9 surprising employment trends in Australia in 2025

Summary: Key employment trends in Australia in 2025

1. Contractors keep the wheels turning: Agility beats fixed cost when rates stay high and skills run short.

2. Full‑time employment headcount is flat: Capacity risks rise in stretched teams.

3. Manager span of control stalls: The midpoint holds, but uneven spans exist that hide burnout risk on one side and excess layers on the other.

4. Hybrid work isn't going anywhere: Any hard return‑to‑office push risks churn, Fair Work disputes, and lost goodwill.

5. Casual numbers dip, compliance heat soars: Directors face bigger penalties for missed conversion offers.

6. Psychological‑injury claims are on the rise:  Insurance costs are rising, and regulators are making surprise visits to see if safety measures go beyond paperwork.

7. Mature‑age participation hits a record high: It's filling skills gaps and steadying turnover, but requires an element of roster flexibility.

8. Union membership edges upward: Expect faster log‑of‑claim cycles and deeper wage‑compliance audits to land on HR desks.

9. Gender‑pay‑gap data goes public: Candidates, media, and investors are likely to use these numbers as brand‑trust scores.

Some of these employment trends originate from Rippling’s State of Employment Report and survey of 7,000 SMBs. We also studied workforce data from the ABS, Jobs and Skills Australia, Safe Work Australia, the Productivity Commission, WGEA, and the other sources cited throughout this article.

Together, these datasets give a rounded snapshot of current employment trends in Australia.

Trend 1: Contractors are rising fast where agility pays

Australia still runs on a 7.5% contractor share, which is identical to the slice recorded a year ago. However, a closer look reveals that, while the national needle hasn't moved, the hiring of contractors in flexibility-critical industries is certainly on the rise. Why? Because it makes strategic and financial sense.

Rippling’s SMB survey results paint the same picture: arts and recreation teams run 77% contractors and restaurants 37%. According to the Australian Bureau of Statistics (ABS), the construction industry also books contractors for up to one in four roles now.

Why it matters

• Cash control: Contractors come with less heavy fixed costs, like superannuation, paid leave, and redundancy. This frees up capital for strategic growth moves or rate shocks.

• Speed to skill: When an urgent skill gap opens up, hiring a contractor usually beats the time‑to‑fill of a full‑time role. And rapid skill insertion can win projects, fill peak rosters, and also keep full‑timers from burning out.

• Talent magnet: High contractor ratios can signal modern, flexible work, which often attracts specialists who value autonomy. At the same time, it gives full‑timers breathing room to focus on core work, which can boost retention.

What HR leaders should do next

• Create a single onboarding lane: Funnel onboarding tasks, like ID checks and bank detail collection, for staff and contractors through the same workflow. This can close compliance gaps and reduce admin time significantly.

• Set conversion triggers: Flag any contractor billing 38+ hours a week for three months, then assess whether the role meets the legal test for employment. This reduces misclassification risk and also recognises stable, long-term contributors.

• Put pay and invoices on autopilot: Give contractors access to a self‑service portal that sends their approved hours straight to payroll. Everybody wins because contractors get paid on time and finance gets an audit-proof trail.

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Trend 2: Employee headcount is flat

The ABS clocked 10.06 million full‑time roles in June 2025, almost exactly the same as the previous year.

Rippling’s dataset of 7,000 SMBs tells a similar story: full-time employment decreased by just 1% year over year, with the sharpest cuts in retail, consumer services, and real estate. Healthcare was the clear outlier though, where full-time employment increased by 14%.

This goes to show that many sectors remain highly sensitive to interest rate pressure and wage growth. It also highlights that healthcare is still desperate for staff amid temp-labour caps and continuing shortages. 

Remember, fewer full‑timers doesn’t mean less work. It just means the same load gets spread thinner or pushed to contractors.

Why it matters

• Lean rosters mute wage pressure but stretch capacity: Fewer permanent seats keep payroll steady. But the same workload may now land on fewer shoulders, which breeds burnout (and human error).

• Capability gaps widen when hiring stalls: Strategic projects may slow or shift to contractors. This may present an opportunity for quicker rivals to snatch market share while teams battle day-to-day operations alongside increasing project backlogs.

What HR leaders should do next

• Tie requisitions to up‑skilling budgets: If roles stay frozen, consider funding laser‑focused training. This can empower staff to grow into new demands instead of stretching thin and potentially walking.

• Build a bench of contractors: It can be a good idea to have a vetted pool of contractors ready to go for peaks or pilots. This can give core teams breathing room without adding fixed costs.

Trend 3: Manager span of control hasn’t budged

Rippling’s sample highlights that the average manager still leads nine people (unchanged from last year). However, gaps appear after a deeper dig into the survey results. Marketing and advertising managers juggle up to 25 direct reports and consumer‑services leads average 18. Then there are transportation and restaurant supervisors who run lean at just six or seven. 

