Recent developments in employment law

The latest issues, decisions and proposed changes impacting business and workplace risk 12 min read

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Government passes amendments to superannuation reforms

By: Tarsha Gavin, Joseph Power, Jon Wenham, Lawrence Mai and Annabelle Elliott

Newly introduced legislation with broad implications for superannuation obligations

In October 2025, the Federal Government introduced the Treasury Laws Amendment (Payday Superannuation) Bill 2025 and Superannuation Guarantee Charge Amendment Bill 2025 to give effect to the long-anticipated Payday Super reforms (together, Payday Super Bills).

The Payday Super Bills seek to amend the Superannuation Guarantee (Administration) Act 1992 (Cth) and related legislation, which passed Parliament on 4 November 2025. The new regime will therefore commence on 1 July 2026.

Key features of the Payday Super Bills

• Qualifying earnings: while the existing concept of 'ordinary time earnings' is retained, it will be incorporated into a broader and new concept of 'qualifying earnings', which represents the amount on which superannuation contributions are calculated. Amounts currently excluded from ordinary time earnings (eg overtime) will still be excluded from qualifying earnings.
• Compliance timeframe: employers will need to make superannuation contributions within seven business days of a 'qualifying earnings' payment being made to an employee. This significantly reduces the current compliance timeframe, which allows contributions to be made within 28 days after each quarter. However, although the detail is not yet clear, it has been announced that it should be easier to rectify late payments of superannuation than it is under the current system.
• Superannuation guarantee charge (SGC) and penalties: employers will continue to be liable to an SGC and potentially liable to penalties if contributions are not made within the compliance timeframe for each qualifying earnings day. The new formula to calculate the SGC has a similar structure to the current formula, as it will include the sum of individual superannuation guarantee shortfalls for the relevant period, an interest component to compensate employees for lost superannuation earnings, an administrative fee, and a choice loading where employers do not comply with the choice of fund rules (if applicable). However, there are significant changes to the way these components are calculated, and overall it is expected that most employers will generally incur lower penalties and costs for superannuation non-compliance under these reforms. In particular:
  • The super shortfall will now be calculated on 'qualifying earnings', not the broader concept of salary and wages on which a shortfall is currently calculated (which included overtime and other payments not ordinarily subject to superannuation).
  • The interest rate will now vary annually (in line with the general interest charge rate for tax penalties) instead of being fixed at 10% per annum.
  • The current nominal administrative fee of $20 per employee per quarter will change to a substantive penalty uplift of up to 60% of the shortfall plus interest. The 60% uplift can be remitted in full in circumstances (to be specified in future regulations) which are not yet confirmed, but which are expected to include where the employer makes a voluntary disclosure.
  • The current 'additional SGC' penalty of up to 200% of the shortfall plus interest will be removed entirely without a direct replacement.
  • A new penalty will be introduced of 25% (or 50% for repeated non-compliance) of any unpaid SGC which will be imposed if an employer fails to pay the SGC after receiving a notice from the ATO.
• Deductibility: prior to the Payday Super reforms, superannuation contributions are only deductible to the employer for income tax purposes if they are made on time. Under the new system, employers will also be able to deduct late payments and the SGC, although the 25% late penalty will not be deductible. This should further reduce the cost to employers of non-compliance.

The Australian Taxation Office has released a draft Practical Compliance Guideline PCG 2025/D5 in tandem with the Payday Super Bills which is currently undergoing consultation until 7 November 2025. This guideline identifies high, medium and low-risk zones for when the ATO is likely to take compliance action against employers during the first year after the reforms take effect.

Government passes amendments to paid parental leave

By: Tarsha Gavin, Lawrence Mai and Annabelle Elliott  

Fair Work Amendment (Baby Priya's) Bill 2025

In October 2025, the Federal Government introduced the Fair Work Amendment (Baby Priya's) Bill 2025 (PPL Bill), which passed Parliament on 3 November 2025.

The reform adds a new provision to the Fair Work Act 2009 (Cth) (FW Act), following the widely publicised 'Baby Priya' case in which a mother's paid parental leave was withdrawn by her employer after the loss of her baby 42 days after birth.

