The Cost of Compliance: What Australia’s Employers Are Really Up Against in 2025

Right now, it’s not just the cost of living that’s under the spotlight, it’s the cost of doing business. And for small and medium-sized employers across Australia, that cost is becoming harder and harder to manage.

We’ve seen over 150,000 business closures in recent years, and the trend hasn’t slowed. 1 in 10 cafes across Queensland, South Australia, and Victoria shut their doors. Combine that with the fact that construction and hospitality now make up 40% of insolvencies nationwide, and the picture is clear: the squeeze is real.

But what’s causing it? Wages? Sure. But it goes deeper than that.

A System That’s Working Against Business

The workplace relations environment in Australia is becoming more complex, and less balanced, by the day.

We’re facing a wave of industrial relations reform driven by a government that’s heavily aligned with union ideology. That’s not hyperbole. It's visible in policy decisions, in the cultural tone set by the Fair Work Commission, and in the appointment of former union leaders to high-level roles within the Fair Work Ombudsman and Commission.

Small businesses, which make up 97% of Australian employers, don’t have a compliance department. They don’t have a CFO or IR specialist to pivot when the rules change. Most of them are working with a small team, tight margins, and a business model that’s already been trimmed back for survival.

And yet, Fair Work Commission President Justice Adam Hatcher recently questioned why more businesses aren’t investing in productivity tools or redesigning their workforce models.

The answer is simple: they can’t. They’re trying to stay afloat, not overhaul their entire operation with capital they don’t have.

The same body pushing employers for innovation is simultaneously drafting legislation to expand remote work rights under modern awards. These contradictions don’t help. They confuse, frustrate, and ultimately cost employers even more.

Mistrust Is Spreading And It’s No Accident

Let’s be clear: the regulatory and political environment is creating division between employers and employees. And that’s by design.

When long-standing flexibility arrangements like RDO cycles or TOIL management, previously used by employers in a manner that benefits employees is suddenly deemed wage theft (criminal), trust starts to unravel.

Employers are forced to revoke popular arrangements simply to protect themselves legally. The outcome? Confused and frustrated employees who now question their boss’s intentions.

This government is rolling out change after change, approaching 30 legislative updates already, and more to come. Employers are left guessing what’s next, how to prepare, and whether they can survive the next hit.

The result? Many businesses are choosing not to grow. They’re not hiring. They’re waiting. Because growth under this environment feels like a trap.

What Can Employers Do?

It might feel like everything is stacked against employers right now and in many ways, it is. But that doesn’t mean you’re powerless.

The number one tool in your business right now? Retention.

Keeping good people is more valuable than ever. You can’t afford to lose skilled staff when the cost of rehiring, retraining, and ramping up is higher than ever. That’s where retention strategies come in.

One model that’s gaining traction and one used by major employers is a structured, long-term retention bonus. These models work by offering a meaningful financial reward to employees who stay with you for two or three years.

Paid in staggered instalments, with a growing deferred amount, these incentives create a reason to stay, and keep staff engaged along the way.

There are variations of this for different budgets and business types.

You can apply this selectively to high-potential employees, or roll it out company-wide depending on your confidence in the next few years.

And yes, retention costs money. But losing your workforce costs more.

Read the Signs. Then Act.

The signs are right there. A heavily union-aligned Commission. Ombudsman messaging that prioritises prosecution over support. Wage theft criminalisation that penalises even technical, well-intentioned breaches. A three-term government with no appetite for employer protections.

This is the most dangerous period for employers in decades.

That’s why building stronger connections with your staff, not weaker, is the best path forward. Don’t let external pressures divide you from your people. Get ahead of the legislation. Make your workplace a place worth staying.

And when it gets too complex to handle alone? Get advice from people who’ve actually fought the hard battles, not those who’ve only ever said, “No, you can’t do that.”

Because in 2025, being right matters more than ever.

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