Government backs small business

THE FEDERAL Government recently introduced a Bill to overturn the Australian Industrial Relations Commission’s (AIRC’s) recent decision that forces small businesses to make redundancy payments.

The Workplace Relations Amendment (Protecting Small Business Employment) Bill 2004, introduced by Federal Minister for Employment and Workplace Relations Kevin Andrews, seeks to exempt businesses with less than 15 employees from having to pay four weeks’ redundancy pay after one year of service to eight weeks’ pay after four years’ service.

The Bill would only apply to new employees of small businesses and not existing employees, and small businesses would still be subject to the unlawful termination provisions of sec 170CK of the Workplace Relations Act 1996 which cover unlawful dismissal in cases of trade union membership, religious beliefs, and so on.

As a result of the AIRC’s decision in March this year, Minister Andrews said a typical retail business with seven employees, each with six years continuous service, now faces a redundancy pay bill of almost $30,000.

Despite the AIRC’s recent decision to introduce a transitional period of up to five years before the full impact of its decision will be felt by small business, Minister Andrews said small business simply could not afford the cost of having to make redundancy payments.

“The Australian Government will not stand by and let this happen. Increasing business costs and imposing more restrictions on small businesses hurts all Australians.”

Minister Andrews cited a report by the Centre for Independent Studies, which found that 50,000 new jobs would be created if only 5 per cent of small businesses employed one further person.

“The Australian Government wants to create more jobs and the way to do this is to make it easier for businesses – particularly small businesses – to employ staff,” Minister Andrews said.

“If Federal Labor is serious about helping small businesses and creating jobs it will support this important legislation.”

However Shadow Minister for Workplace Relations Craig Emerson said Labor would not support the Bill as employees who are made redundant lose their jobs through no fault of their own.

“Businesses who cannot afford to pay shouldn’t have to and they shouldn’t have to go through expensive, time-consuming processes to prove it,” he said.

“Labor wants the process for these exemptions to be simple and inexpensive, ensuring that small businesses who genuinely cannot afford to pay do not have to.”

The AIRC found that more than 70 per cent of small businesses were viable at the time they made staff redundant, and Emerson accepted the Commission’s decision that these viable small businesses should provide redundancy pay to staff that have been engaged for more than a year.

In those cases where a small business cannot afford redundancy payments the AIRC ruled they could apply for an exemption on the grounds of incapacity to pay.

Where a small business is insolvent, redundancy obligations would be met through Labor’s commitment to guarantee 100 per cent of employee entitlements, Emerson said.

The Howard Government attempted to exempt small businesses from unfair dismissal laws through the Workplace Relations Amendment (Fair Dismissal) Bill in 2002, however this was rejected by the Senate for a second time in March 2003.

The Democrats indicated they would also block the Bill in the Senate, claiming that it was just a time-wasting exercise.

“We have too many important Bills to get through Parliament in the next few weeks without wasting time on a Bill that the Democrats and Labor have consistently rejected,” said Australian Democrats Workplace Relations spokesperson, Senator Andrew Murray.

“This is a first world country with advanced social standards. Businesses are not going to be allowed to hire and fire at whim. On both human rights and equity grounds the Democrats will not create unjustifiably different rights for employees of small businesses.”

Murray said unfair dismissal applications are most often pursued under state laws, rather than federal law. He also pointed out that when the former Coalition government in Queensland introduced an exemption for small business, it had no effect on job creation.

“Whatever the unfair dismissals experiment, whether it is poor state processes or good federal processes, there has been no discernable effect on employment,” he said.

“Contrary to the twisted logic of the Government, employment is rising and unemployment is falling in all States and Territories.”

However the Australian Chamber of Commerce and Industry (ACCI) urged the Senate to reconsider its approach to date and pass these amendments “as a matter or urgency”.

“Small business owners simply do not have the same capacity as larger employers to deal with unfair dismissal claims,” said Peter Hendy, ACCI chief executive.

“The time and resources required to contest a claim that results from an employment relationship that just hasn’t worked out, means that many owners are forced to just give in, rather than taking time off to attend a hearing in the Industrial Relations Commission.”

Hendy said employment growth must be a first order priority for all governments and all legislators.

“The passage of this Bill will send a message to the nation’s 1.2 million small businesses that the Parliament is serious about reducing our unemployment rate below 5 per cent and serious about their role in creating new jobs.”

Hendy said small businesses do not have the same capacities to access borrowings or capital as larger businesses and the AIRC’s decision would have a negative affect on jobs.