2025 is around the corner, and so too are some key legislative changes that small businesses should know about. Here are some changes coming up in the year ahead.
1. Intentionally underpaying employees will become a federal crime
From 1 January 2025, intentional underpayment of wages or entitlements can be a criminal offense. Small-business employers will be subject to this legislative change.
ISB has previously reported on small businesses accidentally underpaying workers due to misunderstandings. We heard from small businesses and experts alike that the complex IR system can lead to mistaken underpayments.
In response to these concerns from the community, the Fair Work Ombudsman has introduced a Voluntary Small Business Wage Compliance Code to help small businesses avoid criminal prosecution. The Code includes steps like “working out correct pay rates” and “seeking information from a reliable source about paying employee entitlement correctly”. If these steps are satisfied, then it’s unlikely that the employer will be found to have intentionally underpaid employees.
2. Tax and BAS agents will be under stricter ethical and operational requirements
Tax and BAS agents will have new obligations next year. These will apply from 1 July 2025 for tax practitioners with 100 or less employees, and 1 January 2025 for all other tax practitioners.
For small businesses, this will mean that your tax agents will be under stricter ethical and operational requirements. According to the Tax Practitioners Board, these include keeping proper client records, having quality management systems in place, and keeping clients informed.
3. “Introductory” classifications can only apply to employees for a limited time, under some awards
Some awards will have new rules for introductory classifications early next year. These classifications can now only apply for a limited time.
If you’re unfamiliar with introductory classifications, these refer to the first stage of a job, i.e. in an induction or training period. They often allow an employer to pay an employee below minimum wage, under the assumption that they are still gaining the basic skills and experience required for the job. The new laws will mean that employees can only be in this introductory stage, with below-minimum-wage entitlements allowed, for a limited period.
The new time limit on introductory classifications varies between affected awards, but it will be applicable for a maximum of six months.
A list of affected awards is available here. For all affected awards bar the Horticulture Award, the changes will take effect on 1 January 2025.
4. The ‘right to disconnect’ will apply to small businesses
From 26 August 2025, small-business employees will have the right to refuse work-related contact outside of regular business hours.
The laws already apply to businesses with over 15 employees, but are reportedly not having much of an impact. According to a survey by Indeed, 79 per cent of employees are still fearful of disconnecting from work-related messages after hours.
Additionally, many small businesses say they rely on flexible hours and integrated work schedules – meaning they have no set working hours. The legislation may therefore not be relevant to their working lives either.
Recent changes to know
A couple of key pieces of legislation have been passed in these last few weeks of 2024. These include a crackdown on unfair trading practices, a new banking code of practice, and new legislation making the reporting of cybersecurity incidents mandatory.
