22 Jul HR LAW NEWSLETTER – JUNE AND JULY 2025

In this joint June and July HR Law Newsletter, we review the various changes across the Australian employment law landscape during this period.  Overall, these changes increase employee rights as well as require employers to remain informed and proactive to comply with these changes.

We also review a case brief which provides guidance and notice for Employers regarding the importance of completing the final payment of relevant entitlements on the date of an employee’s termination, as failure to do so will incur penalties.

National Minimum Wage and Award Wages Increases  

From 1 July 2025, a 3.5% increase took effect on the National Minimum Wage and minimum modern award wages.  The National Minimum Wage applies to employees not covered by a modern award or enterprise agreement.

From the first full pay period starting on or after 1 July 2025, the National Minimum Wage increased by 3.5% to:

• $948.00 per week; or
• $24.95 per hour.

To access the Annual Wage review, click here.

Paid Parental Leave Increases

The Federal Government’s Paid Parental Leave Scheme (“Scheme”) has increased the period of the Scheme from 22 weeks to 24 weeks.  The addition of the two (2) weeks will provide new parents with additional time at home with their adopted or newborn children.  These changes took affect from 1 July 2025.  Employers should review internal Parental Leave policies and processes to ensure compliance and address relevant adjustments required.

High-Income Threshold Increase

The high-income threshold has increased from $175,000.00 to $183,100.00 for FY2025/2026.  Employees who earn above the high-income threshold may be excluded from making an unfair dismissal claim unless they are covered by an award or agreement.
 
Maximum Compensation Unfair Dismissal Claim Threshold Increases

The maximum compensation for unfair dismissal claims has increased from $87,500.00 to $91,550.00 for dismissals occurring on or after 1 July 2025.  This amount is set at half of the high-income threshold.

Non-compete Reforms Imminent

Following the re-election of the Labor Party, the Federal Government’s plans to statutorily ban non-compete clauses for workers earning less than the $175,000.00 high-income threshold (per the Fair Work Act 2009 (Cth)) are likely to be introduced.  These changes were proposed following concerns that non-compete clauses limit worker mobility and wage growth.  While these changes are not expected to take effect until 2027, employers are encouraged to review their employment contracts to consider the effectiveness of these provisions and the likely removal.

Case Brief – Penalties for Employers Late Payment of Termination

Many employers mistakenly believe that an employee’s final pay simply has to be paid within seven (7) days of termination. This belief is commonly held given most modern awards and enterprise agreements contain clauses stating wages and other entitlements owing to an employee must be paid by no later than seven (7 days) after termination.

In Jewell v Magnium Australia Pty Ltd (No 2) [2025] FedCFamC2G, the Federal Circuit and Family Court of Australia has clarified that this is not the case, and that there is a clear obligation pursuant to the Fair Work Act 2009 (Cth) (“Fair Work Act”) for employers to pay certain amounts on the final day of employment.  While this case also considered a general protections claim, this case brief focuses on the facts relating to late employment entitlements (the employee was unsuccessful in the general protections claim). 

FACTS

• The Chief Technology Officer (“Employee”) of Magnium Australia Pty Ltd (“Employer”) was dismissed on 21 April 2023.

• The Employer paid the Employee for accrued and unused annual leave and made a payment in lieu of notice 12 days after the Employee’s termination date (as per the usual pay cycle).

• There was some dispute between the Employer and the Employee as to whether the Employee was entitled to redundancy pay with the Employer originally holding the view that they were a “small business employer”, as such no amount was payable.  This was resolved and the Employer paid the Employee their redundancy entitlements approximately three (3) months after their termination date.

• Following the dismissal, the Employee commenced a general protections claim and a claim for non-payment of relevant accrued entitlements against the former Employer.  (As noted above, the employee was unsuccessful in the general protections claim).

• By the time of the trial, it was accepted that all payments had been made (albeit delayed) to the Employee.  Therefore, the issue for consideration was not non-payment, but late payment of entitlements.

ISSUE

Did the Employer breach the Fair Work Act by late payment of the Employee’s termination entitlements?

FINDING

The Court found that the Employer engaged in three contraventions of section 44 of the Fair Work Act by failing to pay the Employee in respect of their accrued annual leave, payment in lieu of notice and redundancy pay by the last day of their employment.

For each separate contravention, Judge Champion imposed 7.5% of the maximum penalty, ultimately imposing a total penalty of $18,600.00.  In imposing this penalty, Judge Champion took into account the Employer’s early admission of wrongdoing.

This decision confirmed that under the Fair Work Act:

• Where a payment in lieu of notice is being made, it must be paid by no later than the final day of employment.  (As a separate, albeit related, issue we note that earlier cases confirm that termination does not take effect until the payment is made. As such if the payment in lieu of notice is not paid by the final day of employment, the employment will remain ongoing until it is paid).

• Payment in respect of accrued annual leave entitlements and redundancy entitlements (where applicable) must be paid by no later than the final day of employment.

• Nothing in any modern award, enterprise agreement or employment contract can override the above statutory requirements.

LESSONS

This Case is an important reminder that termination payments must be processed promptly and with priority.

Whilst arguably a termination payment that consists solely of payment in respect of outstanding “wages” can be made within 7 days of termination, where an employee is owed accrued annual leave entitlements, payment in lieu of notice and/or redundancy pay, those amounts must be paid by no later than the last day of employment.  This is the case regardless of whether the employee’s employment ends by way of resignation or termination by the employer.

To avoid inadvertent breaches of the Fair Work Act and exposure to claims and penalties, we recommend businesses adjust their processes to ensure that an employee’s final pay is paid on the last day of their employment (in all situations).

Furthermore, businesses are reminded that an employer must be notified in writing of their termination.  Verbal notification is not sufficient and employment will remain ongoing until written notice is provided.

While this decision provides clarity about the current position of termination payments, the practical and operational impact necessitates swift review.  If you require assistance and legal guidance regarding termination payments, please contact us at info@hrlaw.com.au for specialised further legal advice.

To read the case, click here.

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The content of this newsletter is intended to provide a general guide to the subject matter.  Specialist advice should be sought about your specific circumstances.