The political landscape has shifted, and with it comes a wave of workplace law changes that will reshape how Australian small businesses operate.
The Council of Small Business Organisations Australia (COSBOA) has outlined the key changes on the horizon, and for business owners.
What’s really changing
The re-elected Albanese Government’s strong majority signals a confident push toward employee-centric workplace reforms.
For small business owners, this translates to higher compliance requirements, increased operational costs, and the need for more sophisticated HR systems, even if you only employ a handful of people.
Wage and workforce changes that hit your bottom line
The penalty rate lockdown
The Government is strengthening protections around penalty rates, making it significantly harder for employers to negotiate trade-offs between penalty rates and higher base pay. This removes a flexibility tool that many small businesses have used to manage weekend and after-hours staffing costs.
Minimum wage reality check
Proposals to set minimum wage at 60% of median full-time earnings could substantially increase your wage bill, particularly if you employ entry-level staff. For businesses in hospitality, retail, or service sectors, this change alone could require significant operational adjustments.
The gig economy gets regulated
If your business relies on contractors, freelancers, or gig workers, think delivery drivers, casual cleaning staff, or project-based specialists, expect more regulation. Award conditions may extend to these workers, fundamentally changing how you structure these relationships and their associated costs.
Junior rates under fire
Unions have applied to remove junior pay rates in retail, food, and pharmacy sectors. While COSBOA is fighting this change, businesses employing younger staff should prepare for potentially higher labour costs.
This could particularly impact businesses that have traditionally offered entry-level opportunities to students and young workers.
The end of non-compete clauses (for most)
The proposed ban on non-compete clauses for employees earning under $175,000 affects virtually every small business employee. This means you’ll need new strategies to retain key staff and protect business interests. Consider strengthening:
- Training and development programs to increase employee loyalty
- Clear confidentiality agreements
- Performance incentives and career progression paths
- Non-solicitation clauses where legally permissible
Multi-employer bargaining: industry-wide impact
If you operate in childcare, aged care, or other targeted sectors, you may be required to participate in industry-wide wage negotiations. This removes your ability to set competitive pay rates based on your specific business circumstances and local market conditions.
The implications extend beyond immediate wage costs, you’ll have less flexibility to offer unique benefits packages or working arrangements that differentiate your business as an employer.
The casual employment transformation
Stronger restrictions on casual and labour hire arrangements are coming, with a likely requirement to offer permanent employment after six months unless there’s a valid business reason not to. This change affects:
- Seasonal businesses that rely on flexible staffing
- Growing companies that use casual arrangements to manage uncertainty
- Businesses in industries with fluctuating demand
The National Labour Hire Registration Scheme will also be finalised, requiring due diligence on any labour hire providers you use.
Right to Disconnect
From August 26, 2025, all Australian businesses must respect employees’ right to disconnect from work outside normal hours. This isn’t just about phone calls—it covers emails, messages, and any work-related communication.
Small businesses need clear policies around:
- Emergency contact protocols
- After-hours work expectations
- Weekend and holiday communication boundaries
- Consequences for non-compliance
READ: What employers must know about new ‘right to disconnect’ laws
Leave and entitlement expansions
Prepare for increased costs from:
- Enhanced paid reproductive leave
- Extended paid parental leave
- Superannuation obligations on paid parental leave from July 2025
- Potential portable leave schemes funded by industry levies
These changes require updated payroll systems and financial planning to accommodate higher leave-related costs.
Union activity and workplace access
Expect increased union presence and activity. Unions will gain enhanced rights to access workplaces and engage with employees. Small businesses should:
- Understand union access rights and limitations
- Prepare management responses to union inquiries
- Maintain positive employee relations to reduce union appeal
- Ensure all workplace practices are compliant and defensible
AI and technology consultation requirements
New laws may require employee consultation before implementing AI or automation technologies. This affects small businesses planning to:
- Use AI in recruitment or HR processes
- Implement automated rostering systems
- Introduce new technologies that change work processes
What to do now
Immediate steps (next 3 months)
- Audit your current employment practices – Review contracts, policies, and pay structures against upcoming changes
- Strengthen payroll systems – Ensure accurate record-keeping and compliance tracking
- Update workplace policies – Particularly around after-hours communication and flexible work
- Plan financially – Budget for higher wage costs and compliance expenses
Medium-term preparation (3-12 months)
- Review contractor relationships – Assess which arrangements may need restructuring
- Develop retention strategies – Create alternatives to non-compete clauses
- Enhance employee engagement – Build stronger workplace relationships to maintain team stability
- Invest in HR systems – Consider software solutions for compliance management
Ongoing vigilance
- Stay connected with industry associations for updates
- Monitor Fair Work Commission decisions affecting your sector
- Regularly review employment law changes with professional advisors
- Maintain open communication with your workforce about changes
These workplace law changes represent the most significant shift in employment regulation for small businesses in years. While the focus on employee rights and job security reflects broader social priorities, the practical impact on small business operations, costs, and flexibility is substantial.
Success in this new environment requires proactive preparation, robust compliance systems, and a strategic approach to workforce management. The businesses that adapt early and thoroughly will maintain their competitive advantage, while those that wait may find themselves scrambling to catch up.
Keep up to date with our stories on LinkedIn, Twitter, Facebook and Instagram.
