A Year in Review. How 2025 Shifted HR in Australia

Here at ELMO, we’ve spent the past 12 months gathering insight directly from the people shaping Australia’s workplaces, employees across industries, and the HR professionals supporting them.

Through three waves of our Employee Sentiment Index (ESI), and our flagship annual HR Industry Benchmark Report (HRIB), we built a clear, data-backed picture of where pressure is rising, where momentum grew, and where HR needs to focus next.

What did we learn about Aussie employee sentiment in 2025?

ELMO’s ESI tracks the prevailing mood of the workforce. While each quarter explores topical issues, the ‘Index’ gives us a baseline reading of security wellbeing, confidence and future outlook. 

The Index began at an underwhelming 69.1 in Q1 (its lowest point in five quarters). Driven by slipping job security, reduced wellbeing and a sharp rise in burnout to 43% (up from 29% in Q4 2024).

By mid year, sentiment hadn’t improved.  Burnout remained high at 40%. Almost half of Aussie employees said their income didn’t meet their needs and presenteeism increased. These figures pointed to a workforce doing its best to stay afloat, but not necessarily feeling supported.

By Q3, the Index climbed to 71.4 in a sign of cautious recovery. Confidence and recognition improved, but core challenges persisted. Burnout held steady at 40%  and job mobility remained low.

A snapshot of the year

Q1 (Jan to Mar)

• Index fell to 69.1
• Burnout jumped to 43% Economic and job security dropped from 27.5 to 25.2
• Wellbeing declined from 15.7 to 14.2
• 14% said they were “nowhere near” meeting their financial needs

Q2 (Apr to Jun)

• Index dipped slightly to 68.2
• Burnout held at 40%
• Only 30% felt economically secure
• 61% responded to after hours messages to appear committed
• Women were less comfortable ignoring after-hours contact (44% vs 31% for men) 

Q3 (Jul to Sept)

• Index rebounded to 71.4
• Economic and job security rose to 26.2
• Recognition and fairness of pay improved
• Burnout remained flat at 40%
• Interest in job change dropped to 18%, down from 23% in Q2

What were the key lessons for HR? 

Taken as a whole, consecutive ESIs show that engagement doesn’t equal thriving. Low mobility and high effort can mask underlying strain. Burnout, presenteeism and financial insecurity point to a workforce that’s committed, but stretched.,

What can HR do?

• Strengthen your early warning systems by combining engagement data with wellbeing signals. 
• Train managers to specifically spot silent burnout, and how to intervene. 
• Intervene early rather than waiting for performance dips or turnover

How HR managed rising expectations

While employees were operating under quiet strain, HR was navigating its own pressures. ELMO’s HR Industry Benchmark Report revealed a profession carrying more weight than ever, with growing strategic influence but persistent operational constraints.  

The biggest challenges of 2025

• Upskilling and reskilling were the top organisational challenge
• Productivity topped business priorities, yet a large majority of HR professionals cited manual processes and unclear goals as key barriers 
• Many HR leaders were expected to provide strategic insight, often without the systems to support it.

At the same time, HR’s strategic role strengthened:

• HR-Finance collaboration grew faster than CEO / CHRO partnerships
• Leaders turned to HR for insights into people costs, performance and workforce risk
• HR was being asked to contribute at the board level, often without the infrastructure to deliver

What can HR do?

• Prioritise work that drives strategic impact
• Reduce the manual load by advocating for systems with measuring ROIUse people data to make workforce planning more precise

2025 showed that HR doesn’t need more tasks, it needs greater capacity, clearer role definition and the tools to move strategically.  

Where pay and performance expectations diverged

Pay became a symbol for fairness and transparency in 2025. 

• 43% said they earnt ‘just about enough’
• 31% said ‘not quite enough
• 12% reported ‘nowhere near enough’.

Employees said performance should determine pay. Many believed profitability actually did. This gap reflects a trust issue more than a financial one.

What can HR do?

• Make pay frameworks visible and transparent
• Better communicate the “why” behind remuneration decisions
• Strengthen the link between performance, progression andreward.

The real story behind skills and confidence

Mid-year ESI data showed 84% of Australian employees felt their skills were keeping pace with change. On the surface, that sounds reassuring, but the deeper story tells us otherwise. Only 15–20% of employees felt supported to build future‑focused skills such as AI. Most development was informal, not structured. This inconsistency poses a risk as digital transformation accelerates. 

What can HR do?

• Audit  learning pathways and gaps
• Map workforce skills to future business needs
• Build clear, accessible development pathways that create career momentum 

Where flexibility met trust: the Right to Disconnect

The ‘Right to Disconnect’ took centre stage mid-year for Australia. It was timely, and the results were revealing.

• 60% said their employer supported their right to switch off
• Nearly a quarter said this support felt superficial 
• 61% responded to after-hours messages to look committed. 
• One in six said they’d faced negative consequences for not doing so.

The takeaway for HR?

This isn’t about policy, it’s about psychological safety (not to mention retention). Trust needs to be actively built, especially around boundaries and wellbeing.

What can HR do?

• Train leaders to embrace ‘switch-off’ behaviour
• Normalise realistic communication boundaries
• Embed disconnection in your culture, not just policy

AI must take the front seat in capability building 

If there’s one thing 2025 made clear, it’s that AI and learning can’t be treated separately. The gap between ambition and readiness is widening and employees are noticing.

Only 54% of Australian employees thought their employer was helpingAI’s impact. This disconnect poses a long-term risk to capability.

What can HR do?

• Make AI literacy central to 2026 learning strategies
• Embed digital skills into role design Provide clear guardrails around safe use of AI

AI can accelerate performance, but only when people feel equipped to use it confidently.

What we learned about the workforce

Across the year consistent patterns emerged:

• Persistent burnout
• Ongoing financial pressure
• Low job movement but high output
• Confidence in skills, but concern about the future

The lesson?

Don’t confuse staying with thriving. In 2026, HR will need to improve employee health, not just headcount stability.

What can HR do?

• Integrate wellbeing, financial literacy and work/life balance into your employee experience.

What we learned about HR in 2025

HR walked a tightrope this year. Influence grew, but so did expectations. Legacy systems and manual administration limited strategic capacity.

What can HR do?

• Build a stronger case for resourcing by using data to show the true cost of fragmentation.
• Advocate for infrastructure that supports strategic contribution
• Move from reactive tasks to proactive planning. 

What matters most for HR in 2026

When we look to the year ahead, several themes are clear:

• Strategic HR must replace legacy administration
• AI needs to move from trial to embedded practice
• Capability building must become continuous and integrated
• Workforce planning must be data-driven
• HR leaders need time and space to lead change

If 2025 was the wake up call, 2026 is the moment to act. The systems, structures and strategies built now will define how resilient, prepared and people-focused organisations can be in the future.