Australia Labour Law Updates 2026
A comprehensive overview of Australia labour law updates 2026, with practical guidance for employers operating in or expanding into Australia.
Australia’s employment law landscape is undergoing a period of significant and simultaneous change in 2026. The most operationally consequential reform, payday superannuation, takes effect on 1 July 2026, fundamentally changing how and when employers remit superannuation guarantee contributions.
On the same date, the national minimum wage increases, government-funded Paid Parental Leave expands to 26 weeks, and new rules protecting penalty and overtime rates come into full effect. Looking ahead, a ban on non-compete clauses for most Australian workers is expected to be legislated in 2026 for commencement in 2027, and the first comprehensive review of the National Employment Standards since the Fair Work Act commenced is underway.
This article sets out every significant change, what has already commenced, what takes effect on 1 July 2026, and what is confirmed or expected later in 2026 and into 2027, with practical steps for employers to take now.
Penalty and Overtime Rate Protections Strengthened
In practice, this change protects existing penalty rate structures from being wound back through future award reviews, addressing concerns that arose following earlier decisions in the hospitality and retail sectors that reduced Sunday and public holiday penalty rates. The change does not increase current penalty rates, but prevents future reductions.
| Key Action For Employers: |
|---|
| Review any enterprise agreement or annualised salary arrangement that uses set-offs against penalty and overtime rates. Ensure that any all-in or annualised salary structures are properly documented and genuinely compensate employees for all penalty and overtime entitlements they would otherwise receive. Given the new protection, future award variations that reduce penalty rate obligations are unlikely to provide any compliance relief. |
National Employment Standards: First Comprehensive Review Underway
The Committee accepted written submissions until 27 February 2026 and is expected to publish its findings and recommendations, with a final report due 15 June 2026. While no legislative changes are imminent, the review is examining areas that could fundamentally reshape minimum employment standards, including:
- Whether the 12-month service requirement for unpaid parental leave should be removed or shortened
- Dedicated carer’s leave entitlements separate from the existing personal/carer’s leave structure
- Long service leave harmonisation, replacing the current patchwork of state-based schemes with a single national standard
- Extension of paid leave entitlements to casual employees
- The impact of AI and automation on redundancy obligations and workforce composition
- Whether redundancy provisions need to be updated to reflect technology-driven job losses
| Key Action For Employers: |
|---|
| Monitor the NES review outcomes closely. The inquiry has the potential to significantly reshape Australia's minimum employment standards, affecting contracts, policies, payroll rules, and enterprise bargaining. HR leaders should engage with the Committee's published report when available and begin scenario-planning for the areas most likely to change, particularly parental leave qualifying periods and long service leave harmonisation. |
Road Transport: Fairer Fuel Act and Contractor Chain Orders
This is a targeted reform relevant to businesses that engage or use contractors in road freight and logistics supply chains. Employers in those sectors should review whether their contractual arrangements may be subject to road transport contractual chain orders and seek specific advice if needed.
Annual Wage Review 2026: Minimum Wage Increases to $26.44 Per Hour
The 4.75% award increase is larger than the 3.5% increase in 2025 and applies to approximately 21% of the Australian workforce, around three million workers. These are predominantly female, part-time, or casual workers concentrated in accommodation and food services, retail trade, administrative and support services, and health care and social assistance.
The Commission cited several factors in its decision, including the ongoing real wage deficit for award-reliant workers (whose real wages remain below 2021 levels), above-forecast inflation of 4.2% in April 2026, and economic uncertainty including the Middle East conflict. The decision takes effect from the first full pay period on or after 1 July 2026.
Important distinction: NMW vs. award rates
The National Minimum Wage (approximately 6% increase to $26.44/hr) applies only to employees not covered by a modern award or enterprise agreement, a relatively small group. For the approximately 2.6 million workers covered by modern awards, the 4.75% award increase applies, with the lowest award rate floor set at $1,004.90 per week. Employers with employees covered by annualised wage arrangements or award-covered employees paid above minimum rates should check whether those arrangements still satisfy the new award minima from 1 July 2026.
| Key Action For Employers: |
|---|
| Identify every employee paid at or near minimum award rates before 1 July 2026. Confirm the specific award rates applicable to each classification in your business, the Fair Work Ombudsman's Pay and Conditions Tool will be updated with new rates ahead of 1 July. Review annualised wage arrangements and any 'set-off' clauses to ensure they continue to satisfy award obligations after the increase. For employees on enterprise agreements, check whether the agreement's rates still exceed the new award minimum. |
Paid Parental Leave Expands to 26 Weeks from 1 July 2026
Use-it-or-lose-it: reserved days for the second parent
From 1 July 2026, 20 days (4 weeks) are reserved for the second parent or partner, up from 15 days (3 weeks). These days are use-it-or-lose-it: if the second parent does not take their reserved days, they cannot be transferred to the primary carer. The remaining 110 days (22 weeks) can be allocated flexibly between both parents. Single parents can access the full 26 weeks.
