The 3 Biggest Employment Law Changes Coming in 2026: What Small Businesses Need to Know

Why 2026 will redefine Payroll, Leave and HR Compliance for Small Businesses. Learn how these reforms will impact Australian small businesses and what you need to do.

If you run a small business, you’ve probably felt the wave of industrial relations changes hit harder over the past few years. 

And now 2026 brings another round of major updates, some designed to modernise payroll processes, others to improve workforce participation and clarify employer obligations. 

While the headlines often focus on big corporations, small businesses often bear the brunt of compliance changes because they lack large HR teams or dedicated legal support.

This year, three major developments will shape the way small employers manage payroll, leave and HR compliance: 

1. Payday super, 
2. Expanded paid parental leave, and 
3. The ongoing National Employment Standards (NES) review.

Understanding these changes and preparing early can make the difference between a smooth transition and a stressful scramble.

Let’s walk through what’s coming and what it means for your business;

1. Payday Super: the end of quarterly payments

One of the biggest shifts in years arrives on 1 July 2026, when employers must switch from quarterly superannuation payments to payday-aligned contributions. Super will need to be paid at the same time as wages; and must land in the employee’s super fund within seven days of each pay run. 

This change represents a significant adjustment for small businesses, many of which rely on predictable quarterly outflows to manage cash flow. Under the new model, superannuation can no longer be used as short-term working capital for up to three months. 

There’s also the matter of compliance penalties. If a business misses the new seven-day window, the Superannuation Guarantee Charge becomes payable the very next day, and interest compounds daily until the shortfall is resolved. 

For small operators, especially those handling bookkeeping manually or with outdated software, this shift requires both operational and cash-flow planning.

Many small employers still rely on quarterly reminders or accountant-managed super lodgements. Moving to payday super means checking whether your payroll system can process contributions instantly, ensuring super fund details are accurate and making sure clearing house payments don’t lag, especially since some clearing houses will close under the new system, including the ATO’s Small Business Superannuation Clearing House from July 2026. 

Small businesses should also prepare their staff for the change. Employees will begin seeing super contributions more frequently, and this tends to trigger questions about balances, timing and fund details, so early communication reduces confusion.

Another important factor: from July 1, 2025, the Australian government will pay a Paid Parental Leave Superannuation Contribution (PPLSC) of 12% on government-funded Paid Parental Leave (PPL) directly to an employee’s super fund. It is administered by the ATO and it’s automatic after the financial year the employee receives PPL. However, it only applies to PPL for children born or adopted from 1 July 2025, not older schemes.

Paid Parental Leave expands to 26 weeks

From 1 July 2026, eligible parents will be able to access up to 26 weeks of government-funded Paid Parental Leave (PPL). This follows a gradual increase from 22 weeks in 2024 and 24 weeks in 2025. 

Four weeks will be reserved for each parent on a “use-it-or-lose-it” basis, promoting more shared caregiving responsibilities, although single parents receive the full entitlement. 

While this entitlement is funded by the government, there are still operational impacts for small businesses, particularly those with teams small enough that every person plays a critical role. Longer and more flexible leave periods can affect workflow, rostering and service continuity, things that matter deeply where one absence represents 10% or more of your workforce.

This shift offers long-term benefits in terms of workforce participation, especially helping parents return to work sooner and with fewer financial setbacks but small businesses must plan for coverage. This might involve temporary staff, redistributing duties or using contractors for short periods.

Many small-business owners don’t have formal parental leave policies, relying instead on “common sense” or ad-hoc arrangements. With PPL now stretching to six months, clarity becomes more important for both business continuity and employee confidence.

The NES Review: Big Potential Changes Still in the Pipeline

In late 2025, the government launched a comprehensive review of the National Employment Standards (NES), the first since the Fair Work Act came into effect in 2009. 

The review is ongoing, but it has potentially enormous implications for small businesses because even minor changes to leave, hours or redundancy rules can create significant cost and workforce impacts. 

The review is driven by remote work, gig platforms, shifting attitudes about flexibility, labour shortages and an ageing population. 

Among the potential changes under consideration:

• Increasing annual leave from 20 to 25 days
• Strengthening redundancy entitlements, including possible removal of small-business exemptions and adjusting rules to reflect job losses caused by technological change (e.g. AI adoption). 

If implemented, these changes could significantly affect small employers’ scheduling, labour costs, leave liabilities and operational planning e.g. a move to 25 days of annual leave would immediately increase the amount of leave owed and may require more intentional rostering to ensure enough hands remain available at critical times.

Redundancy reform may also complicate restructuring for small employers, who often rely on exemptions to manage periods of unpredictability or financial strain.

While final recommendations are still pending, small businesses that stay informed will be better positioned to pivot when the outcomes become law.

Practical checklists to HELP small business employers

Below are two checklists to download for:

• HR teams, and 

• small-business owners who manage HR themselves.

These checklists may help translate the legal changes into day-to-day action.

Final Thoughts

The overarching theme for 2026 is clear: HR compliance is shifting more frequent and requiring more thoughtful planning. 

For small businesses, this means investing a little more time upfront so you’re not caught off guard later (e.g. reviewing systems, updating policies and communicating with employees).

With payday super, expanded parental leave and a potentially game-changing NES review, the best approach is to stay informed and proactive. Small employers who prepare now will not only avoid compliance pitfalls but may also strengthen trust, retention and workplace stability in the process.

If you’d like help tailoring policies, communications or planning documents for your business, Akyra is here to support you.