The Rising Regulatory Burden: What SMEs Need to Know in 2025

We work with SME owners every day who feel overwhelmed by the pace of change. The good news is that with the right advice and systems in place, you can stay ahead of the curve and even turn compliance into a competitive advantage. 

Here’s a breakdown of the biggest regulatory shifts SMEs need to keep on their radar this year. 

Criminal Penalties for Wage Underpayments 

The government is cracking down hard on wage theft. Businesses that underpay employees (whether intentionally or through poor systems) could face up to 10 years in prison or fines of up to $7.5 million. 

For SMEs, this means payroll accuracy is no longer just good practice, it’s critical. Investing in proper payroll systems and regular audits is a must. 

The Right to Disconnect 

The “right to disconnect” laws are expanding, giving employees the ability to refuse unreasonable after-hours contact from their employers. 

For many SMEs, especially those where flexibility and availability are valued, this requires a cultural shift. It’s important to review employment contracts, staff policies, and communication practices to avoid disputes or penalties. 

Mandatory Cybersecurity Reporting 

Ransomware attacks are on the rise, and new laws mean businesses must report incidents and ransom payments to authorities. 

Even if you think your business is “too small” to be a target, cybercriminals often see SMEs as easier opportunities. Beyond the compliance angle, this is about protecting your reputation and your clients. Building cyber resilience should now be part of your core risk strategy. 

Bookkeeping and Payroll Tax Compliance 

Authorities are putting greater scrutiny on bookkeeping and payroll tax. With the ATO and state revenue offices sharpening their focus, SMEs can expect more audits and stricter enforcement. 

For business owners, this means making sure your financial reporting is watertight and that you’re across payroll tax thresholds. 

Climate-Related Financial Disclosures 

Mandatory climate reporting may feel like an issue only for large corporations, but SMEs will feel the impact through their supply chains. Larger companies will increasingly demand climate-related data from their suppliers, meaning SMEs need to start thinking about sustainability reporting sooner rather than later.