Key Changes to the Legal Services Award in 2025
The Legal Services Award 2025 has introduced updates that law firms need to be aware of to stay compliant. Here are the key changes:
Greater scrutiny on annualised wage agreements – Employers must show clear reconciliation of hours worked vs. wages paid.
3.75% pay increase from 1 July 2024 – Ensure your payroll reflects these updated rates.
Stronger compliance measures – Fair Work is increasing audits and penalties for non-compliance.
Updated overtime and penalty rates – New clarifications on how different staff levels accrue entitlements.
Why Compliance Matters More Than Ever
Law firms are under greater pressure in 2025 to demonstrate compliance with the Legal Services Award.
Failure to comply can lead to:
- Backpay liabilities – Underpaying staff can result in significant financial penalties.
- Reputational damage – Prominent firms like Clayton Utz and Gilbert + Tobin have faced scrutiny over payroll issues.
- Fair Work audits and penalties – In 2025, Fair Work is ramping up investigations and increasing fines for breaches.
Overtime & Time Off in Lieu (TOIL) in 2025
When Does Overtime Apply?
Under the Legal Services Award 2025, overtime is payable when an employee works: ✔ Outside ordinary hours on any day or shift. ✔ More than an average of 38 hours per week. ✔ On weekends or public holidays (with varying penalty rates depending on the day and employment type).
Example: Overtime for Casual Staff
A casual employee working four hours overtime on a Thursday would be paid:
- 175% of their hourly rate for the first three hours.
- 225% of their hourly rate for the final hour.
This makes payroll complex, especially for firms with different employment types and shift patterns.
Time Off in Lieu (TOIL)
Employees can opt to take time off instead of receiving overtime pay, but:
- Both the employer and employee must agree in writing.
- TOIL must be taken within six months or paid out at overtime rates.
Managing these variations manually is risky. That’s where award interpretation software can help.
Why Law Firms Need Award Interpretation Software
Most legal practice management software is designed for billable hours, not compliance with the Legal Services Award.
Common problems include:
❌ Incomplete records – Standard timesheets often lack compliance details.
❌ Manual errors – Payroll teams must manually track and update award rules.
❌ No automated reconciliation – Firms struggle to prove compliance during audits.
Fairtime fixes these issues by:
✅ Automating award interpretation – Our software applies the correct pay rates, including penalties and overtime.
✅ Keeping pay rates up to date – No scrambling when the Award updates.
✅ Providing compliance-ready reports – Easy reconciliations for Fair Work audits.
Final Word: Stay Ahead of Legal Services Award 2025 Changes
With Fairtime, law firms can:
✔ Avoid underpayment risks and penalties.
✔ Reduce admin time spent on payroll.
✔ Ensure compliance with Legal Services Award 2025 effortlessly.
Book a 30-minute demo to see how Fairtime can simplify payroll and compliance for your firm!