Key features of the PPL Bill

• General prohibition: the PPL Bill prohibits employers from cancelling or refusing employer-funded paid parental leave (PPL), arising from the 'terms and conditions of employment', solely because a child is stillborn or dies shortly after birth.
• Threshold: while the phrase 'terms and conditions of employment' will not be defined under the amended FW Act, the explanatory memorandum indicates that the phrase will take its ordinary meaning and should be construed broadly to include an employee’s rights, obligations and entitlements that arise under a workplace instrument, employment contract or incorporated workplace policy.
• Exceptions: there are limited exceptions to the general prohibition, including circumstances where the employee requests that their leave be cancelled, or where the terms of employment expressly provide for alternative arrangements. For example, where an employment contract or enterprise agreement substitutes another form of leave that specifically addresses stillbirth or infant loss.

Implications for employers

The PPL Bill does not seek to impose a requirement that employers provide employer-funded PPL where they do not already provide such entitlements.

The new protection will only apply to existing and future employment contracts and workplace instruments where the stillbirth or passing of a child occurs on or after the commencement date, which will be the day after the bill is given royal assent.

Redundancy pay: when is alternative employment 'acceptable'?

By: Emma Gillman and Nathan Shannan  

Application to reduce redundancy pay dismissed

The Fair Work Commission (FWC) has dismissed an employer's application to reduce the amount of redundancy pay payable to an employee who was retrenched from her employment. The FWC did not consider that the employer had obtained 'acceptable' alternative employment for the employee, so as to enliven the FWC's power to reduce redundancy pay under section 120 of the Fair Work Act 2009 (Cth) (the FW Act).¹

Key takeaways

• Whether alternative employment is 'acceptable' is assessed objectively. Offering an employee a role with significantly reduced responsibilities, hours and remuneration is unlikely to meet this standard.
• For an employer to have 'obtained' alternative employment for an employee, the employer must have taken sufficiently active steps (for example, confirming the role in writing).

Background

The employee was employed as a Compliance and Risk Officer with an NDIS service provider. She worked four days a week, three of which were performed remotely. In August 2025, the employer decided to undertake a restructure, which would involve outsourcing its payroll and human resources functions.

The employer offered the employee an alternative role. However:

• the role that was offered involved reduced responsibilities;
• the role that was offered was for two days per week (rather than four), meaning her remuneration would halve; and
• the employee would not be able to work remotely.

The employer also referred the employee to an online portal which outlined other roles that it had available. The employee was asked to let the employer know if any of the roles 'stood out to her' so that they could discuss them further.

The employee was subsequently retrenched, and the employer applied to the FWC to reduce the amount of redundancy pay payable to the employee under section 120 of the FW Act on the basis that it had obtained acceptable alternative employment for the employee.

Decision

The FWC dismissed the employer's application. The FWC confirmed that in order for an application under section 120 of the FW Act to succeed, the employer must have 'obtained' alternative employment for the employee, and the alternative employment must be 'acceptable'.

Here, the FWC did not consider the role that the employee had been offered to be 'acceptable', as it involved significantly reduced responsibilities, hours and remuneration. The FWC also found that the roles outlined in the portal had not been 'obtained' by the employer for the employee, as the employer had not taken sufficiently active steps (like offering the roles to the employee in writing). As the employer had not obtained acceptable alternative employment for the employee, the jurisdictional pre-requisite to enliven the FWC's power under section 120 of the FW Act had not been met.

Flawed handling of harassment complaint forced employee to resign

By: Anthony Hallal and Isabel Horsley  

A recent case involving constructive dismissal

The Fair Work Commission (FWC) has decided that an employee was forced to resign after her employer mishandled a sexual harassment complaint she had made, leaving her no real choice but to resign.²

Key takeaways

• A resignation may amount to a dismissal under the Fair Work Act 2009 (Cth) (the FW Act) for the purposes of an unfair dismissal application where an employee is forced to resign because of the employer's conduct.
• Employers should promptly and clearly communicate the outcome of workplace investigations, and provide meaningful support to complainants, even where allegations are unsubstantiated.

Background

The complainant worked part-time at an airport services company. On 9 March 2025, she reported being sexually harassed by a male colleague who made repeated comments about her clothing and physical appearance. The employer commenced an internal investigation shortly after. On 21 March 2025, the employer notified the subject of the complaint (the male colleague) that the allegations could not be substantiated. However, the complainant was only verbally informed of the investigation outcome on 10 April 2025. The complainant was also required to resume duties alongside the male employee against whom she had made a complaint, which she was concerned about and raised with her employer. The complainant subsequently received a letter from her employer on 28 April 2025 which contained investigation findings which were inconsistent with the verbal communication on 10 April. Further, the concerns she raised in relation to her working arrangements with the male colleague remained unaddressed. The complainant subsequently resigned two days later.

