2025 has been a transformative year in Australian employment law, marked by significant legislative reforms, landmark court decisions, and emerging workplace trends. From flexible work arrangements to criminal liability for wage underpayment, these changes carry profound implications for employers.
This article provides a comprehensive wrap-up of the year’s most critical developments and offers practical insights for navigating the evolving employment landscape.
Flexible workplace reforms
Flexible working arrangements have dominated headlines, particularly following the landmark decision in Karlene Chandler v Westpac Banking Corporation [2025] FWC 3115. In this case, the Fair Work Commission held that Westpac breached its obligations under section 65B of the Fair Work Act 2009 (Cth) by failing to genuinely consult with Ms Chandler before rejecting her request to work remotely due to care responsibilities. Ms Chandler had a long history of working remotely from Westpac offices closer to her home.
Coming from parental leave, she made her informal request which was initially approved as a temporary measure before she was directed to attend Westpac’s Kogarah office. Ms Chandler subsequently made a formal request under s 65 of the Act to work from the offices closer to home. However, the request was refused with no reason initially provided and, on her seeking clarification, Westpac cited the portion of its hybrid work policy that allowed it discretion while also asserting that 'working from home is no substitution for child care'.
The Commission sided with Ms Chandler and ordered Westpac to grant her flexible work request, signalling a strong stance on employer engagement obligations. The Commission found that Westpac’s refusal did not comply with legislative requirements and that the refusal was not based on demonstrable reasonable business grounds.
In 2025, 306 applications were lodged regarding disputes over flexible work arrangements in the 2024/25 reporting year. This figure is expected to rise as legislative changes, including the proposed Fair Work Amendment (Right to Work from Home) Bill 2025, introduce statutory rights for employees to work from home up to two days per week. The Bill would give employees a statutory right to work from home for up to two days per week, with employers only able to refuse if remote work would make the inherent requirements of the role impractical or impossible. Introduced in November 2025, the Bill is currently before a Senate inquiry, with a report due in March 2026.
Criminal penalties for wage underpayment
On 1 January 2025, amendments to the Fair Work Act 2009 (Cth) introduced criminal liability for companies who intentionally underpay an employee wages or entitlements. Under the amendments, an employer may be liable for an offence if:
- they are required to pay an amount to or on behalf of, or for the benefit of, an employee under the Fair Work Act or industrial instrument
- the employer engages in conduct, and
- that conduct results in a failure to pay the required amount to, on behalf of, or for the benefit of the employee in full on or before the day when the required amount is due for payment.
The Fair Work Ombudsman has been empowered to investigate suspected criminal underpayment and refer cases for prosecution. This reform underscores the need for rigorous payroll compliance and proactive auditing. To mitigate the risk, employers should consider seeking advice and conducting a review of staff wages by reference to the relevant industrial instruments to identify any areas of exposure.
Protecting penalty and overtime rates
In August 2025, the Australian parliament passed the Fair Work Amendment (Protecting Penalty and Overtime Rates) Bill 2025. This amendment introduced two guiding principles to safeguard penalty and overtime entitlements under modern awards:
- The rate of pay for penalty rates or overtime that employees are entitled to receive is not reduced, and
- Modern awards do not include substitute or 'rolled up' entitlements in lieu of existing penalty or overtime rates, that would have the effect of reducing the additional remuneration employees would otherwise have received.
These changes are limited to amendments to modern award provision and will likely introduce greater rigidity into the structure and make up of award entitlements. Notably, these amendments do not affect the ability for employers and employees to enter into flexible working arrangements, nor do they affect enterprise bargaining more broadly.
Court decisions shaping employer obligations
There have been significant rulings which have clarified employer responsibilities in 2025.
Helensburgh Coal Pty Ltd v Bartley [2025] HCA 29
In Helensburgh Coal Pty Ltd v Bartley, the High Court clarified the scope of genuine redundancies. The case provides important guidance on how employers must approach redundancy decisions and arguably places more onerous obligations on what must be considered particularly when it comes to redeployment. Read our case note detailing this decision here: High Court clarifies scope of genuine redundancy under the Fair Work Act.
Fair Work Ombudsman v Woolworths Group Limited & Ors [2025] FCA 1092
In Fair Work Ombudsman v Woolworths Group Limited & Ors, the Federal Court clarified key considerations for employers regarding off-set clauses and annualised salaries under industrial instruments. The ruling also reinforces employer obligations to maintain employee records in line with the Fair Work Act and Regulations. Read our case note detailing this decision here: Supermarket giants vs Fair Work Ombudsman: Employer takeaways from landmark Federal Court decision.
Workplace discrimination
There has been a rise in discrimination cases in both the Fair Work Commission and Australian Human Rights Commission in 2025. This includes discrimination in emerging areas, including a case involving pronoun misuse where an employee had been dismissed after repeated misgendering of a colleague despite being told several times how to address them. Whilst that case was brought to the Fair Work Commission, the matter was settled confidentially.
This case serves as an important reminder for employers to prioritise having inclusive policies in place and facilitate regular training for employees on inclusivity in the workplace in order to mitigate risk.
Changes to general protections processes
There has been a general increase in general protections claims lodged this year, with the Fair Work Commission reporting a 27% increase above the five-year average.
In our experience, the claims are often made by self-represented Applicants where they have been unable to make an unfair dismissal claim due to jurisdictional issues or where the Applicant seeks to claim more than the unfair dismissal compensation cap.
In response, the Commission has implemented a number of changes designed to improve the efficiency of dealing with general protections claims. This includes:
- updating the application and response forms to require more detailed information
- allowing for early determination of representation for conciliation conferences to be made on the papers
- an early Member-only determination of whether applications lodged outside the 21 day time limit, and
- a streamlined conciliation conference process focused on early resolution and assessing settlement prospects.
The streamlined process requires a proactive approach in managing dismissals as the timeframes imposed for responses are brief and increasingly rigid. Employers should consider notifying their insurers of circumstances when undertaking a disciplinary process to enable a quicker notification process should a claim arise. In defending claims, it will be increasingly necessary for employers and insureds to work collaboratively with legal representation and insurers to prepare for and attend conferences in circumstances where the Commission may not grant leave for representation to act at conferences.
Implications for you
2025 has reinforced the need for employers to stay ahead of legislative and judicial developments. As always, we recommend an approach that places prevention as a priority. For employers, key priorities to keep in mind going into 2026 include:
- Compliance is non-negotiable: With criminal liability now attached to wage underpayment, organisations must prioritise payroll accuracy and robust governance frameworks.
- Flexibility is becoming less flexible: Anticipate legislative changes that will either entrench remote work entitlements or place more onerous obligations on employers when considering such requests, therefore necessitating updating of policies and systems to accommodate these shifts. Employers should consider ongoing training for decision makers regarding what may be relied on in making decisions and how they are to be communicated.
- Workplace culture: Cases on discrimination and policy enforcement underscore that legal compliance alone is not enough, and that fostering an inclusive and well-informed workforce is critical.
- Prepare for complexity: With new penalty rate protections and streamlined general protections procedures, employers must stay alert and adapt quickly to maintain compliance. Looking ahead to 2026, employers should view these changes not merely as compliance challenges but as opportunities to strengthen organisational resilience and employee engagement.
