What Small Businesses Need to Know After the 2025 Election

The recent re-election of the Albanese Government, with a strong majority, signals significant changes ahead for Australian workplace laws. For small businesses, understanding and preparing for these changes is crucial to ensure compliance, manage costs, and maintain good workplace relations.

Key changes likely to affect small business:

Wage regulation and bargaining:

• The Government plans to strengthen protections for penalty rates, making it harder for employers to trade these off for higher base pay.

• There may be moves to set a higher minimum wage, with proposals to set it at 60% of the median full-time wage. This could increase wage costs, especially for businesses with entry-level or low-paid staff.

• For businesses using gig workers or contractors (such as delivery drivers or freelancers), we may expect more regulation and possible extension of award conditions to these workers.

• Unions recently applied to the Fair Work Commission seeking to remove junior pay rates in the retail, food, and pharmacy sectors. We anticipate that the government will provide at least tacit support for the application; however, in COSBOA's view, this would increase costs for businesses employing younger staff. We have made strong representations opposing the application.

• Minimum conditions are likely to become more rigid, making flexible work arrangements potentially more expensive. Small businesses should review their contracts and workplace policies to maintain flexibility without breaching new rules.

Ban on non-compete clauses:

• There is a ban proposed on non-compete clauses for employees earning below the high-income threshold (currently $175,000). Most small business employees will fall under this threshold, so if implemented, employers will need to find alternative ways to retain staff.

• COSBOA eagerly awaits the opportunity to consult and engage with Government on this proposal to ensure it does not have unintended consequences on small business.

Multi-employer bargaining:

• The Government is supporting more multi-employer bargaining, especially in sectors like childcare and aged care. Small businesses in these sectors may be required to participate in industry-wide bargaining, which could lead to higher wage costs and less flexibility in setting pay and conditions.

Portable entitlements

• Small businesses will need to stay alert to any movement towards portable leave schemes, particularly for casual, gig, and project-based workers. These schemes would allow employees to carry entitlements like sick leave with them between jobs, funded by an industry levy.

Casual and labour hire reforms

• Stronger rules are expected to limit the use of casual and labour hire workers. There may be a requirement to offer permanent employment after six months, unless there is a valid business reason not to do so.

• The National Labour Hire Registration Scheme is expected to be finalised, so small businesses using labour hire should ensure their providers are compliant.

Workplace flexibility and work-life balance

• The right to disconnect from work outside of hours will come into law for all businesses in Australia from 26 August 2025, with possible penalties for breaches. Small businesses should set clear policies on after-hours communication.

• Work-life balance is likely to be a focus, so businesses should be proactive in managing flexible and remote work arrangements.

Expanded leave and inclusion measures

• Proposals include increasing paid reproductive leave and paid parental leave, as well as legislating superannuation on paid parental leave from July 2025. Small businesses should plan for these potential changes in their staffing and payroll systems.

• There will be greater scrutiny on diversity and inclusion, especially in recruitment and workforce design.

Union rights and industrial action

• Unions are likely to gain more rights to access workplaces and engage with employees. Small businesses may see increased union activity.

Artificial Intelligence (AI) and automation

• We envisage new laws may require more consultation with employees before introducing new technologies or automation. Small businesses using, or planning to use, AI in hiring, rostering, or other HR functions should monitor developments and prepare for additional compliance obligations.

What should small businesses do now?

Wage regulation and bargaining:

• Keep up to date with changes via your membership association.

• Review employment contracts and workplace policies to ensure they retain access to information with upcoming changes, especially around penalty rates, non-compete clauses, and flexible work.

• Plan for higher wage costs and less flexibility in some areas, particularly if you employ casuals, juniors, or gig workers.

• Strengthen payroll and compliance systems to avoid underpayments and ensure workplace safety.

• Engage with employees early to manage change and maintain good workplace relations.

Small businesses will need to be proactive and adaptable as the workplace relations landscape evolves over the next three years, with a strong focus on employee rights, job security, and regulatory compliance. As always, your membership association is the best source for advice.