A New Year, A New Government

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When the Liberal Party won the last election, many wondered how businesses and jobs would be affected. Change may be slow, but it is coming. Leaked documents have recently revealed that the Productivity Commission will be investigating the impact of the Fair Work Act on unemployment/under-employment, productivity, business investment and the labour markets response to economic changes.

What does this mean for small business?

Lets start with the positive. Changes to the Fair Work system could make employment arrangements more flexible and less regulated, similar to the individual contracts of the WorkChoices era. Small businesses may find it easier to conduct business without navigating the red tape that currently exists. The definition of small business may be widened to, say, 50 staff, which would mean many more businesses would have less onerous rules to follow. Having a ‘small business’ status changes some of the rules – for example, to dismiss someone fairly, a small business only needs to have properly used the Small Business Checklist. Employees of small businesses are not eligible to claim unfair dismissal unless they have been with the company for 12 months or longer, whereas in ‘big’ business, the time frame is 6 months or longer.

But what about the possible negative impacts? What reduces red tape for small business employers could potentially make employment less secure for workers, causing them to change jobs more frequently. This increase in employee turnover can be costly for business, with not only the expenses of recruitment to consider, but also reduced staff morale and company culture, as well as the loss of company knowledge. Employees are just more likely to be loyal to a company when their job is secure. In addition, if the commission’s review of weekend penalty rates results in a reduction of the penalty amount, it may be harder for companies to find employees willing to work on those days.

According to the documents, the Productivity Commission will report findings back to the government in 2015. Watch this space for future changes in employment law and industrial relations.