SMEs ‘grappling with a number of changes’ in employment

The standing committee on employment, workplace relations, skills and training has heard evidence from the ASBFEO regarding small-business practice and compliance as part of the inquiry into the operation and adequacy of the National Employment Standards.

Australian Small Business and Family Enterprise Ombudsman (ASBFEO), Lynda McAlary-Smith, began the proceedings on Friday, 15 May, by flagging “the particular challenges of small businesses in navigating the complexity of the industrial relations system in Australia”.

She said: “And obviously there have been significant changes in relation to workplace relations in, over quite some period of time. And in addition, we have Payday Super coming in from the 1st of July, which, broadly, everyone’s very supportive of, but it is obviously a challenge from an administrative and process point of view, and cash flow.

“You’ve got the decisions around from the RBA around surcharging as well. You have the transition of youth wages in the retail sector for those who are over 18 as well, so any consideration of changes with respect to the NES, I would just caution just in terms of the capacity and capability of businesses to actually be able to absorb that and apply that.”

Regarding a suggestion that small businesses often aren’t appropriately informed of impactful changes to industrial relations legislation, the Ombudsman highlighted: “One of the challenges is, there’s actually no shortage of information and support and advice for small businesses across a whole range of things, across all three levels of government, but the challenge possibly comes because there’s so much of it; where do you actually start?”

She added: “Different agencies will have their own material, and it’s beholden on a small business to know, I might need to look at ASIC’s website, I’ve got to look at Fair Work Ombudsman’s website, I might need to look at Fair Work Commission’s website. The more that we can actually go to where small businesses are running their businesses and operating and where they’re getting their advice from that works for their business, and hooking into that, rather than expecting small businesses to have to come to government for advice.”

Aidan Storer, executive director of policy and advocacy at the ASBFEO office, said: “It’s also [important] to remember that small businesses are incredibly diverse, so there’s not a one-size-fits-all approach to education and guidance.”

He also suggested alternative ways to reach small businesses and achieve their needs, namely meeting them face-to-face rather than relying on passive information.

Asked about areas of non-compliance, the ASBFEO said small businesses often grapple with staying up to date, knowing what awards apply, and identifying employment status, casual conversion, record keeping, penalty rates and implemented wage rates – particularly when employees work atypical hours.

McAlary-Smith said: “In our experience talking to small businesses, if there [are] missteps in terms of employee entitlements, often it’s inadvertent.”

She cited one such challenge within hospitality: “You’ve got to do annual reconciliations. If you pay an annualised salary in hospitality, it’s actually more record keeping and work than if you paid them on an hourly basis.”

Regarding parental leave provisions, McAlary-Smith said “it comes up in a couple of different ways.”

“Annual leave more broadly … and I’d include parental leave and family and domestic violence leave in this, sometimes a nervousness of small businesses not wanting to say the wrong thing to their staff … if they use the wrong language, will they then be exposing themselves to a discrimination complaint as well.”

She continued: “In terms of parental leave around eligibility and how it actually works in practice, and then also return to work as well, after parental leave, and that can be really difficult for small businesses to even navigate … if they are in a position to replace someone while they’re on parental leave, ensuring that’s done in the appropriate way, and then that person’s being exited for the person to return from parental leave.”

Compliance across special leave related to pregnancy was also cited as a compliance and informational issue.

McAlary-Smith flagged that compliance issues are compounded for small business often due to an absence of dedicated HR or IR expertise. She expressed an interest in increased focus and promotion of a service from the Fair Work Ombudsman in which they provide subsidised legal service for small businesses, citing positive feedback from the community.

“I think anything we can do to shine a light on that, so businesses know … when you’re thinking about educational opportunities, that’s an existing service that works well, but I think there’s an opportunity for more small businesses to know about it,” she said.

Noting the importance of pitching the service in the right way, she continued: “Small businesses are naturally a bit nervous about talking to regulators … they’re concerned that, will they then have workplace inspectors racing out to see them the next day. So any assurances that can be provided from Fair Work Ombudsman, that they have this service, tha it’s a safe space to use it, I think would be very impactful.”

Both the ASBFEO’s initial inquiry submission and public hearing statements focused on easier compliance, more open channels of communication, and greater understanding of the specific operations of a small business in Australia.

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