Essentially, even though the midpoint is steady, some functions are stretching people thin while others are keeping layers fat.

Why it matters

• Oversized teams drain managers and dim coaching: When one lead has to wrangle lots of reports, 1‑on‑1s often end up on the back burner and strategic thinking begins to shrink. And typically, what comes next is burnout.

• Undersized teams bloat costs and slow decisions. Too‑small teams generally mean you’re paying for more managers than you really need. Each extra layer adds salary cost and another sign‑off that can drag out decision making.

What HR leaders should do next

• Map spans to task complexity instead of head‑count: High‑volume, standardised work can live under broader spans. Complex or highly regulated tasks, on the other hand, require tighter oversight.

• Run a quarterly span audit: Flag any manager above 12 reports or below five. Then rebalance by delegating, automating, or consolidating roles before productivity does a nosedive.

Trend 4: Hybrid work has hit its cruising altitude

ABS data shows that 36% of Australians work, partly or entirely, from home. This is down just one point from last year, but still four points above the pre‑COVID 2019 level of 32%. Put simply, remote and hybrid work is no longer an experiment. It's part of everyday life.

A recent Productivity Commission paper found no evidence that working from home dents output. In fact, it showed that it can actually boost job satisfaction and reduce sick days. Yet 2025 has seen a wave of big employers, from tech firms to banks and telcos, tighten in‑office mandates. This has triggered Fair Work disputes and a growing chorus of employee push-back.

The resulting tension is unlikely to restore the old nine‑to‑five. More plausibly, both sides will settle on flexible hybrid models rather than a full return to the status quo.

Why it matters

• Hybrid basics are non‑negotiable: Strip back remote working options and you risk fast turnover. This is especially true among parents and regional hires who baked work-from-home (WFH) into their lives.

• Badly handled mandates break team spirit: Heavy‑handed office mandates can damage morale and splinter teams. Clear, trust‑based rules are key to keeping everyone engaged, regardless of where they work from.

What HR leaders should do next

• Publish a hybrid work playbook: List office days, response‑time expectations, and equipment stipends in one easy-to-access document. Clear rules are the best way to stop confusion before it starts.

• Audit the setup yearly: Survey remote staff, refresh allowances, and run a cyber‑safety drill once a year. If you value output over seat‑warming, a visible tune‑up can prove it.

'Workers do not need to be in the office full‑time to experience the benefits of in‑person interactions. Hybrid work tends to be beneficial to productivity, or at least, is not detrimental.' - Dr Alex Robson, Deputy Chair of the Productivity Commission

Trend 5: Casualisation is easing, but compliance heat is rising

Over the past two years, the share of Australians on casual contracts has slipped by roughly 3%. A key driver is the Closing Loopholes reform, which took effect on 26 August 2024. As of July 2025, all casuals at large employers can request conversion once they reach six months’ service. Small‑business casuals remain under the old employer‑offer system until 26 August 2025, after which they, too, will move to the employee‑choice pathway.

The real compliance squeeze, however, lies in classification and pay accuracy. When someone works regular, ongoing hours but is still labelled ‘casual’, or a genuine casual is paid less than the full 25% loading, Fair Work treats it as misclassification. Civil penalties can reach $93,900 per breach for small businesses (five times more for large companies). And deliberate underpayment is now a criminal offence. 

Why it matters

• Legal risk: Misclassification or ignored conversion notices can trigger big fines and, for wilful underpayment, criminal charges. One mistake is all it takes to spark a full Fair Work investigation.

• Cost control: Fixing status early costs far less than back‑pay, interest, and legal fees. Paying the full loading up front protects margins when permanent conversion isn’t a requirement.

• Staff loyalty. Paying people correctly and honouring conversion requests builds trust and reduces turnover. This can save recruitment and onboarding costs.

What HR leaders should do next

• Audit rosters every quarter: Flag casuals with regular, predictable hours and either convert them on your own accord or verify they’re receiving the full loading. Automated checks in your HRIS can make this easy.

• Embed compliance triggers: Set system alerts for the six‑ or 12‑month service mark. Log all Casual Employee Choice Notices so you can respond in writing within 21 days and keep an audit‑ready trail.

• Refresh contracts and coach supervisors: Be clear on loading, shift patterns, and conversion rights in every casual employment agreement. Train frontline managers to apply these rules consistently.

Trend 6: Mental‑health claims now 11% of serious comp cases

Safe Work Australia’s most recent statistics confirm that mental‑health injuries make up 11% of all serious claims. These injuries lead to a median time off work five times longer than physical injuries. The compensation bills rise just as fast. Sentis’s review of the same dataset notes that, on average, mental‑health claims now stretch well beyond half a year off work. And they typically cost over four times that of a physical injury claim.

