HR in 2025: Wage Theft, Psychosocial Risk and Workplace Reform

The past year has been one of the most transformative in recent memory for HR professionals across Australia. Major legislative changes arrived in rapid succession, introducing new expectations for organisations and challenging leaders to interpret and apply these obligations effectively. From expanded employee protections to increased compliance responsibilities, HR teams navigated an environment shaped by uncertainty, evolving risk and shifting employee expectations.

Many organisations entered 2025 anticipating a rise in formal complaints, case escalations and heightened scrutiny. Early predictions suggested that new laws would trigger a significant increase in grievances. Yet as the year unfolded, the practical impact proved more complex. Some reforms led to extensive behavioural adjustments, while others resulted in fewer disputes than expected. Instead of overwhelming legal action, many changes prompted quiet recalibration across policies, roles and cultural norms.

Ultimately, the year underscored the importance of proactive planning and clear communication. HR teams learned that compliance must be integrated across leadership, legal advisers, payroll and operational managers. The reforms signalled a deeper shift in the relationship between legislation and people management, revealing the need for organisations to prioritise transparency and employee wellbeing alongside legal obligations.

“Many reforms sparked intense discussion, but the real impact only became clear once the year unfolded.”

On a recent Through the HR Lens Market Update, Host Leanne Lazarus, Specialist Recruitment Manager, was joined by Guest Jonathan Mamaril, Director and Employment Lawyer at South Geldard Lawyers, to explore the legislation, cases and behavioural trends that shaped Australian workplaces throughout 2025.

Wage theft, underpayments and the importance of intent
Wage compliance was one of the most prominent themes of the update. Wage theft has been widely discussed in media, often used interchangeably with simple underpayments. Jonathan clarified this crucial distinction, explaining that “wage theft needs the underpayment of entitlements and there needs to be some sort of dishonesty or deliberate behaviour,” noting that “honest mistakes” do not meet the legal threshold for wage theft.

Despite strong public attention, wage theft cases have not surged as dramatically as anticipated. However, the risks remain broad. Jonathan highlighted that “HR, payroll, directors, owners can all be held liable” when there is deliberate wrongdoing or when organisations ignore known risks. He also pointed out that “there are serious problems with payment of wages at the moment,” emphasising that many businesses still struggle with award interpretation, complex staffing models and legacy decisions.

To mitigate future issues, many organisations have adopted a targeted audit approach, beginning with at-risk roles or unclear classifications. These audits, combined with stronger documentation and legal guidance, have provided clarity and reduced the likelihood of unintended breaches.

The right to disconnect and evolving workplace behaviours
The right to disconnect was one of the most widely debated reforms of the year. Although it attracted substantial attention, the conversation revealed that it did not generate the volume of legal cases many expected. Instead, the legislation has driven a clear shift in workplace behaviour. Organisations have invested time in updating job descriptions, revising policies and providing leaders with guidance around reasonable expectations.

Jonathan explained that “the change has probably been more the change in behaviour,” noting that many challenges are arising within management and supervisory roles rather than executive levels. He observed that issues often come from “really high performers… whose expectations of the people they are managing may be similar to what they were doing,” which has led to friction when team members exercise their right to refuse out-of-hours contact.

This shift has reinforced the importance of clearer roles, structured communication channels and training to ensure people leaders understand their obligations. It has also highlighted the need for better workload management and clearer boundaries within high-pressure teams.

Sexual harassment reforms and the role of external investigation
Sexual harassment legislation also underwent substantial change, particularly in Queensland, where employers were required to implement written prevention plans. Jonathan explained that these obligations should prompt organisations to “refresh their sexual harassment policies, how to deal with complaints, and anything that touches on that.” He stressed that sexual harassment investigations should not be handled internally, stating that “sexual harassment, especially if it's dealing with someone in a senior role, should not be touched by the HR team,” due to the significant risks of bias and procedural error.

He noted that external investigators paired with legal oversight provide organisations with stronger defensibility and fairness, particularly when cases involve complex interpersonal dynamics or power imbalances.

Psychosocial risks and the rise of secondary claims
Psychosocial risk has become one of the most discussed compliance areas, though not always in the way expected. Instead of standalone claims, psychosocial hazards are increasingly appearing as supporting elements in broader disputes. Jonathan observed that these issues often emerge through “workers compensation claims, general protections claims,” or performance-related matters. He also highlighted the rise of what he described as “weaponised claims,” where psychosocial risks are raised in response to disciplinary processes or performance management.

This trend underscores the need for strong documentation, fair processes and consistent communication. Organisations that maintain clear evidence of role expectations, workload patterns and decision-making are better placed to manage these issues effectively and protect both their people and their operations.

Looking towards 2026: technology, contracts and new workplace pressures
Looking ahead, several emerging themes are expected to shape HR in 2026. Technology and AI remain largely unregulated, yet cases already show that tools used incorrectly can create significant risk. Jonathan noted that further legislation is likely but may emerge through privacy or technology law rather than the Fair Work Act.

He also highlighted potential developments around penalty rate protections, non-compete clauses and flexible working arrangements. Employment contracts and position descriptions will require closer attention, especially where outdated language or unclear expectations create compliance challenges. As Jonathan pointed out, contracts that still reference the Workplace Relations Act or use outdated terminology are “probably out of date,” signalling a need for urgent review.

What should HR teams focus on as they prepare for 2026?

• Review employment contracts and remove outdated references
• Update position descriptions to reflect accurate role expectations
• Conduct targeted wage audits for at-risk positions
• Strengthen manager training on legislative obligations
• Build partnerships with external investigators for sensitive matters
• Maintain thorough documentation of decisions and processes