Decision

In May 2025, the complainant commenced an unfair dismissal application in the FWC alleging she was forced to resign due to her employer's conduct in handling the investigation. Although after the investigation the employer accommodated the employee's requests for personal leave, conducted welfare checks and later offered alternative working arrangements, the FWC was satisfied that the termination of the complainant's employment was the probable result of the employer's conduct, and was therefore a forced resignation. Consequently, the complainant had been 'dismissed' for the purposes of the unfair dismissal application.

The FWC observed that while the employer took some reasonable steps to respond to the allegations of sexual harassment, the investigation process was deficient, including:

• Delay: the employer's delay in providing the outcome to the complainant after repeated requests, in circumstances where the male employee had already received a written outcome weeks earlier, was described by the FWC as 'unacceptable' and conduct that would objectively 'give rise to the plausible perception that the employee was not valued by the employer she works for'.
• Failure to address concerns: despite the employer's large human resources and industrial relations capabilities, the employer failed to substantively address the complainant's concerns about having to work alongside the male employee. While the employer eventually offered some alternative working arrangements to the complainant, the FWC observed all options unreasonably involved a compromise on the part of the complainant.
• Inconsistent communication of investigation findings: the written outcome letter contained findings that were inconsistent with what had previously been verbally communicated to the complainant, causing the complainant to lose trust in the process and her employer.

In these circumstances, the FWC found the employer's conduct was 'sufficiently egregious' to leave the complainant with no real choice but to resign. The dismissal was found to be unfair and the complainant was awarded $36,468.

Flexible work arrangement upheld despite inconsistency with enterprise agreement

 By: Tarsha Gavin and Leila Zraika  

Understanding the grounds for refusing flexible working arrangement requests

The Full Bench of the Fair Work Commission (FWC) has considered an employer's refusal to grant a flexible working arrangement requested by an employee under the Fair Work Act 2009 (Cth) (FW Act) in circumstances where the proposed arrangement would have been inconsistent with rostering provisions in an applicable enterprise agreement.³

Key takeaway

• Relying on inconsistency with the terms of an enterprise agreement may not constitute reasonable business grounds to refuse an employee's request for a flexible working arrangement.

The decision

An employee of Paper Australia Pty Ltd (Paper Australia), Mr May, requested the formalisation of his previous long standing informal flexible working arrangement which varied his start and finish times to accommodate his parental responsibilities. Paper Australia rejected Mr May's request on the basis that the arrangement would be inconsistent with the rostering provisions in an applicable enterprise agreement, and so exposed Paper Australia to a potential penalty for breach of the agreement.

Mr May applied to the FWC to resolve the dispute. At first instance, the FWC decided that non-compliance with the terms of an enterprise agreement did not constitute a reasonable business ground to refuse Mr May's request for a flexible working arrangement. The FWC ordered Paper Australia to grant Mr May's request.

Paper Australia appealed against this decision and maintained its argument that the risk of civil penalty for breaching the terms of an enterprise agreement constitutes reasonable business grounds for refusing flexible working requests by employees.

The Full Bench of the FWC rejected Paper Australia's argument, and upheld the decision made at first instance. In doing so, the Full Bench said that:

• The right to request a flexible working arrangement is one of the National Employment Standards (NES), and an employer can only refuse this request on reasonable business grounds. A term of an enterprise agreement cannot displace this NES. The rostering arrangement in the enterprise agreement could not restrict Mr May's ability to make a flexible working request, as that would result in the enterprise agreement limiting Mr May's minimum entitlement under the NES.
• The reasonable business grounds exception to refuse an employee's flexible working request should be considered with respect to the operational consequences to the business if the employee's request was approved. In this case, practical difficulties such as cost issues, inability to reorganise staff, impacts on efficiency, and rostering issues, may constitute reasonable business grounds to refuse Mr May's flexible working request. However, mere inconsistency with the rostering arrangement in the enterprise agreement does not constitute satisfactory reasonable business ground.