State regulators echo the pressure. New South Wales alone expects 80,000 psychological claims over the next five years. It warns that premiums will skyrocket if employers fail to act.

Why it matters

• Claims hit hard and last long: Mental‑health injuries often sideline staff for months. Each week lost inflates wage‑replacement costs and pushes insurance premium hikes.

• Regulators are clamping down: Safe Work watchdogs have started compliance sweeps focused on psychosocial risks. Non‑compliance can lead to big fines or, for serious or repeated breaches, prosecutions.

• Culture dictates retention: Workers are more likely to stay loyal to their employer when leaders protect mental health. Poor support can push talent out the door and hurt morale.

What HR leaders should do next

• Run a psychosocial‑hazard risk assessment every year: Map high‑stress roles and fix obvious issues before claims surface. This step can also prove due diligence in audits.

• Train every manager to spot burnout: Teach them to recognise red flags like withdrawal, irritability, or rising absenteeism. Taking action early on can help save minor issues from turning into big ones.

• Promote support channels during onboarding: On day one, let new hires know where they can access mental‑health support. Then, repeat the message in quarterly reminders so staff know help is close.

'Proactively managing psychosocial hazards at work not only protects workers, it also benefits businesses by improving organisational performance and productivity.' -  Marie Boland, Chief Executive Officer, Safe Work Australia

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Trend 7: Mature‑age participation is at a record high

According to recent employment data, the participation rate for Australians aged 55‑64 is now at 69.6%. Their unemployment rate has also dipped to just 2.8%.

This highlights the fact that the number of older Australians staying in, or returning to, the labour force is at a record high. And businesses are welcoming the shift. It helps with persistent skills shortages, steadies teams, and keeps valuable know‑how in‑house. 

Aside from this, a recent report from the Australian HR Institute shows that older workers are 74% more loyal, 64% more reliable, and 62% more stress-resilient than their younger peers.

Why it matters

• Experience fills gaps: Veteran employees often bring decades of know‑how, which they can use to mentor younger staff. Their deep knowledge can close skills shortages faster than a graduate pipeline.

• Teams stay steady: Mature workers tend to switch jobs less often, allowing projects to keep momentum. Lower churn also saves recruitment costs and preserves workplace culture.

What HR leaders should do next

• Offer mid‑career up‑skilling: Fund short, targeted courses so seasoned staff can keep their skills sharp. This investment widens internal talent pools and boosts employee engagement.

• Build flexible schedules: Let mature employees tweak start and finish times to manage health, caregiving, or gradual retirement. Flexibility can be a great way to drive commitment and attendance.

• Create a transition‑to‑retirement pathway: Shift senior staff into part‑time advisory roles before they exit. This can enable you to lock in knowledge and coach emerging leaders.

'Employers who lead by example and embrace age diversity will reap the rewards in terms of productivity, innovation, problem‑solving and workforce stability.' -  The Hon Dr Kay Patterson AO, Age Discrimination Commissioner

Trend 8: Union membership ticks up for the first time since 2011

After 13 straight years of decline, union density has seen a slight rise. The most recent ABS data shows 1.6 million employees (13.1% percent of the workforce) paid union dues. This is up from 12.5% percent in the previous year.

Public‑sector hiring, especially in health, education, and public administration, supplied most of the new sign‑ups. Private‑sector union density sank to a record‑low 7.9%. Even so, the uptick is a sign of fresh organising energy, fuelled by new bargaining laws and rising cost‑of‑living pressure.

Why it matters

• Faster claims land on HR desks: Larger delegate numbers speed up log‑of‑claims requests and hone demands for real‑wage growth. Stronger bargaining units also test payroll accuracy line by line.

• Scrutiny on wage compliance doubles: Union officials drill into underpayments, award errors, and roster breaches. Missed loadings or overtime can snowball into class‑action risk.

• Pulse of workplace sentiment: A membership rise often follows unrest over pay or workload. Ignoring the signal generally risks more disputes along with reputational dents.

What HR leaders should do next

• Map union density by team: When about one in seven team‑members (roughly 15%) have joined a union, organisers usually gain enough traction to start collective‑bargaining talks. Update your map each quarter so you can spot any group that crosses this line early.

• Prep wage‑audit results early: Complete a full pay and allowance check before the next Enterprise Bargaining Agreement (EBA) round. Clean numbers cut leverage for public disputes.

• Engage constructively: Hold regular discussions with delegates, share business updates, and request feedback on change plans. Transparency can lower friction and build trust.

