Small business ombudsman calls for a small business award

Australian Small Business and Family Enterprise Ombudsman Kate Carnell has welcomed the Prime Minister’s commitment to go back to the drawing board on industrial relations, but she is calling for the government to go a step further and introduce a small business award.  

The recommendation is part of a suite of reforms to support small businesses in the post-coronavirus recovery phase, as outlined in the ombudsman’s COVID-19 Recovery Plan.

“The Prime Minister was right in his Press Club address in saying the current industrial relations system is not fit for purpose,” Ms Carnell said.

“In this new world we live in, with business confidence at a historical low, the system needs to make it easy for small-business employers to be able to hire and manage staff, so they can get on with the job of running their business.”

Noting that the Fair Work Act is a source of great confusion for small businesses, with its 960 sections and over a quarter of a million words, Ms Carnell explained that “it’s nearly impossible for small businesses who really want to do the right thing”.

“If nothing changes, those small businesses that were planning to grow their business or start a new venture, simply will not,” she said.

“COVID-19 has had a devastating impact on Australian jobs and that needs to be countered with positive changes that make it simpler for businesses to grow and employ — particularly at a time when small businesses are trying to get back on their feet.”

If adopted by the government, the small business award would be simpler than existing awards and available to all small businesses on an “opt in” basis.

According to Ms Carnell, it would cover all staff, irrespective of their different duties and would include a “permaflexi” classification. 

“Permaflexi gives the employee a permanent and secure position with standard forms of leave, but it also gives the employer the flexibility to ensure all duties are carried out, without the onerous need to move a staff member to a different award classification,” Ms Carnell said.

“If a small business decides to stay within the current award structure, they need access to comprehensive advice regarding their obligations. A reg-tech solution should be created — accredited by the FWO — that provides a technology-driven method for small business to comply.”

The ombudsman opined that small businesses will be facing enormous challenges and uncertainty as they emerge from hibernation, and will refrain from employing if they don’t have flexibility and confidence in the system. 

“The overly complex current system effectively forces small businesses to seek expensive legal advice to avoid the threat of significant penalties if they make a mistake,” she said. 

Another logical move, Ms Carnell explained, would be to clarify the Small Business Fair Dismissal Code to give small and family businesses the confidence they need to employ more Australians.

“We’ve provided the government with our Review of the Small Business Fair Dismissal Code, which recommends a number of changes to help small-business employers meet their obligations,” Ms Carnell said.

“Without a system overhaul, business confidence will continue to be undermined, and that hurts both small businesses and workers.” 

She noted that “this had the potential to be a game-changer for Australia’s small business and family enterprise sectors”.

“We are committed to working to achieve the best possible outcomes for small businesses,” the ASBFEO said.