As the new financial year gets underway, finance industry employers across Australia must navigate a shifting employment law landscape. From changes to minimum entitlements to increased scrutiny of contractor and offshore labour arrangements, staying compliant means staying informed. Here’s what you need to know for FY25/26.
New rules for contactor arrangements
The use of independent contractors remains common in the financial services sector. However employers now need to be extra vigilant about the types of contractors they’re engaging.
In 2024, the Government amended the Fair Work Act 2009 (Cth) to change how the courts look at and distinguish employment relationships from contractor engagements. Now courts must consider the real substance and genuine nature of the relationship to determine if the relationship is a true independent contractor arrangement.
This can result in circumstances where, at the outset of the arrangement, both the worker and the employer are content to characterise the relationship as a contractor engagement. However, if the relationship breaks down, the worker can subsequently make a claim arguing that they should have been paid employment entitlements throughout the engagement. The parties’ intention at the outset of the agreement is of little relevance in such claims.
This can result in unexpected outcomes for employers. For example, in June 2025 a Queensland-based law firm lost an unfair dismissal claim brought by a worker engaged in the Philippines. The worker was engaged by a written contract that described the relationship as an independent contractor providing services to the law firm.
The Fair Work Commission (FWC) disagreed and determined that worker was an employee of the law firm, despite the attempt to characterise the relationship otherwise and the fact that the worker was based in the Philippines working completely remotely. The law firm was ultimately ordered to pay the employee $10,800 as compensation for unfair dismissal.
To mitigate risks, businesses should ensure independent contractor arrangements reflect genuine independence, avoid exercising undue control over their work, and regularly review contracts and working practices to remain compliant with evolving laws. Non-compliance can lead to liabilities for superannuation, leave entitlements, and even unfair dismissal claims.
National Minimum Wage rate increase
As of 1 July 2025, the National Minimum Wage and all modern award minimum wage rates increased by 3.75%.
While the review directly impacts the wage rates in all modern awards, there is a flow-on impact for all employment instruments. Employers will need to ensure that all modern award covered employees are paid the revised minimum wage, even where an enterprise agreement applies.
Employers should review their records to ensure that employees are paid correctly, particularly ensuring that annualised wage arrangements are still sufficient to compensate for these increased minimum rates. By taking a proactive approach, employers will be well-positioned to minimise the risk of underpayments from this increase.
Other key employment changes
Now is a good time to review all employment contracts and payroll systems to ensure consistency with the following changes that came into effect on 1 July 2025:
- The minimum weekly wage has increased to $948
- The minimum hourly rate has increased to $24.95 for permanent employees and $31.19 (inclusive of the 25% casual loading) for casual employees
- The superannuation guarantee rate has increased from 11.5% to 12%
- The maximum super contributions base has decreased to $62,500 from $65,070 per quarter
- The employee high-income threshold has increased from $175,000 to $183,100
- The independent contractor high-income threshold has increased from $175,000 to $183,100
- The compensation cap for unfair dismissal claims is set at $91,550.
Next steps
Employers and HR teams in the finance industry should take a proactive approach to managing their employment practices. Now is the ideal time to reassess existing employment contracts, upgrade payroll systems, and confirm compliance with the latest regulations.
For further guidance and support in navigating these changes, please reach out to the Workplace and Employment team at Hamilton Locke.