PPL is taxable income paid directly by the government, not the employer. It does not affect the employer’s obligations under the Fair Work Act to provide up to 12 months of unpaid parental leave (with the right to request an additional 12 months).
Super on government PPL, already in force from July 2025
Separately, from 1 July 2025, the Australian government began paying superannuation on government-funded PPL at the standard 12% rate. This is paid by the ATO after the end of each financial year, directly to the employee’s nominated super fund. It is not an employer obligation, but employers should be aware of it when advising employees on their total entitlements and when designing or reviewing employer-funded top-up arrangements.
Baby Priya's Law: stillbirth and infant death protections
| Key Action For Employers: |
|---|
| Update parental leave policies, employment contracts, and onboarding materials to reflect the 26-week government PPL entitlement and the increased 4-week reserved allocation for the second parent. Review any employer-funded top-up arrangements to ensure they remain clearly documented and compliant with Baby Priya's law. Communicate changes to employees and managers ahead of 1 July 2026, with particular attention to leave planning for employees with due dates in the second half of 2026. |
Payday Superannuation: The Most Significant Payroll Change in Decades
What changes in the calculation
The basis for calculating superannuation guarantee contributions also changes from 1 July 2026. ‘Ordinary Time Earnings’ (OTE) is replaced by a new concept called ‘Qualifying Earnings’ (QE), which brings together ordinary time earnings and a broader range of additional payments. Employers must calculate super at 12% of qualifying earnings for each pay event.
A new annual Maximum Contributions Base (MCB) also takes effect: from 1 July 2026, super contributions are only required on earnings up to AUD 270,830 per year per employee (previously AUD 62,500 per quarter). Once an employee’s earnings reach the annual threshold, contributions for the remainder of the financial year are not required.
Seven-business-day deadline, what it means in practice
Penalties under the new framework
The super guarantee charge (SGC) is restructured under payday super. Penalties for late or unpaid contributions were earlier a maximum of 200% of the super guarantee charge, with remission available in part or in full. Now this has been reduced to penalties of 25% or 50% apply depending on prior history. (A penalty of up to 200% of the SGC still exists under the new payday super rules for the most serious cases such as deliberate non-lodgement and evasion, while the standard 25%/50% penalties apply to ordinary late payments.)
The ATO can issue director penalty notices and pursue additional penalties for failure to lodge super guarantee statements. Voluntary disclosure and prompt remediation may reduce penalty exposure.
| A note from Raj Inda, CEO of Beyond Borders HR: |
|---|
| Payday super compresses remittance windows from up to 91 days (end of quarter plus 28 days) to just seven business days from each payday. This is not an incremental adjustment, it requires employers to test payroll systems, update banking arrangements, and verify super fund payment channels well before 1 July 2026. |
| Key Action For Employers: |
|---|
| Act now, not on 30 June. Confirm your payroll software is payday super-ready and test the new contribution timing before the changeover. Switch away from the SBSCH immediately, it closes on 30 June 2026 with no extension. Review qualifying earnings calculations to ensure all relevant payments are included. Implement a reconciliation process to verify contributions reach super funds within the seven-business-day deadline. Seek payroll or accounting advice if you have variable-hours workers, complex allowances, or backpay arrangements that could affect QE calculations. |
Non-Compete Clause Ban: Legislation Expected in 2026, Commencement in 2027
The ban will cover approximately 91% of Australian employees. Non-compete clauses in contracts for workers earning below the threshold will be void and unenforceable. The ban operates prospectively, it will apply to new contracts entered into after the law commences, though some commentary suggests it may also affect clauses in existing contracts.
