Are Aussie SMEs drowning in the ‘overflowing pool of regulations’?

With the Closing Loopholes legislation finally coming into effect, the multifaceted discourse surrounding the bill has once again resurfaced, with detractors calling into question the feasible goals of the workplace law changes.

Some scathing criticism is raining on the parade of the newly implemented Closing Loopholes workplace changes, which came into effect last week (26 August 2024). These new changes included the Right to Disconnect, changes to the definition of a casual employee, and adaptions to full-time and part-time employment.

The Right to Disconnect – which has already been implemented in countries like France – allows for employees of non-small businesses (a business employing 15 or more employees) to have the right to refuse to monitor, read or respond to contact (or attempted contact) outside of their working hours.

This rule will apply to small businesses in 12 months’ time.

As the changes have come into the fold, critics have probed about whether the Right to Disconnect and new regulations of the sort do more harm than good.

Simon Obee, head of HR advisory and principal lawyer at Employment Hero and EI Legal, believes that SMEs will suffer greatly from the changes, after already having to deal with the increasing burden of red tape and legal compliance.

“It’s important that there are enough tools and resources out there to ensure SMEs, which are the backbone of our economy, are educated and supported, as these laws add to the already overflowing pool of regulations they need to comply with,” Obee said.

“This is not a case of hand holding, but rather about providing clear, accessible information and resources to support our SMEs, as well as a balanced dialogue that considers the impact over-regulation can have on small businesses and the wider Australian economy.”

Obee described SMEs as the backbone of the Australian economy, yet a large quantity of these smaller enterprises often operate with tight budgets, and with an excruciating economy, a lot of them are already doing it tough without having to adapt to workplace law changes.

“SMEs often work with tight budgets, making it costly to hire employment lawyers for compliance guidance. Yet, without this expertise, they risk making unintentional errors with significant consequences,” Obee said.

“The ongoing implementation of IR changes and the introduction of new wage theft laws, carrying potential jail time, further heightens the compliance burden on business owners, and with fines reaching millions of dollars, even minor breaches could spell disaster for businesses, particularly family-run establishments that might misinterpret the law.”

Although Employment Hero chief executive Ben Thompson agrees that the law is well intended, he believes that these new workplace changes are crippling Aussie SMEs and limiting their innovation.

“This situation raises critical questions about the viability of starting and running a business in Australia. Beyond the debates and political maneuvers, the real impact on employers and Australia’s position in the global employment market seems to be an afterthought,” Thompson said.

“The ‘Right to Disconnect’ law, for instance, adds to the compliance burdens, despite its intentions, contributing to a landscape that seems increasingly hostile to business owners.”

Small businesses still have 12 months to prepare themselves for these legislative changes to come into place; however, it is of the critics’ opinion that these changes will only dampen their business outcomes going forward.