This past year saw numerous changes to workplace laws and significant case developments. This article provides a summary of the 2025 changes and an overview of some key changes to have on your radar for 2026.

Employment contracts: The future of set-off clauses

In September 2025, the Federal Court of Australia issued a lengthy judgment in the consolidated proceedings brought by the Fair Work Ombudsman against Coles and Woolworths.[1] The Federal Court judgment addressed set-off clauses, record-keeping obligations and written agreements under the Fair Work Act 2009 (Cth) (FW Act) and Fair Work Regulations 2009 (Cth) (FW Regulations) in relation to employees covered by the General Retail Industry Award 2010 and paid annualised salaries.

The case concerned certain common issues to be determined as part of broader class actions against Coles and Woolworths. Those class actions continue and in the judgment, the Court determined the following:

• Set-off: Employers may only apply contractual set-off within each pay period having regard to section 323(1) of the FW Act which requires that employers pay employee entitlements in relation to the performance of work ‘in full’ and ‘at least monthly’. That is, employers can set-off overpayments with underpayments within pay periods subject to appropriate set-off mechanisms being in place.
• Employee records: Both companies breached record-keeping requirements by failing to maintain accessible records of award entitlements (such as loadings, penalty rates, monetary allowances and/or overtime), despite paying annualised salaries. Roster records and clocking data (i.e. an employee clocking in and out from a shift) were deemed insufficient to satisfy the overtime record-keeping obligation pursuant to Regulation 3.34 of the FW Regulations on the basis this data – across two sources – did not constitute a record that was ‘in a form readily accessible to an inspector’.
• Agreements in writing: Written agreements varying award conditions require clear employee consent (for example, varying part-time employees’ regular pattern of work) and the employer bears the onus of proving such an agreement.

We expect the judgment will be appealed. However, in the interim, employers should:

• review salary arrangements for award and enterprise agreement covered employees, compliance systems and policies to ensure payments satisfy entitlements on a pay period basis as the judgment may have broader implications beyond the retail sector
• review record-keeping obligations to ensure rostering, timekeeping and payroll systems can produce data of enlivened award / agreement entitlements by reference to actual hours of work.

For more details on the future of set-off clauses in employment contracts, see our team’s recent article here.

Employment contracts: The future of restraint clauses

In March 2025, the Federal Government announced reforms to worker restraints in the 2025-26 Budget including to ban:

• non-compete clauses for employees earning less than the high-income threshold in the FW Act ($183,100 for the 2025-26 financial year)
• no poach agreements (in the context of competition law whereby two or more businesses agree to refrain from actively recruiting or hiring each other’s workers)
• wage fixing agreements (in the context of competition law involving two or more businesses agreeing to set a cap on wages and employment conditions for their workers).

As part of the consultation process on non-compete clauses and restraints of trade in employment, submissions for feedback on the reforms closed on 5 September 2025 and were published on 31 October 2025. The reforms are expected to take effect from 2027 with consultation continuing to occur alongside drafting of the proposed legislation.

Redundancy obligations – What is “reasonable in all of the circumstances” to be redeployed

In August 2025, the High Court of Australia (High Court) dismissed an appeal from the Full Court of the Federal Court of Australia which considered section 389 of the FW Act.[2]

The key facts of the case are as follows:

• The employees in this proceeding worked at a mine operated by Helensburgh Coal
• Helensburgh Coal restructured its business and consequently dismissed the employees by way of redundancy (however continued to deploy contractors to perform work at the mine)
• The employees applied to the Fair Work Commission (FWC) for remedies for unfair dismissal which was objected to by Helensburgh Coal on the basis that the dismissals were cases of “genuine redundancy” under section 389 of the FW Act
• The FWC ultimately determined that the dismissals were not a case of “genuine redundancy” because, applying section 389(2) of the FW Act, it would have been reasonable in all the circumstances for the employees to be redeployed to perform the work that was being performed by the contractors
• Helensburgh Coal applied to the Full Federal Court of Australia for a judicial review of the FWC decisions which were ultimately dismissed.

Helensburgh Coal’s main argument on its appeal to the High Court was that the FWC was not permitted to inquire into whether an employer could have made changes to its enterprise so as to create or make available a position for an employee who would otherwise have been redundant in undertaking the inquiry as to whether it would have been “reasonable in all the circumstances for a person to be redeployed” within the employer’s enterprise pursuant to under section 389(2) of the FW Act.

