As the new financial year begins, Australian employers need to prepare for several key employment law and payroll changes that take effect from 1 July 2025. These updates will impact wage compliance, superannuation, and unfair dismissal exposure, and failing to act could result in legal and/or financial risk.
Here’s a breakdown of the most important workplace changes coming into effect:
1. National Minimum Wage Increase
The Fair Work Commission has confirmed a 3.5% increase to the National Minimum Wage, lifting it from $24.10 to $24.95 per hour (or $31.19 per hour for casuals, with the 25% loading). All minimum award rates will also rise accordingly.
Accordingly, employers should ensure that employees covered by modern awards or the National Minimum Wage are paid in line with the new rates. The increase applies from the first full pay period on or after 1 July 2025.
Now is the time to audit pay rates against the applicable modern awards and implement system updates in payroll software.
2. High Income Threshold and Unfair Dismissal Cap Rise
From 1 July 2025, the high income threshold will increase from $175,000 to $183,100.
Employees earning above this threshold (and not covered by an award or enterprise agreement) are generally not eligible to bring an unfair dismissal claim. The maximum compensation for unfair dismissal will also increase to the equivalent of 50% of the high income threshold.
This may affect how you assess risk in termination decisions and contract negotiations with senior staff.
3. Superannuation Guarantee Increase to 12%
From 1 July 2025, the Superannuation Guarantee (SG) rate will increase from 11.5% to 12% of ordinary time earnings.
Action required:
Employers must update payroll systems and salary packaging arrangements to reflect this increase. Depending on how your contracts are structured (i.e. whether super is “inclusive” or “in addition to” salary), this may also affect total remuneration costs.
Time to Review Your Payroll, Contracts and HR Policies
These changes are not just administrative. They can have a real impact on business compliance, employee entitlements, and termination risks. Employers should take proactive steps to:
- Review and adjust employee pay rates in line with award increases
- Update employment contracts referencing superannuation contributions
- Reassess termination procedures for high-income earners
- Confirm payroll systems are set to apply new entitlements from 1 July
Need Help Getting Compliant?
If you’re unsure how these changes apply to your business, now is the time to ask for help. We work with employers to ensure their contracts, pay systems and workplace practices align with legal requirements.
Reach out to discuss a tailored review of your contracts, systems and/or policies.