‘Timing, capacity and cumulative impact’: Can small businesses withstand more regulation?

A small businesses council has warned that further legislation may only serve to harm those without access to HR departments and employment lawyers.

Further to recent coverage of public hearings by the standing committee on employment, workplace relations, skills and training, the Council of Small Business Organisations Australia (COSBOA) gave an alternative viewpoint as part of the ongoing inquiry into the operation and adequacy of the National Employment Standards (NES).

In his opening statement, head of industrial relations Michael Gerard Sommerton outlined COSBOA’s position regarding the review, stating: “Further change to the NES is not required at this time”.

He continued: “That is not because small businesses oppose fair and reasonable employment standards. We do not.”

“We understand and support the role of the NES in protecting workers and establishing a clear baseline for the employment relationship.”

The main consideration behind this reasoning was based on significant changes to the Australian workplace relations frameworks that small businesses have been subjected to, including the Secure Jobs, Better Pay Act, subsequent Closing Loopholes Acts no.1 and no.2 – in total over 38 substantive amendments to the Fair Work Act, only one of which does not apply to a small business.

These changes, all from the last few years, are impacting small businesses irrespective of “whether they’re a five-person baker or a $100,000 corporation”.

He said: “Each of these [has] arrived with new compliance obligations, new Fair Work Commission jurisdictions, and of course, new legal uncertainty.”

“For large businesses with HR departments and access to employment lawyers, these changes may be manageable, but for a small-business owner, who is also the manager, the bookkeeper, the person on the shop floor, they can be overwhelming.”

Sommerton cited COSBOA-commissioned research, the 2025 Small Business PEAK Benchmark Research Report, in which over 1,000 small-business owners overwhelmingly reported limited understanding of workplace relations changes, despite awareness rising from 44 per cent to 48 per cent.

“Awareness of Closing Loopholes changes, which were arguably the most complex of all the reforms, sits at a low 23 per cent. These are not numbers that suggest the system, in our view, is ready for further change; these are numbers that tell us that existing obligations are not yet understood, and need further time for embedding,” he said.

This is not because of bad faith, Sommerton highlighted, but due to the pace and complexity of reform outstripping a capacity to keep up.

Adding further obligations before existing measures are properly understood, “no matter how noble”, will not improve employment standards for workers.

“In our view, it will lead to a reduction in compliance,” Sommerton said.

As a cumulative effect, Sommerton added, new and old obligations can impact each other, “creating a complex, multiplier effect that small businesses are finding difficult to absorb”.

Spending about 12 hours per week on regulatory and administrative matters, he argued, “is beyond their capacity to absorb”.

Sommerton said: “Our view is that further NES changes risk dampening employment growth in the small-business sector at a time when the national economy needs it most.”

As the inquiry continues, with more public hearings expected, it remains to be seen what changes – and for whom – are recommended.

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