Major Australian Payroll Changes in 2025: What Employers Need to Know

Organized payroll essentials: calculator, cash, and documents surround the focus on financial management.

Australia's payroll landscape has undergone significant transformations in 2025, with new legislation and regulatory updates that fundamentally change how employers must manage wage payments and compliance. From criminal penalties for wage theft to increased minimum wages and superannuation rates, these changes require immediate attention from HR professionals, payroll managers, and business owners.

Criminal Penalties for Wage Theft Now in Effect

Bottom Line: From 1 January 2025, intentional underpayment of wages or entitlements became a criminal offence under Australian law. This represents the most significant change to Australian employment law in recent years.

What Constitutes Wage Theft

The new criminal offence applies when employers:

• Intentionally engage in conduct that results in underpayment of wages, superannuation, or other entitlements

• Fail to pay amounts required under the Fair Work Act, modern awards, or enterprise agreements

• Continue underpaying employees after becoming aware of the breach

  
  

Important distinction: The offence only applies to intentional underpayments and doesn't include honest mistakes. However, if employers discover errors and fail to rectify them promptly, this could constitute intentional conduct.

Severe Penalties for Non-Compliance

The penalties for wage theft are substantial:

• Individual employers: Up to 10 years imprisonment and fines up to $1.65 million or three times the underpaid amount

• Corporate employers: Fines up to $7.8 million or three times the underpayment amount, whichever is greater

  
  

Small Business Protections

A Voluntary Small Business Wage Compliance Code provides small businesses with a pathway to avoid criminal prosecution. The Fair Work Ombudsman cannot refer small business employers for criminal prosecution if they comply with this Code following an underpayment discovery.

Minimum Wage Increases Take Effect

From 1 July 2025, the National Minimum Wage increased by 3.5% to $24.95 per hour or $948 per week. This increase also applies to minimum award wages across all industries.

Key impacts for employers:

• Penalty rates and allowances have been adjusted proportionally

• APS Level 1 employees now receive a minimum of $27.53 per hour, up from $26.60

• All award classifications received corresponding increases

  
  

Superannuation Guarantee Reaches 12%

The Superannuation Guarantee rate increased from 11.5% to 12% on 1 July 2025. This represents the final scheduled increase in the superannuation guarantee rate.

Critical implementation detail: The 12% rate applies to all salary and wages paid on or after 1 July 2025, even if the pay period relates to work performed before this date.

Parental Leave Superannuation

From 1 July 2025, the Australian Taxation Office began making 12% superannuation contributions on government-funded Parental Leave Pay for children born or adopted after this date. This initiative aims to reduce retirement savings gender disparities.

Right to Disconnect Laws Expand

From 26 August 2025, right to disconnect laws will apply to small businesses, having already commenced for larger employers. These laws give employees the right to refuse contact outside working hours unless such refusal would be unreasonable.

Enhanced Parental Leave Benefits

Eligible employees can now access up to 24 weeks of Parental Leave Pay for children born or adopted from 1 July 2025. This represents an increase from previous entitlements and includes superannuation contributions.

Single Touch Payroll Phase 2 Compliance

By 2025, all organisations must fully comply with Single Touch Payroll (STP) Phase 2 requirements, with the compliance grace period having ended. This includes:

• Detailed income categorisation for bonuses, allowances, and salary

• Granular tracking of leave entitlements

• Expanded employee data fields, including residency status

  
  

Employment Termination Payment Adjustments

Several termination payment thresholds increased for 2025-26:

• Life benefit termination payments ETP cap increased from $245,000 to $260,000

• Genuine redundancy base limit increased from $12,524 to $13,100

  
  

Student Loan Repayment Threshold Changes

The student loan repayment threshold increased significantly from $54,435 to $67,000, providing relief for many employees with HECS-HELP debts.

Future Changes to Monitor

Payday Super Implementation: From 1 July 2026, the Payday Super legislation will require employers to align superannuation payments with each pay cycle rather than quarterly payments.

Essential Action Steps for Employers

1. Conduct immediate payroll audits to identify any potential underpayments

2. Update payroll systems to reflect new minimum wages and superannuation rates

3. Review and strengthen compliance processes to prevent unintentional underpayments

4. Train management and payroll staff on the new criminal penalties

5. Consider implementing the Voluntary Small Business Wage Compliance Code if applicable

6. Ensure STP Phase 2 full compliance with detailed reporting requirements

7. Update employment contracts and policies to reflect right to disconnect obligations

   
   

Conclusion

The 2025 Australian payroll changes represent the most comprehensive reform of employment law in recent years. With criminal penalties now attached to wage theft and significantly increased compliance requirements, employers must prioritise payroll accuracy and implement robust systems to prevent both intentional and accidental underpayments.

The combination of increased minimum wages, higher superannuation rates, and enhanced enforcement mechanisms creates a new paradigm where payroll compliance is not just a business imperative but a legal necessity with severe consequences for non-compliance.

For expert guidance on navigating these changes, businesses should consult with qualified payroll professionals, legal advisors, or visit the Fair Work Ombudsman website for detailed compliance resources and tools.

This article reflects Australian payroll changes as of August 2025. Employers should regularly check the Fair Work Ombudsman and Australian Taxation Office websites for the most current information and seek professional advice for their specific circumstances.