Small business ombudsman calls for systems overhaul as businesses emerge from lockdown

Ombudsman recommends range of reforms to support small businesses in post-coronavirus recovery phase.

The Australian Small Business and Family Enterprise Ombudsman Kate Carnell has outlined a range of reforms to support small businesses in the post-coronavirus recovery phase, including the introduction of a Small Business Award.

The recommendation to introduce a Small Business Award is part of a wider business recovery strategy released earlier this week, the ASBFEO’s COVID-19 Recovery Plan, which details a number of changes to improve the legal, regulatory and compliance environment for small businesses.

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

“The Fair Work Act has 960 sections and over a quarter of a million words. On top of this, Australia has more than 100 industry awards, with hundreds more classifications within those awards.

“If big businesses with large HR and payroll departments struggle to comply, 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.”

If adopted by the government, Carnell said the Small Business Award would be simpler than existing awards and available to all small businesses on an ‘opt in’ basis. It would cover all staff, irrespective of their different duties and would include a ‘permaflexi’ classification. The Award should have minimum standard pay rates, which can include penalty rates but not overtime ie: loaded rates.

“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,” 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.

“Small businesses will be facing enormous challenges and uncertainty as they emerge from hibernation. If they don’t have flexibility and confidence in the system, they won’t employ.

“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.”

Carnell said another logical move 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.

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

Other recommendations in the ASBFEO’s COVID-19 Recovery Plan include:

  • Abolishing Fringe Benefits Tax for small business
  • Creating a federal small business claims tribunal with ASBFEO to provide triage services
  • Permanent small business instant asset tax write-off of $150k
  • Legislating 30-day payment terms for small businesses
  • Creating a small business procurement panel for any government contract under $10m

“Right now, many small businesses are wondering how they will survive and if it is worth continuing in business at all.

“Our Recovery Plan aims to restart the economy by getting people back to work and building economic confidence. Small business is the cornerstone of economic activity – employing over 5 million Australians.

“Our recommendations cover a broad range of areas including taxation, access to justice, industrial relations and government procurement.

“Trade-offs will need to be made but ultimately our COVID-19 Recovery Plan provides the framework to build essential support for Australia’s small businesses and family enterprises and a future that all Australians can be proud of.”

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