Trend 9: Public gender‑pay‑gap data is a new reputational score

Since March 2025, every big private‑sector employer’s gender‑pay gap has been in plain sight on the Workplace Gender Equality Agency's (WGEA) Data Explorer. The agency released pay‑gap numbers for over 7,600 companies after new laws force employer‑level disclosure.

The median total‑remuneration gap across those firms is 18.3%. And 72% of employers still pay men more than women.

Why it matters

• Talent chooses transparency: Jobseekers and customers may check the gap before they trust a brand. A big gap can be a real roadblock when it comes to great hires and deals.

• Media names and shames: Reporters rank firms by their numbers. A poor score is likely to land in the headlines and damage labour and consumer trust.

• Investors flag risk: Boards and environmental, social, and governance (ESG) funds track progress. Slow action can heighten governance concerns and increase funding costs.

What HR leaders should do next

• Run a fresh gap scan: Gather current pay data, sort by job level, and flag hot spots. Share the results with leaders promptly.

• Set clear targets: Choose a gap number to achieve, pick a date, and tie bonuses to progress. Clear goals are one of the best ways of keeping momentum high.

• Publish the plan: Post your action steps on your careers page and link every job ad to it. Show candidates and staff that you are taking the initiative to close the gap.

'56% of companies improved their gender pay gap in the last 12 months, so we’ve got progress. We need to accelerate that change.' - Mary Wooldridge, CEO, WGEA

One platform, any workforce: Rippling fits the data

Contractors make up 25% of the roles in fast‑moving sectors. Full‑time headcount stays flat. Managers juggle nine reports on average. Pay‑gap numbers, mental‑health claims, and union activity sit in the spotlight. Dealing with that mix in scattered apps? It's a compliance and capacity catastrophe waiting to happen. 

Rippling is your ultimate all-in-one workforce management platform. It puts every job type, every rule, and every metric in one place.

'Rippling saved our lives in terms of how much time we spend doing manual administrative work—our payroll entry alone went from 3 hours to about 30 minutes.' - VP People Operations & Technology, Morning Consult

Australian employment trends FAQs

Which metrics matter most for headcount planning?

1. Employment growth: Track the net change in total staff each month. If it's rising fast, be mindful of cash burn. If it's falling, be on the lookout for burnout cues.

2. Contractor share: Keep an eye on what share of your labour cost sits on flexible contracts versus fixed salaries. This can help you balance agility with stability before budgets or laws bite.

3. Span of control: Flag managers with more than 12 or fewer than 5 direct reports. This allows you to re‑balance before burnout or bloat becomes problematic.

4. Vacancy days: Log how long key roles sit open. Long delays can hint at compensation or brand issues.

5. Labour cost per FTE: Pair this with revenue per FTE to see if productivity is keeping pace.

When must I switch a contractor to employee status?

• Their monthly hours worked are steady and mirror a full‑timer’s roster.

• You direct when, where, and how they work.

• Their contract rolls past six months with no clear end date.

• They rely on your equipment, email, and policies to do the job.

Hit two or more of these signs? It's probably time to offer employment.

How can I keep contractor compliance simple?

• Issue one standard SOW that locks in their ABN and rate, insurance, and IP terms.

• Eliminate email chains by storing contracts and invoices in combined HR and payroll software.

• Set an auto‑alert for any contractor who reaches six months of regular hours.

• Run a quarterly audit of pay rates and Goods and Services Tax (GST) status.

• Give contractors a self‑service portal so their details stay current without manual input from HR.

Are these 2025 employment trends likely to shift again in 2026?

Yes, they are. We’re already seeing early signs of movement on a few fronts worth watching:

1. Interest‑rate cuts may restart hiring: Treasury’s 2025 Budget papers tip the cash rate to fall from 4.35% to 3.60% by mid‑2026. Lower borrowing costs may lift construction and retail headcount as these industries regain traction.

2. Permanent‑migration cap stays at 185,000 for 2025‑26: The government has kept the cap steady while tightening student and temporary streams. This is despite lobbying from business groups for a higher intake. Ongoing labour shortages in health, cyber, and engineering mean employers will probably need to continue leaning on contractors for hard‑to‑fill roles.

3. WGEA expands reporting: From March 2026, companies with 500+ staff must publish gender‑equality targets and progress. Boards will push harder on pay‑gap action. So, you can expect faster movement in the numbers.

4. Psychosocial laws tighten nationwide: All jurisdictions except Victoria already apply the national psychosocial regulations, and Victoria’s own (stricter) rules start in December 2025. This means 2026 will probably bring a wave of regulator spot‑checks and steeper fines for token compliance. There might also be a short‑term spike in psychological‑injury claims as better reporting drags hidden issues into the open.

The bottom line is that Australian employment trends shift with policy and economics. Keeping an eye on each quarterly ABS Labour Force release and Fair Work update can help you pivot ahead of the curve.