The High Court determined that the FWC could inquire:

• into whether it would have been reasonable in all the circumstances for the employees to be redeployed in the employer’s enterprise to perform work that was being performed by the contractors
• whether an employer could have made changes to how it uses its workforce to operate its enterprise so as to create or make available a position for an employee who would otherwise have been redundant.

Payroll Remediation Program Guide released

On 1 May 2025, the Fair Work Ombudsman released the Payroll Remediation Program Guide (Guide). The Guide has been issued to assist employers, and their representatives, to identify and correct underpayments of employee entitlements under the FW Act.

Entitlement to employer funded paid parental leave for stillbirth or death of child

From 7 November 2025, there are additional protections for employer funded paid parental leave under the FW Act as part of the Fair Work Amendment (Baby Priya’s) Act 2025 (Act).

Previously, under the FW Act and the Paid Parental Leave Act 2010 (Cth), an employee remained entitled to unpaid parental leave and government-funded parental leave pay if a child was stillborn or died. However, employer-funded paid parental leave, which is negotiated between employers and employees, was not subject to these requirements.

The Act ensures that, unless expressly agreed otherwise, workers will not lose out on employer-funded paid parental leave if their child is stillborn or dies soon after birth by amending the FW Act. This protection applies where a child is stillborn or dies on or after 7 November 2025.

An employer can only refuse or cancel the paid parental leave because of the stillborn or death if an exception applies or the employee requested for the leave to be cancelled. Exceptions include:

• an express provision for refusal or cancellation of the leave under the terms and conditions of an employee’s employment (because of stillbirth or death of child)
• the employee is expressly not entitled to the leave under the terms and conditions of the employee’s employment because of stillborn or the death of a child
• if the employee is entitled to other leave that expressly addresses stillbirth or the death of a child under the employee’s terms and conditions of employment (disregarding unpaid parental leave and compassionate leave).

Psychosocial legislation in Victoria

On 1 December 2025, Victoria’s new Occupational Health and Safety (Psychological Health) Regulations 2025 (Regulations) will commence after a lengthy consultation and waiting period. The Regulations introduce significant obligations for employers to manage psychosocial hazards in the workplace under the Occupational Health and Safety Act 2004.

Psychosocial hazards are broadly defined to include factors in work design, systems of work, management practices, and workplace interactions that may cause negative psychological responses, creating a risk to health or safety in the working environment. This is set out to include responses that are emotional, behavioural and cognitive.

These regulations recognise psychological health as part of workplace health and require employers, so far as reasonably practicable, to:

• identify psychosocial hazards
• assess associated risks
• eliminate or reduce those risks as far as reasonably practicable
• regularly monitor and review control measures.

Obligations extend to employees, contractors and labour-hire workers.

The Regulations also introduce a modified hierarchy of controls, prioritising elimination and structural changes over reliance on training or information alone.

While earlier drafts proposed mandatory reporting of psychosocial complaints and prevention plans, these requirements have since been removed. However, WorkSafe Victoria has released a template prevention plan to assist employers with risk assessment and record-keeping, which remains as recommended best practice.

These Regulations further emphasise consultation with Health and Safety Representatives and prescribe when employers must review control measures, including after incidents, new information, or employee reports of psychological injury. Further, where a combination of controls is used, it is required that training, instruction or information is not the predominant measure in that combination.

In light of these changes, these Regulations signal a more prescriptive approach required by employers to managing psychosocial risks in Victoria compared to other jurisdictions.

Payday superannuation legislation

From 1 July 2026, under the Treasury Laws Amendment (Payday Superannuation) Bill 2025 and Superannuation Guarantee Charge Amendment Bill 2025 which were passed on 4 November 2025, employers will be required to pay employees’ superannuation at the same time as their salary/wages. This will replace the current requirement to pay superannuation on a quarterly basis.

Following each payday, there will be a 7-calendar day window due date for superannuation contributions to arrive in employees’ superannuation fund. This provides time for the movement of funds through the employers’ payment systems, including clearing houses. Failure to comply with this will make employers liable for the new superannuation guarantee charge.

Other key decisions driving change in 2025

Throughout 2025, our team provided insights on other key decisions and emerging trends shaping workplace law. Below is a summary of those decisions:

[1] Fair Work Ombudsman v Woolworths Group Limited; Fair Work Ombudsman v Coles Supermarkets Australia Pty Ltd; Baker v Woolworths Group Limited; Pabalan v Coles Supermarkets Australia Pty Ltd [2025] FCA 1092

[2] Helensburgh Coal Pty Ltd v Bartley & Ors [2025] HCA 29