AI in HR: Navigating the Shift in Australia and New Zealand

In a major step to protect Australian workers, the federal government criminalised wage theft under the Fair Work Legislation Amendment Act 2023. From 1 January 2025, employers who knowingly underpay employees face penalties including fines up to $7.825 million or three times the amount underpaid. Individuals could also face up to 10 years in prison. This crackdown, driven by the growing concern that wage theft costs workers up to $1.5 billion annually, aims to create a culture of fairness and accountability in Australian workplaces. To explore how these changes are playing out, Colleen Deere, Acting Branch Manager at people2people in Perth, spoke with Antonino Meduri, Principal at AM Law & Partners. Their discussion shed light on what the new laws mean for businesses, the common pitfalls that still occur, and how organisations can proactively ensure compliance. "Employers now face serious criminal penalties for deliberate underpayments" Antonino explained the law's key shift: intentional wage theft is now a criminal offence. This applies to both direct entitlements like wages and leave, and indirect ones such as superannuation. Crucially, the law distinguishes between unintentional errors and knowing breaches. "Criminal conduct doesn’t happen when an employer is careless or even reckless. It happens when they knowingly underpay while being aware of their legal obligation to pay more," Antonino clarified. The legislation introduces four major components: criminalisation of wage theft, significant financial penalties, a self-reporting pathway that may prevent prosecution, and a voluntary code for small businesses. The self-reporting mechanism, in particular, offers a pathway for businesses that uncover underpayments and cooperate with the Fair Work Ombudsman to avoid criminal charges. Common Mistakes That Still Lead to Underpayment Claims While intentional wage theft garners the most attention, Antonino noted that most underpayments stem from avoidable errors rather than malice. He highlighted several frequent mistakes: Misclassifying employees : Many errors begin with incorrect award classification, especially in sectors like hospitality and aged care. "Failing to properly consider the legal obligations under the Fair Work Act can snowball into significant liabilities," Antonino warned. Incorrect penalty rates : Employers sometimes overlook weekend or holiday rates or fail to include casual loading during leave. Assuming salaried employees are always compliant : Even when a salary appears generous, if the employee's entitlements under the award are higher, the employer must make up the difference. Unpaid work : Trials or internships where the worker performs productive tasks must be paid, regardless of how the arrangement is labelled. What Good Compliance Looks Like in 2025 Antonino stressed the importance of prevention over reaction. "Good compliance is preventative and not reactive. It's about systems, transparency, and leadership," he said. Here are the key elements he advised businesses to adopt: Accurate classification and regular reviews : Ensure employees are correctly classified under the appropriate award and reassess annually. Pay audits : Regularly verify that pay matches the hours worked and entitlements due, especially for salaried staff. Strong record-keeping : Maintain detailed wage and time records for at least seven years. These not only ensure legal compliance but also serve as vital defence documents in case of claims. Training and accountability : Keep HR and payroll teams updated on legislative changes. Define clear roles for compliance oversight. Early response : If an error is discovered, fix it promptly, pay interest, and engage the Fair Work Ombudsman where necessary. Protecting Legal and Reputational Interests  Beyond compliance, Antonino offered advice on safeguarding a company’s legal and reputational standing: Embed compliance in governance : Treat wage compliance as a leadership issue, not just a payroll task. Independent audits : An external payroll or classification audit can uncover hidden risks before they escalate. Document everything : From employee classification to wage audits, detailed documentation forms the cornerstone of a legal defence. Clear response plans : Have strategies in place for backpay, media management, and engagement with regulators. Foster a culture of integrity : Encourage staff to raise concerns, protect whistleblowers, and promote wage compliance as a shared responsibility. Antonino concluded with a warning: non-compliance can not only invite legal consequences but also drain a business's time and resources. "Being proactive and transparent isn’t just about law—it’s good business." In summary, the new wage theft laws signal a strong shift towards accountability and fairness in Australia’s labour market. Businesses that embrace this change, investing in robust systems and a culture of compliance, will not only avoid legal trouble but build trust and resilience for the future.

As 2025 unfolds, work-life balance has firmly secured its place as the top priority for job seekers across Australia and New Zealand. According to people2people's latest Employment and Salary Report, flexibility is no longer a bonus; it’s a baseline expectation. With 78% of organisations offering flexible hours and 69% supporting remote work options, businesses that fail to adapt risk losing out on top talent. This cultural shift is driven by a desire for autonomy and trust. Employees today seek the ability to tailor their work around their personal lives, not the other way around. Kaajal Khelawan, HR Manager and Operations Lead, puts it succinctly: "Work-life balance has become such an imperative thing for all employees. They want independence. They want to be trusted."  "Flexibility is no longer a benefit. It’s an expectation." That said, physical offices still have a place—but their purpose is changing. As Khelawan explains, "There definitely is a place for in-office models, but their role has changed. It should be focused on collaboration and culture building." Rather than simply housing employees, offices are becoming hubs for engagement and connection. Juma Mrisho, Talent Acquisition Business Partner, highlights other rising trends in employee benefits. Beyond flexibility, mental health and wellbeing initiatives are increasingly valued, as are financial wellness tools, career development opportunities, and progressive leave types like grandparent leave and menopause support. Mrisho adds, "There’s growing interest in purpose-driven benefits that really reflect personal values." Meanwhile, traditional perks like snacks and Friday socials, while still appreciated, are no longer enough on their own. Employees today are seeking a more personalised experience at work. This move towards customisation over gimmicks signals a new era in HR strategy. "One size doesn't fit all anymore," says Khelawan. "There is an understanding that not everything can be tailored to an individual, but going with the status quo is probably not the best course of action either." For businesses struggling to keep pace with these evolving expectations, outsourcing HR support can offer much-needed clarity and agility. Conducting anonymous surveys can help uncover what employees truly value, from reasons for staying to the motivations behind exits. Khelawan explains, "We work with a number of different clients. We have access to market benchmarks, scalable benefit programs, and we can help tailor strategies to attract and retain talent without the overhead of a full HR function." Mrisho agrees, adding that external HR support offers the flexibility and insights needed to remain competitive, particularly in uncertain markets. As work-life balance becomes the cornerstone of employee satisfaction in 2025, it’s clear that understanding and adapting to these new expectations is no longer optional—it’s essential. Businesses that respond proactively will be best positioned to attract, retain, and support top talent in the year ahead.

