With the new financial year fast approaching, Australian employers are preparing for significant legislative changes that will take effect from 1 July 2025. From increases in paid parental leave and superannuation to potential shifts in the minimum wage, the employment landscape is evolving — and it’s vital for businesses to stay ahead.
Below, we outline the key changes you need to be aware of and what they mean for your workplace obligations.
Government Paid Parental Leave Increase
In a welcome move for working families, the Government has announced that from 1 July 2025, the Paid Parental Leave (PPL) scheme will increase from 22 to 24 weeks. This extension allows new parents more time at home during those critical early months of a child’s life, supporting both family wellbeing and workforce participation over the longer term.
The expansion of the PPL scheme is part of a broader effort to modernise Australia’s approach to family-friendly policies and close gender equity gaps. For employers, while the PPL scheme is government-funded, it is important to ensure internal policies and documentation reflect these changes, especially if you provide top-up parental leave entitlements.
Superannuation Guarantee Increase to 12%
As part of the long-term plan to boost retirement savings, the Superannuation Guarantee (SG) will increase to 12% from 1 July 2025. This marks the final scheduled increase under the Government’s commitment to raise the SG rate from 9.5% to 12% over a phased timeline.
Though this change is relatively modest (an increase from 11.5%), employers are reminded that accurate and timely contributions are critical to ensure compliance with the law. Payroll systems and employment contracts should be updated accordingly to reflect the new SG rate.
Failure to correctly apply the SG rate could result in penalties or back-pay obligations, so proactive planning is advised.
Superannuation on Government Paid Parental Leave
Arguably the most notable reform is the introduction of superannuation contributions on Government-funded Paid Parental Leave.
Currently, no superannuation is paid on PPL payments made by the Government, disproportionately impacting the retirement savings of women and primary caregivers. This is set to change from 1 July 2025, with the Australian Government committing to pay superannuation on PPL payments at the rate of 12%.
How It Will Work
- Who pays? The Government, not the employer, will be responsible for the superannuation contributions.
- Who administers the payments? Services Australia will calculate and remit super directly to the employee’s nominated super fund.
- What does it cover? The 12% contribution will be based on the total Government PPL payment the employee receives.
This measure is specifically designed to reduce the gender superannuation gap while minimising administrative burden on businesses.
However, if your business offers additional employer-funded parental leave under your own internal policy or through an enterprise agreement, you will still be required to pay superannuation on those employer-funded amounts, in line with your usual obligations.
Employers are encouraged to review their internal parental leave policies and consider whether their current approach aligns with these evolving standards of support and equity.
Annual Wage Review 2025
In addition to changes already confirmed, all eyes will be on the Fair Work Commission in June 2025, when it announces the outcome of the Annual Wage Review. This review determines adjustments to the national minimum wage and modern award rates, based on input from government bodies, unions, business groups, and economic indicators such as inflation and employment data.
Any changes will come into effect from the first full pay period on or after 1 July 2025.
What Should Employers Do?
- Monitor the announcement from the Fair Work Commission in June.
- Review employee pay rates to ensure compliance.
- Update payroll systems promptly to apply the new rates.
- Communicate changes to staff where relevant.
Non-compliance with minimum wage obligations can lead to significant penalties and reputational damage. It’s crucial for employers to act swiftly once the decision is made.
Final Thoughts
The workplace relations landscape in Australia is constantly evolving, and 1 July 2025 represents a major milestone with reforms aimed at enhancing equity, fairness, and financial security for employees. For employers, these changes are not just administrative updates — they reflect broader societal shifts and expectations around how we support workers and families.
Whether it’s ensuring your payroll system reflects the correct superannuation rate, understanding your obligations around paid parental leave, or planning for minimum wage changes, proactive preparation is key.
Need Assistance Navigating These Changes?
At NB Employment Law, we specialise in helping employers understand and comply with Australia’s complex workplace laws. From reviewing employment contracts and award coverage to updating policies and supporting payroll compliance, our team is here to provide clear, practical legal advice tailored to your business.