HR Compliance in Australia: Priorities for business leaders

As a business leader managing HR along with everything else, you already know that HR compliance matters. But it’s harder to know where to focus when the rules keep shifting, your to-do list keeps growing and the stakes are high.

There’s often a gap between knowing compliance is a priority and feeling confident that it’s covered.

We hear this often, so we’ve put together this guide to help you understand the main HR compliance priorities. It’s not an HR audit or tailored advice for your business (but please do reach out if you’d like help with that). Instead, it’s a practical look at each area and a general way to approach it.

Payroll and superannuation

Payroll is where most HR compliance exposure sits. The complexity of enterprise agreements, legislation, modern awards, penalty rates and leave entitlements means underpayment often happens by accident, usually because of manual spreadsheets and outdated systems. It’s one of the most common challenges we see Australian SMEs get caught out by. And the introduction of Payday Super from 1 July 2026 adds another pressure point for businesses, at least in the short term.

Payday Super

Previously, employers could pay super contributions quarterly. From 1 July 2026, Payday Super rules mean that employers must pay super with each pay run, and funds must hit your employee’s super account within seven business days of payday, unless an extended timeframe applies such as for new employees.

This is a big change for many businesses to adjust to operationally and from a cash flow perspective. 

Make sure you’re across:

• New calculation method: The current Ordinary Time Earnings (OTE) framework is being replaced by Qualifying Earnings – a broader base that bundles OTE, salary sacrifice and other amounts together for calculating the 12% super guarantee.
• Penalties: If a payment misses the seven-day window, penalties are 25% or 50% of the unpaid super guarantee charge (SGC), depending on any prior penalties.

How to approach Payday Super

Talk to your accountant or bookkeeper and model the cash flow impact of paying super every pay cycle. If you’re still running payroll manually, this is a good catalyst to look at upgrading to a system that handles the new requirements automatically. And beyond just meeting the deadline, it’s worth using this as a prompt to review your broader payroll setup – whether your systems, award interpretations and processes are fit for purpose, or just getting by.

Contractor classification

This is one of the most common HR compliance risks we see when working with clients on workforce structuring. The rules about who is a contractor and who is an employee have shifted significantly and many leaders aren’t fully across the changes.

The Closing Loopholes amendments to the Fair Work Act mean, among other changes, that the employment relationship needs to be assessed based on the real substance and practical reality of how the arrangement actually works, not just what’s written in a contract.

The consequences of getting this wrong can be significant, with back-payment liabilities covering:

• Superannuation
• Leave entitlements
• Payroll tax
• Workers’ compensation premiums

The defence for sham contracting has also been tightened. It’s no longer enough to say you didn’t know. You need to be able to show that your belief about the arrangement was objectively reasonable.

There is a narrow opt-out pathway for genuinely specialised, high-income contractors earning above the Contractor High Income Threshold (which changes each year). But for most small business contractor arrangements, the practical reality test applies.

How to approach this

Review each contractor arrangement and ask yourself: does this person set their own hours, use their own tools, and genuinely run their own business? Or do they look and operate more like an employee? If you’re not sure, it’s worth getting professional advice to clarify where you stand. Beyond the compliance check, this is also a good opportunity to think more broadly about how your workforce is structured – whether your mix of employment types still reflects how your business actually operates and the key people you rely on.

Employment structures: Casuals, fixed-term contracts and after-hours contact

Growing businesses often build their teams with a mix of casuals and contractors. The Closing Loopholes reforms mentioned above also affected this.

Casual employment

The definition of a casual employee depends on the practical reality of the arrangement – how the role actually works day-to-day – not just what the contract says. If someone works regular, predictable hours and is fully integrated into your team, a contract calling them “casual” might not be enough. The process for moving from casual to permanent has also changed:

• Employers no longer need to proactively offer conversion
• Employees can now initiate the request (known as the “employee choice pathway”) after six months of employment, or twelve months for small businesses
• When a request is lodged, you need a compliant response process in place

Fixed-term contracts

Rolling fixed-term contracts are capped at two years in aggregate, including any renewals. Many of the sector-specific exceptions that previously allowed longer terms have expired or will soon.

Right to disconnect

The Right to Disconnect gives eligible employees the right to refuse work-related contact outside their standard hours, provided the refusal is reasonable. “Reasonable” depends on context: the nature of the contact, the employee’s role, their compensation, and whether they’re paid to be on-call.

For SMEs, this isn’t about making your business unworkable. It’s about being intentional about when and why you contact your team outside of hours, and recognising that sustainable performance requires genuine downtime. If you regularly need people available after hours, build that into the role design and compensation. Don’t leave it as an unspoken expectation.

Right to work from home

Since the COVID-19 pandemic, working from home has become something of an expectation and a norm for many organisations, albeit to varying degrees.

Now, there is also a legislated right to this in Victoria. From 1 September 2026, all Victorians who can work from home, have the right to do so for two days per week. This applies to regular casual and part-time workers as well as full-time employees. Workplaces with fewer than 15 employees have until 1 July 2027 to comply.

On the horizon: Non-compete reform

The Australian Government has flagged reforms that would ban non-compete clauses for low-income and middle-income workers by 2027, alongside bans on no-poach and wage-fixing agreements. If your retention strategy relies on restrictive covenants rather than a workplace people genuinely want to be part of, now is a good time to take steps to change that.

How to approach this

Review your casual and fixed-term arrangements against the latest definitions, and make sure your contracts and response processes are current. But also think about what these changes are pointing to: a shift toward more intentional, transparent employment relationships. Getting ahead of that shift, rather than reacting to it, tends to produce better outcomes for businesses and their teams.

