The 2025–2026 financial year brought several important workplace law changes for employers across Australia.

From the expansion of the Right to Disconnect and changes to casual employment, through to new parental leave protections and significant modern award developments, businesses have had another busy year of workplace reform.

For employers, the key message is clear:

Employment contracts, policies and payroll practices cannot simply be set and forgotten.

Below is an overview of some of the most significant changes employers should understand.

Right to Disconnect Extended to Small Businesses

From 26 August 2025, the Right to Disconnect began applying to employees of small business employers with fewer than 15 employees.

The right allows an employee to refuse to monitor, read or respond to work-related contact outside their working hours unless the refusal would be unreasonable.

Whether a refusal is unreasonable depends on several factors, including:

• the reason for the contact;
• how the contact is made;
• the level of disruption caused;
• whether the employee is compensated for being available;
• the employee’s role and level of responsibility; and
• the employee’s personal circumstances.

The Right to Disconnect does not prevent employers from contacting employees outside ordinary working hours. However, it does require employers to carefully consider whether employees are genuinely expected to read or respond to that communication.

Small businesses should review:

• after-hours communication expectations;
• on-call and availability arrangements;
• position descriptions and employment contracts;
• remuneration for after-hours availability; and
• workplace policies dealing with email, messaging and telephone contact.

Managers should also understand that an employee’s Right to Disconnect is a workplace right and must not be treated as a lack of commitment or cooperation.

Casual Employment: The Employee Choice Pathway

The former casual conversion framework has transitioned to the Employee Choice Pathway under the National Employment Standards.

From 26 August 2025, eligible casual employees of small businesses could provide written notice to their employer stating that they wished to change to permanent full-time or part-time employment.

This pathway had already commenced for eligible casual employees of larger businesses from 26 February 2025.

An eligible casual employee may make a request where they believe they no longer meet the definition of casual employment. Employers can only refuse the notice on specified grounds and must follow the required response process.

Businesses should ensure they understand:

• when a casual employee may provide an employee choice notice;
• the grounds on which a request may be refused;
• consultation and written response requirements;
• relevant response timeframes;
• record-keeping obligations; and
• the circumstances in which a casual employee’s working arrangements may indicate an ongoing employment relationship.

The Employee Choice Pathway does not mean every casual employee must become permanent. It does mean employers need to properly assess each request and clearly document their reasons for accepting or refusing it.

Stronger Protection for Penalty and Overtime Rates

Changes to the Fair Work Act took effect from 30 August 2025 to strengthen the protection of penalty rates and overtime rates in modern awards.

The amendments require the Fair Work Commission to ensure that award variations do not reduce or remove employees’ existing penalty or overtime entitlements.

For employers, the reforms provide greater certainty that these entitlements will remain an important part of the modern award safety net.

They also reinforce the importance of ensuring payroll systems correctly calculate:

• overtime rates;
• weekend and public holiday penalties;
• shiftwork penalties;
• casual loading interactions; and
• allowances linked to ordinary or minimum award rates.

Paying employees an above-award hourly rate or salary does not necessarily remove their entitlement to these additional payments unless there is a valid and properly documented arrangement that compensates them for those entitlements.

New Protections for Employer-Funded Parental Leave

Baby Priya’s Law introduced additional protections for employees who experience the stillbirth or death of a child.

From 7 November 2025, an employer generally cannot refuse or cancel employer-funded paid parental leave solely because an employee’s child is stillborn or dies after birth.

The protections apply where the employee is otherwise entitled to employer-funded paid parental leave under their employment contract, Enterprise Agreement, workplace policy or another employment arrangement.

There are some exceptions where the applicable terms and conditions do not provide an entitlement in the circumstances. Employers should therefore review the precise wording of their parental leave arrangements rather than assuming the statutory protection creates a new employer-funded entitlement in every case.

These changes reinforce the need for compassionate, clear and legally compliant leave practices during an incredibly difficult period for employees and their families.

Employers should review:

• paid parental leave policies;
• employment contracts and Enterprise Agreements;
• manager guidance;
• payroll procedures; and
• communication processes following pregnancy loss, stillbirth or infant death.