In an employment market defined by transparency and shifting priorities, counteroffers are losing their appeal. Data from 2024 reveals that while 63% of employers increased salaries to fill roles, 57% chose not to make counteroffers to resigning employees—a five percent rise from the previous year. This trend marks a broader shift towards proactive retention and long-term engagement over reactive responses. Kaajal Khelawan, HR Manager and Operations Lead, explains, "Employers are shifting away from making reactive offers and focusing more on proactive retention." Rather than scrambling to retain staff once they hand in their resignation, more businesses are investing in the experience and growth of their current teams. "If an employee has chosen to leave, you need to let them go." Khelawan is direct about the limitations of counteroffers. "They don't work. They're a band-aid solution," she says. Most employees who accept counteroffers end up leaving within six to twelve months anyway. More critically, such offers can lead to pay inequality, damaging morale and creating internal tension when colleagues learn about unequal compensation. With growing emphasis on pay transparency, businesses are increasingly aware of how last-minute salary hikes may erode trust. As organisations strive to ensure fairness in pay structures, counteroffers become a liability rather than a lifeline. Juma Mrisho, Talent Acquisition Business Partner, agrees. He links the decline in counteroffers to deeper structural shifts: "Reactive offers are seen as a short-term fix that doesn't acknowledge the deeper issue within an organisation." He notes that companies are now prioritising long-term strategies such as employee engagement, leadership development, and cultural alignment. Mrisho also challenges the assumption that salary alone is the reason people resign. "The idea that a salary increase will solve the issue of someone leaving is a misconception. People are also leaving due to cultural or leadership issues. A counteroffer won’t fix that." The trend is clear: businesses are becoming more strategic with pay and retention. Rather than relying on quick fixes, they are creating environments where employees feel valued, supported, and motivated to stay. Khelawan concludes, "The goal is to create workplaces where employees don't want to leave, rather than scrambling to keep them once they've resigned." As we look ahead, the decline in counteroffers suggests that employers across Australia and New Zealand are embracing a more considered, people-first approach to talent management—one that values foresight over quick fixes and stability over short-term wins.

As we move further into 2025, the employment landscape across Australia and New Zealand continues to evolve, with fresh data revealing notable shifts in both employer and job seeker sentiment. With unemployment holding steady and underemployment dropping to its lowest level since August 2008, the job market is showing signs of resilience despite broader economic uncertainties. Australia's job posting index remains 52% above the pre-pandemic baseline, a clear indication that demand for talent remains strong. While there has been a modest slowdown in employment growth, vacancies remain high, with over 328,000 job openings recorded earlier this year—a 4.5% decline from late 2024 but still 44.5% above February 2020 levels. At the same time, the hiring confidence index has dipped slightly to 63%, reflecting a small drop in employers' optimism about finding suitable candidates. On the flip side, job seeker confidence has also declined, dropping eight percentage points to 54%. This cautious optimism, shared by both sides of the hiring equation, paints a picture of a market that is adjusting to new realities rather than retreating. "Unemployment remains steady, but underemployment is at a historic low." Kaajal Khelawan, HR Manager and Operations Lead, highlights the significance of the underemployment drop. "That means more people are working as many hours as they want, which is a great sign," she notes. This indicates an improving match between worker availability and employer demand. Juma Mrisho, Talent Acquisition Business Partner, points to ongoing strength in job listings. "Job vacancies are still significantly elevated compared to pre-COVID levels," he explains, reinforcing the view that despite shifting conditions, opportunities remain abundant for job seekers. Suhini Wijayasinghe, Head of HR Solutions, adds perspective on job seeker behaviour. "Nationwide, seventy-four percent of job seekers are actively looking for new opportunities, while twenty-two percent are passive but open to the right role," she says. The numbers show a highly mobile workforce, with only one percent hesitant to move and just three percent inactive.  While employer confidence has softened slightly, the fact that three-quarters of job seekers are actively engaged suggests the market remains dynamic. Businesses that are clear, fast-moving, and transparent in their recruitment practices are likely to continue attracting top talent. For both Australia and New Zealand, the focus in 2025 appears to be on alignment—matching available roles with the right candidates at the right time. With underemployment falling, job ads still elevated, and a mobile workforce, there is much to be optimistic about. The key challenge lies in bridging the gap between employer expectations and job seeker needs in an evolving employment market.