Fair Work Act is not fair, is not working, and we should act

Kate Carnell, The Australian, January 26, 2017:

Australia, we need to talk; we need to have a serious and sensible conversation about small business. And industrial relations. Not a heated argument thrashed out in the media. Not a nasty megaphone debate won and lost through the typical political pointscoring that so often characterises discussions on this subject.

What we need in 2017 is sensible dialogue that leads to practical outcomes. Let’s not allow the challenge of sweeping IR reform to frustrate meaningful changes for small business. Let’s focus on how we can make it easier for this vital sector to employ people and grow and continue to be the engine room of the economy.

The resignation of Fair Work Commission vice-president Gra­eme Watson and his scathing ­assessment of the commission highlighted the challenges businesses face in dealing with the present model. For small business in particular, the Fair Work Act is complex and inflexible; let’s face it, the entire system is an albatross around the neck of Australia’s more than two million small ­businesses.

And you don’t need to take my word for it; there are 122 different industry or occupation awards stipulating staff pay and conditions (and remember, not all ­employees in a particular small business necessarily fall under the same award, so small business owners often have to deal with three or four different awards). There are 960 sections in the Fair Work Act, which has a grand total of 250,000 words (yes, you read that correctly) for small business owners to wade through.

And remember, small businesses don’t have human resources departments or in-house lawyers to help navigate the system. They are on their own.

Surely we can work out a way to make it simpler for small businesses to hire new people — to hire school-leavers, to hire mums and dads, to hire older Australians, to unleash growth.

The idea of one small business award or code of practice surely merits further discussion and ­investigation; one document that clearly and simply — in no more than a couple of pages — outlines an employer’s responsibilities in treating their staff fairly while ­ensuring they stay inside the law. In other words, an award that says to business: “As long as you follow these rules, you’re doing the right thing.”

At the moment, small businesses are operating under legislation and regulation that’s been written for big businesses. We’ve simply got to move away from this framework and stop trying to fit a round peg in a square hole.

Latest figures show confidence in the small business sector is at its highest level since 2010, with more than four times as many small and medium enterprises now feeling confident ­compared with those that are “worried”. However, the same ­survey found the number of businesses concerned about ­excessive bureau­cracy and red tape had ­increased. So it’s clear small ­business owners have the drive and the ­enthusiasm to grow, but this fervour is being stymied by paperwork.

Close to four million people are employed by small businesses in Australia. Unlike large businesses, the tax revenue generated by this sector is on the rise, so their importance should never be ­underestimated, and their growth shouldn’t be taken for granted.

Which leads me to penalty rates. As any small business owner will tell you, penalty rates are a huge impediment when it comes to trading on weekends, not to mention public holidays such as today.

As one NSW small business owner remarked, keeping their cafe open during the ­recent holiday period (which amounted to five public holidays in the space of nine days) was ­effectively providing a “community service”. In other words, there was next to no money in it for him, but his customers expected him to be open.

Now, as the Small Business ­Ombudsman, I can certainly see how bringing Sunday rates into line with Saturday rates makes good business sense; however, I ­respect the fact that decisions like this rest firmly with an independent arbiter, who takes submissions on such issues — from all sides of the argument — before making a determination. This ­independence is fundamental to the integrity of the system and should always be kept out of the political arena.

So as we await the federal government’s response to the Productivity Commission’s recom­men­dations on workplace reform, along with the Fair Work Commission’s decision on penalty rates in several awards in the hospitality and retail sector, let’s have a specific conversation about simplifying workplace relations for small business and build a consensus for change in 2017 that will make the tough job of running a small business that little bit easier.

Kate Carnell is the Australian Small Business and Family Enterprise Ombudsman.