Road Transport Industry Changes

In April 2026, the Fair Work Commission made Australia’s first time-sensitive Road Transport Contractual Chain Order.

The Road Transport Contractual Chain Order – Fuel Cost Recovery – 2026 commenced on 21 April 2026 and established fuel-cost recovery obligations within certain contractual chains in the road transport industry.

The Order was designed to respond to significant increases in wholesale diesel prices and applied beyond the immediate relationship between a transport operator and driver. It recognised that pricing and payment practices throughout a contractual chain can affect whether transport businesses and workers are able to recover increased fuel costs.

By July 2026, wholesale diesel prices had fallen below the threshold that activated the additional payment obligations. As a result, the relevant payment requirements ceased to apply.

However, the Order itself was not revoked and remains capable of operating if the prescribed conditions are met again.

Businesses operating within road transport contractual chains should continue monitoring:

• diesel price movements;
• contractual payment obligations;
• transport service agreements;
• fuel levies and adjustment mechanisms; and
• future Fair Work Commission reviews or variations.

Significant Modern Award Updates

Aged Care and Health Sector Wage Increases

As part of the Fair Work Commission’s ongoing Aged Care Work Value Case, further minimum wage increases took effect from the first full pay period starting on or after 1 October 2025 for some employees.

The changes affected eligible employees covered by the:

• Aged Care Award;
• Nurses Award; and
• Social, Community, Home Care and Disability Services Award.

The specific increase depended on the employee’s award coverage, duties and classification. Not every employee covered by these awards received the same increase.

Employers within the aged care and health sectors should confirm that:

• employees are covered by the correct award;
• employees have been mapped to the correct classification;
• updated minimum rates have been applied;
• related penalties, overtime and allowances have been recalculated; and
• employment contracts and payroll systems remain accurate.

Classification errors can be particularly costly because they affect not only the employee’s base rate, but also the calculation of overtime, penalties, leave and other entitlements.

Junior Pay Rate Reforms

The Fair Work Commission has determined that junior wage arrangements will change under the:

• General Retail Industry Award;
• Fast Food Industry Award; and
• Pharmacy Industry Award.

The reforms affect junior employees aged 18 to 20 and are intended to progressively reduce the circumstances in which these employees can be paid a percentage of the adult rate.

The changes are expected to be phased in from 1 December 2026, with further transitional increases occurring over time.

Employers should not assume that every employee aged 18 to 20 will immediately become entitled to the full adult rate from that date. The precise entitlement will depend on the employee’s age, length of service, award coverage and the final transitional arrangements.

Businesses operating in retail, fast food and pharmacy should begin preparing by reviewing:

• the ages and commencement dates of junior employees;
• workforce and payroll data;
• labour-cost forecasts;
• recruitment budgets; and
• payroll system configuration.

Preparing early will help businesses manage the financial impact and reduce the risk of junior employees continuing to be paid at an outdated rate.

What Should Employers Do Now?

The volume and pace of workplace law changes mean that employers should regularly review their compliance arrangements rather than waiting for a complaint or payroll problem to arise.

As a starting point, businesses should review:

• employment contracts;
• workplace policies;
• modern award coverage and classifications;
• casual employment arrangements;
• parental leave provisions;
• overtime and penalty calculations;
• payroll system settings; and
• manager training.

A small issue in a contract, classification or payroll setting can quickly become a significant financial and operational risk when it affects multiple employees over an extended period.

How Capture Culture Can Help

Keeping up with changes to employment legislation and modern awards can be challenging for busy business owners and managers.

At Capture Culture, we help organisations translate complex workplace requirements into practical and commercially workable solutions.

Our team can assist with:

• HR compliance reviews and workplace audits;
• employment contract and policy updates;
• modern award interpretation;
• payroll compliance and classification reviews;
• casual employment and employee choice requests;
• leave and employee entitlement advice;
• manager training; and
• ongoing HR and workplace relations support.

Whether you are reviewing your compliance obligations following another busy financial year or preparing for upcoming changes, early action can help protect your business and provide greater confidence in your workplace practices.

Need support navigating workplace law changes?

Contact the Capture Culture team to ensure your business remains compliant, confident and ready for what comes next.