Psychosocial safety

Under Australian work health and safety law, psychological health is now treated with the same seriousness as physical safety. Psychosocial safety is a core part of HR compliance in Australia, and the expectations of employers have moved well beyond offering an employee assistance program (EAP).

Victoria’s Occupational Health and Safety (Psychological Health) Regulations 2025 set the national benchmark. But regardless of which state or territory you’re based in, employers must proactively manage psychosocial risks to employees.

The definition of psychosocial hazards is broader than you might expect. It includes:

• Consistently high or low job demands
• Unclear role expectations
• Poor change management
• Inadequate recognition
• Environmental factors like noise, isolation or poor workspace design

The hierarchy of controls

Regulators expect employers to follow a hierarchy of controls – a structured approach to managing risks, starting with the most effective interventions:

• Eliminate the hazard where possible (e.g. redistributing tasks to reduce an unreasonable workload)
• Redesign the work, system or environment to reduce the risk at its source
• Use training and awareness only as a supporting measure, not your primary response

Offering an employee assistance program (EAP) or reinforcing your work, health & safety policies is no longer considered enough. Regulators want to see structural changes first.

How to approach this

This is one area where getting it right has benefits well beyond compliance. The kinds of structural changes regulators are looking for – clearer role expectations, better workload management, stronger change communication – are the same things that improve retention, performance and culture. Psychosocial safety isn’t just good for our employees, it’s also good for your business too if it strengthens your HR foundations and culture, as intended. 

Leave policies and supporting your people

Your HR policies around leave, particularly in difficult circumstances, say a lot about your culture. And the legislative landscape in Australia is increasingly reflecting that.

The Fair Work Amendment (Baby Priya’s) Act 2025 is an example. It ensures that employer-funded paid parental leave can’t be cancelled or refused if an employee’s child is stillborn or dies in infancy, aligning corporate entitlements with the government-funded scheme so grieving parents aren’t forced to navigate return-to-work conversations or financial stress on top of loss.

While this addresses a specific circumstance, it’s worth using it as a prompt to look at your leave policies more broadly:

• Are your parental leave provisions clearly documented, with government-funded and employer-funded entitlements clearly separated? Note that from 1 July 2026, government-funded Parental Leave Pay increased from 120 days to 130 days. 
• Can your payroll handle longer or more flexible periods of concurrent leave?
• How does your business support people through other significant life events, such as bereavement, family violence or serious illness?

When your team sees how you treat a colleague during a difficult time, it shapes how they feel about working for you. That kind of trust is hard to build and easy to lose. And for smaller businesses, it’s one of your strongest retention tools. Getting your leave policies right isn’t just about compliance, it’s cultural too.

Technology and expertise: Getting the balance right

If your HR operations rely on spreadsheets, documents and fragmented tools, it’s worth taking a look at what that could cost you. Manual payroll calculations are a common cause of underpayment errors that lead to ATO penalties. And in the current economic climate, a preventable HR compliance issue is likely the last thing your business needs. 

Technology has a role to play. The volume of data processing now required for Payday Super, Single Touch Payroll reporting and award interpretation is often beyond what manual processes can reliably handle.

However, technology on its own doesn’t solve compliance. It’s only as good as the foundations beneath it – the HR policies, processes, role clarity and expertise that tell the system what to do. We’ve worked with plenty of businesses that invested in great software but still had gaps, because no one was asking the right questions about what the system needed to support.

The businesses that get this right tend to take a layered approach:

• Foundations first: your policies, contracts and compliance obligations need to be understood before you automate them.
• Intentional tool choice: not the most feature-rich platform, but the one that solves your specific needs and is genuinely usable for your team.
• Clear ownership: someone in the business needs to be accountable for keeping the system current and making sure it’s used as intended.
• Security conscious: considering confidential data handling and employee privacy when choosing tools and systems around them. 
• Use expertise when you need it: whether that’s an HR consultant, an employment lawyer or a payroll specialist, the human judgment layer is what catches the things a system can’t.

HR tech doesn’t work with a set-and-forget mindset. The goal is to pair smart systems with real expertise, so your compliance foundations are solid and your team can focus on business-building work.

Where to start: HR compliance check-in

You don’t need to tackle everything at once. When we work with clients on HR compliance, we usually start with a focused HR audit – understanding where the biggest gaps are and then working through them methodically. Here’s a starting point:

• Payroll and super: Are you complying with Payday Super (from 1 July 2026)? Have you modelled the cash flow impact of this?
• Contractor arrangements: Has the practical reality of each engagement been reviewed against the latest statutory definition?
• Employment structures: Are your casual and fixed-term arrangements compliant with the Closing Loopholes reforms?
• Psychosocial safety: Do you have a documented risk assessment, and are you taking steps to address it?
• Leave policies: When did you last review your parental leave provisions and other leave entitlements?
• Systems and processes: Are your HR processes still largely manual? What compliance risks does that create?

You don’t need perfect answers to all of these. But you do need to know where you stand, and have a plan to address the gaps.

If you’re rethinking how your business approaches HR more broadly, our article on making the shift from old HR to new HR is a good companion read.

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If you're sitting with that nagging feeling that the People side of your business needs help, you’re probably right. Getting expert support doesn't have to mean huge budgets or complexity; it means finding someone who can meet you where you are and help you get where you need to go.

At We Are Charlotte, we’ve worked with more than 100 Australian businesses, supporting leaders to get the People side of things right and unlock the growth that enables. If you’d like to talk to our team about what that might look like for you, please get in touch. We’re always happy to listen and point you in the right direction.

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Thank you to Markus Winkler on Pexels for the image.