What the ban does not cover
The following are not affected by the proposed ban:
- Non-compete clauses in business sale agreements protecting goodwill the buyer has paid for
- Non-disclosure, confidentiality, and intellectual property protections, these remain fully enforceable
- Non-compete clauses for workers earning above the high-income threshold (Treasury is separately consulting on this group)
Treasury is also consulting on whether to restrict non-solicitation clauses, no-poaching agreements, and wage-fixing arrangements. The scope of final legislation may be broader than the non-compete ban alone.
| Key Action For Employers: |
|---|
| Do not wait for legislation to pass. Audit all current employment contract templates and identify roles with non-compete clauses, particularly for workers earning below AUD 183,100. Begin reviewing what legitimate protections you currently rely on non-competes to provide, and assess whether confidentiality clauses, IP protections, or narrowly tailored non-solicitation clauses would achieve the same outcome. Contracts drafted in 2026 for workers below the threshold should either remove non-compete clauses or include transitional language acknowledging the forthcoming change. |
At-a-Glance: Australia Labour Law Updates 2026
| Effective Date | Change |
|---|---|
| 29 Aug 2025 | Penalty and overtime rate protections strengthened. Fair Work Commission prohibited from reducing award penalty and overtime rates in future reviews. |
| 7 Nov 2025 | Baby Priya's Law in force. Employers cannot cancel or refuse employer-funded paid parental leave where a child is stillborn or dies after birth. |
| Nov 2025 (ongoing) | NES Review inquiry commenced. First comprehensive review of the National Employment Standards since the Fair Work Act 2009. Final report due 15 June 2026. |
| 2 Apr 2026 | Fairer Fuel Act commences. Fast-tracking of road transport contractual chain order applications. |
| 1 Jul 2026 | Payday Super commences. Super contributions payable on every payday; must reach super fund within 7 business days. SBSCH closes permanently. QE replaces OTE as the contribution basis. Annual MCB of AUD 270,830 replaces quarterly MCB. |
| 1 Jul 2026 | Annual Wage Review takes effect. NMW rises ~6% to AUD 26.44/hr. All modern award minimum rates increase by 4.75%. New floor of AUD 1,004.90/week for the lowest award classifications. |
| 1 Jul 2026 | Paid Parental Leave expands to 26 weeks (130 days). Reserved days for second parent increase from 3 to 4 weeks (use-it-or-lose-it). |
| 2026 (expected) | Non-compete ban legislation introduced to parliament. Ban to take effect from 2027 for workers earning below AUD 183,100. |
| 2027 | Non-compete clause ban takes effect. Clauses void and unenforceable for most Australian workers. Further reforms to non-solicitation and no-poaching arrangements also expected. |
What Employers Should Be Doing Now
The concentration of changes taking effect on 1 July 2026 makes the period leading up to that date a critical compliance window.
Here is a practical checklist:
Before 30 June 2026 (urgent)
- Confirm payroll software is payday super-ready and test contribution processing under the new rules
- Switch away from the SBSCH immediately, it closes permanently on 30 June 2026 with no extension
- Verify that super fund electronic service addresses (ESAs) are current and capable of receiving contributions under the new SuperStream requirements
- Identify all employees paid at or near modern award minimum rates and confirm their new rates from 1 July 2026 using the Fair Work Ombudsman’s Pay and Conditions Tool once updated
- Review annualised wage and set-off arrangements to confirm they still satisfy award obligations after the 4.75% increase
- Update parental leave policies and contract templates to reflect 26-week PPL and the increased 4-week second-parent reservation
- Implement Baby Priya’s law compliance in employer-funded parental leave policies if not already done
In the second half of 2026
- Audit employment contract templates for non-compete clauses, particularly for roles earning below AUD 183,100, and begin redesigning protections ahead of 2027 legislation
- Monitor the NES review final report (due 15 June 2026) and assess implications for contracts, leave policies, and payroll
- Monitor non-compete ban legislation for introduction and passage through parliament, noting the expected 2027 commencement date
- Review road transport contractor chain arrangements if operating in freight or logistics sectors
The volume of change taking effect simultaneously on 1 July 2026, payday super, minimum wage increases, and the PPL expansion, makes this one of the most payroll-intensive compliance moments in recent Australian employment law history. Businesses with complex workforces, variable-hours employees, or multiple award coverage should seek specialist HR and payroll advice well ahead of the July changeover.
How Beyond Borders HR Supports Employers Stay Compliant
These 2026 employment legislation changes for Australia can be challenging for employers to process independently. Beyond Borders HR, a global HR consulting firm, stands ready to assist businesses in understanding and implementing these changes effectively. With our extensive expertise in global HR practices, we ensure that your organisation stays compliant with the evolving regulatory landscape.
Reach out to Beyond Borders HR for tailored solutions, expert guidance, and seamless integration of these legislative updates into your HR policies and practices. Our team is dedicated to empowering your business with the knowledge and support needed to thrive in this dynamic regulatory environment.
Need help with Australian employment legislation?
Contact us today to learn more about how we can assist you with employment legislation in Australia and the wider Asia-Pacific region with employment compliance, HR policy development, and international workforce management.
Article Authored By:
Raj Inda
