Employment law obligations in Australia continue to evolve in 2026, and business owners must stay informed to protect their businesses from legal risk, costly disputes, and regulatory penalties.
This checklist is the business owner’s guide to understanding key legal obligations and reforms to prioritise in 2026 to stay compliant and protect your business from reputationally and financially costly disputes.
1. Understand and comply with termination and unfair dismissal Obligations
General protections under the Fair Work Act 2009 (the Act) apply immediately from the first day of an employee’s employment, including for casuals. This means you cannot terminate employment because an employee has exercised a workplace right (for example, taking sick leave, making a complaint, or joining a union) or because of protected attributes such as race, sex, disability, religious belief or political opinion.
These protections sit alongside unfair dismissal laws and can expose your business to significant compensation and penalties, even where the employee has not met the minimum employment period for an unfair dismissal claim.
Before ending employment for conduct or performance, business owners should take steps to ensure ‘procedural fairness’ has been applied in the circumstances by:
- Clearly setting out the allegations in writing;
- Giving the employee an opportunity to improve (for performance issues);
- Giving the employee a reasonable chance to respond (and bring a support person if requested);
- Considering their response in good faith; and
- Keeping file notes, emails and outcome letters that document who made the decision and why.
For small businesses, follow the Small Business Fair Dismissal Code checklist step-by-step, including warnings for performance issues, because compliance can be a complete defence to an unfair dismissal claim.
If you are ever in doubt about whether you can terminate an employee, legal advice should be sought. The cost of dealing with an unfair dismissal claim can seriously outweigh the cost of obtaining advice before making any big decisions.
Checklist actions:
- Review disciplinary and termination procedures for procedural fairness.
- Ensure decisions are documented and based on lawful, unbiased grounds.
- Confirm compliance with any applicable Award or Enterprise Agreement obligations.
2. Get casual vs permanent employment status right
Employment status matters for entitlements and compliance. From 26 August 2024, the Act’s definition of ‘casual employee’ focuses on the nature of the actual employment relationship, not just the wording of the employment contract. This is particularly whether there is a firm advance commitment to continuing work.
This means that business owners need to ensure that they are giving thought to each employee’s employment status and not simply attempting to categorise an employee based on what their employment contract says.
Employment contracts should be drafted carefully to ensure that the contractual terms are suitable for the relevant employee.
Employers must also manage casual conversion requests under the ‘employee choice pathway’, where eligible casuals working a regular pattern of hours can notify you in writing to become permanent part-time or full-time after 6 months (or 12 months for small business employers with fewer than 15 employees).
If you receive a request from an employee to be converted from casual to part time, you must consult the employee, then respond in writing within 21 days. The response should either grant the request (specifying full-time or part-time, hours and start date) or refuse it with clear reasons.
Refusals are only allowed on two narrow grounds:
- The employee still qualifies as a casual under the Act definition (meaning there is no firm advance commitment to ongoing work); or
- Fair and reasonable operational grounds apply, such as where conversion would require substantial changes to how your business organises work, cause significant operational disruption, or breach an award or enterprise agreement.
If disputed, the Fair Work Commission (FWC) can intervene, so always document your reasoning thoroughly to defend against claims.
Checklist actions:
- Confirm employment status classifications are correct based on practical work patterns.
- Respond to casual conversion notices in writing and within required deadlines.
- Ensure that employment contracts are up to date and accurately reflect each employee’s employment status.
3. Prioritise wage compliance: wage theft is now a criminal offence
Under recent reforms, intentional wage theft (meaning deliberate underpayment of wages, entitlements or superannuation), is now a criminal offence that can attract severe penalties including up to 10 years’ imprisonment and substantial fines (for individuals and companies). Honest payroll errors are treated differently, but employers must fix any underpayments promptly once identified.
Regularly reviewing or auditing payroll is one way for businesses to keep on top of these obligations.
Where an employee is employed under an Award, businesses should ensure they are calculating rates appropriately, and in accordance with the employee’s job level and duties, as well as taking into account loading and other entitlements.
Award entitlements can be a minefield. A lawyer can advise you on Awards and appropriate pay rates and entitlements. Seeking advice early can save you a lot of pain (and backpay) later on.
Checklist actions:
- Conduct regular payroll audits to detect and correct underpayments.
- Ensure superannuation contributions, penalties, overtime and minimum wage requirements are correctly calculated.
- If underpayments are identified, promptly remedy and document corrective steps.
- Ensure employees are being paid in accordance with Award rates and with appropriate entitlements applied.
4. Implement updated payroll and superannuation practices
From 1 July 2026, the Payday Super obligation requires you to pay superannuation guarantee (SG) contributions at the same time as wages or salary, so funds reach the employee's nominated super fund within 7 business days of each payday (or 20 business days for a new employee's first payment).
This replaces quarterly payments, and applies to all employers, including small businesses. Business owners can expect tighter ATO monitoring with risk-based audits in the first year.
Late payments trigger the Super Guarantee Charge (SGC), including the base unpaid amount plus interest, a $20 administration fee per employee per period, and an administrative penalty component that scales from 2%, up to 200% of the SGC for deliberate or repeated failures. The ATO can also pursue legal action for debts, and late super may breach the Act, exposing you to further claims or underpayment fines.
Checklist actions:
- Audit and upgrade payroll software for automated, concurrent salary/super payments.
- Train payroll/HR teams on new deadlines, reporting, and handling choice-of-fund rules.
- Review cashflow and model monthly super outflows.
- Review pay cycles to confirm all super reaches funds within 7 business days.
5. The right to disconnect - employee rights outside typical work hours
The right to disconnect continues to roll out. This legislative change gives employees the legal right to refuse unreasonable contact from their employer outside working hours. This right began for larger employers in 2024 and started to apply to small business employers from 26 August 2025.
Business owners need to ensure that they are managing after-hours communication with employees and ensuring policies and procedures are in place for their business.
There are very limited exceptions to these rules (such as rostered on-call and emergency situations), so managers and supervisors need to be trained to understand the application of this law and when exceptions apply.
Checklist actions:
- Create or update policies on after-hours communication to define when contact is reasonable.
- Train managers and supervisors on these obligations, to avoid potential disputes.
6. Strengthen your policies and processes, and engage experts now
With the unfair dismissal compensation cap rising to $91,550 (from $87,500) for claims lodged on or after 1 July 2025, the FWC increasingly scrutinises employer processes. A robust and documented approach to performance management and seeking professional advice to ensure your business remains compliant in the evolving employment law landscape is your best defence.
Businesses should have a comprehensive suite of workplace policies, which are tailored to suit their workplace and industry.
If you aren’t sure where to start, a solicitor can review your existing policies and help you update them, or assist you to put in place a fresh suite of policies.
Checklist actions:
- Audit and tailor workplace policies (e.g., codes of conduct, social media) to align with current standards.
- Schedule periodic compliance reviews with employment lawyers or HR advisors.
Final Note
This 2026 checklist provides a structured overview of the most critical employment law obligations for Australian business owners. Staying proactive and compliant not only reduces legal risk but also supports workplace culture and operational stability.
