Painstakingly, January 1 remains a common start date for new legislation in Australia. For most individuals and businesses, this date falls within the tail end of the silly season, and staffing and commercial activity will be at a low.
And yet, for the government, January 1 represents a strong reference point as government agencies and departments use calendar year-based planning cycles, as well as it being a date that’s hard to lose track of for those who will be affected by the legislation.This new year, the legislation coming into effect does not place a particularly strong administrative burden, but it is important for businesses to keep ahead of the changes.
Here are the three most important ones for businesses across Australia
Table of Contents
New Award provisions regarding introductory classifications
From January 1, modern awards that previously allowed payments below the National Minimum Wage for new employees will be modified. These modifications reflect a broader policy shift in Australian industrial relations law towards ensuring the National Minimum Wage functions as a genuine safety net.
The ‘introductory’ classifications, which are termed “Level 1”, “introductory,” or “C14”, only cover induction and basic training periods. These will now be limited to six months maximum, addressing concerns that some employers were using these provisions to artificially suppress wages beyond reasonable training periods.
This does not mean that employees may only move to the next pay level following six months; the typical rules for progression will continue to apply on top of this maximum.
Additionally, new pay rates for certain award levels will take effect from January 1. The changes affect various modern awards that historically permitted below-minimum wage rates for new employees during training or induction periods. This reform aligns with recent Fair Work Commission decisions emphasising the importance of maintaining real wage levels for entry-level workers.
The Fair Work Ombudsman’s Pay and Conditions Tool provides resources for employers and employees to review these upcoming changes, ensuring clear guidance on obligations consistent with the Commission’s emphasis on making award compliance more straightforward and accessible.
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Criminal penalties for underpayment
The criminalisation of underpayment, also referred to as wage theft, from January 1 represents a watershed moment in Australian employment law. This reform follows years of high-profile underpayment scandals involving major retailers, hospitality groups, and other employers across the nation.
Victoria led the charge with its own wage theft laws in 2020, but this federal legislation marks a national approach to the issue.
For individuals (as sole traders or as responsible individuals within a company), the penalties include:
- Up to 10 years imprisonment;
- The greater of three times the underpayment amount and $1.565 million, or
- $1.565 million if the underpayment value cannot be determined by the courts.
For companies, the penalties will be:
- The greater of three times the underpayment amount and $7.825 million, or
- $7.825 million if the underpayment value cannot be determined by the courts.
The penalties are notably severe, reflecting Parliament’s intention to treat systematic wage theft as seriously as other forms of corporate fraud. The individual penalties, including potential imprisonment for up to 10 years, mirror those applicable to other serious white-collar crimes, bringing wage theft in line with offences under the Corporations Act 2001 (Cth).
Small businesses will have protection from criminal prosecution if they follow the new Voluntary Small Business Wage Compliance Code.
This represents a more nuanced approach to enforcement, acknowledging the different capabilities and resources of smaller enterprises. The Code is expected to provide best practice guidance for payroll management and common error prevention. However, the Code has not yet been released.
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Reforms to tax and BAS agent obligations
These reforms represent the most significant overhaul of tax agent regulation since the Tax Agent Services Act 2009 (Cth). Starting January 1, registered tax and BAS agents face new obligations, except for those with 100 or fewer employees, who have until July 1, 2025, to comply.
These changes, introduced by Assistant Treasurer Stephen Jones in response to the PwC confidentiality breach scandal, exposed vulnerabilities in the existing regulatory framework and added new ethical requirements beyond the existing Code of Professional Conduct.
The new rules cover:
- false or misleading statements made by clients;
- keeping clients informed of matters that may influence their decision to use a tax agent; and
- record-keeping duties.
The staggered implementation, with smaller practices given until July 2025 to comply, reflects a practical approach to the regulatory burden. This mirrors similar transitional arrangements seen in other professional services reforms, such as the financial adviser professional standards reforms.
The Tax Practitioners Board is currently finalising its guidance materials and has released draft information sheets for tax agents, continuing its educational approach to regulation.
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Stay ahead with Lawpath
While these updates may seem overwhelming, taking proactive steps now can save you time, money, and stress in the long run.
Need more detailed guidance? Our team of expert lawyers and accountants provides advice that is updated regularly to comply with legislative changes. Book a demo to discuss your specific situation and ensure your business is ready for 2025.
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