consultation processes
- outlines procedures for handling reports.
This obligation took effect on 1 March 2025.
Employers must ensure all workers are aware of and can access the plan. Failure to prepare, implement, inform or review the plan may attract fines exceeding $9,000 per breach.
WorkSafe Queensland has published useful resources for employers on this topic, including a guide for PCBUs and a template prevention plan.
Minimum wage increase
On 1 July 2025, the national minimum wage rose by 3.5% to $948.00 per week ($24.95 per hour for a 38-hour week). Modern award minimum wages also increased by 3.5%, affecting approximately 20.7% of the Australian workforce. The Fair Work Commission cited inflation and reductions in the real value of wages for minimum wage dependent employees as reasons for the increase.
Criminalising wage underpayments and other issues – Closing Loopholes No.2
From 1 January 2025, intentional underpayment of wages or entitlements became a criminal offence. This offence applies when an employer (individual or company) knowingly fails to pay certain amounts on or before their due date. However, honest mistakes are excluded.
This offence covers amounts that must be paid directly to employees, such as wages or paid leave, as well as amounts paid on behalf of employees, such as superannuation contributions or salary sacrifice amounts.
Penalties include fines, imprisonment, or both. For non-small businesses, maximum penalties have increased to the greater of three times the value of the underpayment or the relevant penalty unit amount for the contravention.
Right to disconnect for small businesses – Closing Loopholes No.2
Following introduction of the right to disconnect for non-small businesses in 2024, the right to disconnect extended to small business employers on 26 August 2025. Employees may refuse to monitor or respond to work-related contact outside working hours unless the refusal is unreasonable.
Despite initial controversy, the Fair Work Commission has noted that there has been surprisingly little use of the right to disconnect by employees. We are yet to see any published right to disconnect decisions.
Baby Priya’s Law
The Fair Work Amendment (Baby Priya’s) Bill 2025 took effect on 7 November 2025. Under the Fair Work Act 2009 (Cth) (FWA), employers are now prohibited from cancelling or refusing employer-funded paid parental leave if a child is stillborn or dies. There are limited exceptions to this prohibition. These include where the terms and conditions of employment allow the employer to cancel or refuse the leave (provided this was a term of employment before 7 November 2025), or where other leave entitlements specifically address the stillbirth or death of a child.
Employers who breach this protection may incur civil penalties.
Landmark cases
FWO v Woolworths Group Limited [2025] FCA 1092 – clarification of operation of set-off clauses
This landmark decision clarified that employers cannot rely on set-off clauses that allow them to pool or offset the payment of employee entitlements across different pay periods. For a set-off clause to be valid, it must operate within the same period in which the entitlements arise.
Set-off clauses are common in many employment contracts and employers should review their employment contracts in light of this decision.
This case also emphasised that relying solely on clocking data and rosters does not meet the detailed record-keeping requirements under the Fair Work Regulations 2009 (Cth). Records must be accessible and clearly show the specific entitlements owed to employees.
Helensburgh Coal Pty Ltd v Bartley [2025] HCA 29 – redeployment obligations in genuine redundancy
After a five-year dispute involving 22 former employees, the High Court ruled on redeployment obligations following forced redundancies during a restructuring. After making 47 employees redundant, the employer continued to engage contractors to perform the same type of work previously carried out by the redundant employees. The employees argued that these were not genuine redundancies and that redeployment was possible in the circumstances.
The Court held that redeployment obligations are not limited to considering existing vacancies in the business but also require an assessment of the workforce composition, especially where contractors are engaged. Employers may need to create new roles or provide retraining to affected employees to meet their redeployment obligations. Replacing contractors with redundant employees may also be a reasonable measure, particularly where contractors are engaged on an ‘as needed’ basis without contractual obligations requiring the employer to retain them.
Transport Workers’ Union of Australia v Qantas Airways Limited (Penalty) [2025] FCA 971 – record penalties for unlawful dismissals
In August 2025, Qantas was slapped with a hefty fine of $90 million for illegally dismissing 1,820 employees during the COVID-19 pandemic. This case followed earlier proceedings in which the High Court found that employers are prohibited from taking adverse action to prevent employees from exercising future workplace rights. In this case, the relevant workplace right was the employees’ ability to organise and engage in protected industrial action and to bargain in 2021.
This case highlights the courts’ willingness to impose significant fines on employers for breaches of the FWA, as well as the serious publicity and reputational consequences that can arise from these breaches.
Magar v Khan [2025] FCA 874 and JF v Oishi Teppanyaki & Café Pty Ltd & Anor [2025] QIRC 209 – landmark sexual harassment decisions
Magar v Khan was the first test of the sex-based harassment provisions under the Sex Discrimination Act 1984 (Cth), resulting in a $305,000 payment to a young female employee who was sexually harassed and victimised by the principal of her workplace. The Court found the employer tolerated sexist and sexualised behaviour, creating a culture that allowed the harassment to escalate.
In a related case, JF v Oishi Teppanyaki & Café Pty Ltd, a female employee who was sexually harassed and assaulted by her boss was awarded $140,000.
These cases demonstrate the courts’ growing focus on sexual harassment and the significant penalties for employers who fail to manage these risks.
What’s to come?
Changes to general protections involving dismissal application process
In November 2025, the Fair Work Commission announced changes to the application process for general protections involving dismissal claims, amending the Form F8 (application) and Form F8A (response) to require more detailed information from the commencement of a claim. These reforms aim to address the rising number of applications, improve scheduling and reduce delays. Key changes include:
- Legal representation requests must be supported by written submissions explaining why representation is necessary. These requests will be decided ‘on the papers’ before the conference, so that parties know whether leave is granted prior to the hearing.
- Late applications require submissions demonstrating ‘exceptional circumstances’. The Commission will review these before serving the application on the respondent.
- Applicants must clearly detail alleged contraventions, and respondents must specify any jurisdictional objections in their initial forms. This ensures all parties are fully informed and properly advised, as it may affect their ability to rely on certain arguments later.
Pay day super
The Australian Government has announced that, from 1 July 2026, employers must pay superannuation guarantee contributions simultaneously with employees’ wages. This reform aims to strengthen Australia’s superannuation system for employees and improve their retirement security.
Proposed ban on non-compete clauses
To boost job mobility and competitiveness, the Australian Government has proposed banning non-compete clauses for most employees earning below the high‑income threshold (which is currently $183,100 per annum under the FWA). However, the final details of this proposed ban are still pending, with changes expected in 2027 to allow employers time to update contracts and compliance measures.
Conclusion
This year has seen some significant legal developments and increased activity in Australia’s workplace relations system. Rising complaints show that employees are becoming increasingly willing to bring claims against their employers. These changes highlight the evolving nature of workplace law and the need for employers to stay informed.
We wish all our clients a safe and happy end to the year and we look forward to working with you in 2026.
If you have any questions regarding the issues raised in this article, please contact a member of our workplace relations and safety team.
