IR bill to ‘add hours of compliance’ for small businesses, government told
Proposed changes to Australia’s workplace relations system will significantly increase the number of hours small business owners spend on compliance, industry groups warn.
Complex changes contained in the government’s Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 will detract from the economy’s productivity performance by requiring employers to spend far more hours on compliance, according to Master Builders Australia and the Business Council of Australia.
The bill was referred to the Education Legislation Committee for inquiry earlier this month, with consultation ending tomorrow.
Master Builders Australia has urged the government to withdraw the bill with the industrial relations reforms set to significantly increase the compliance burden and costs for businesses.
“Small businesses do not have HR departments so industrial laws need to be clear and simple, so everyone knows where they stand,” Master Builders Australia chief executive Denita Wawn said in a recent statement.
“The industrial relations Bill currently before Parliament will require employers to spend far more hours working on compliance and red-tape with greater uncertainty and increased legal risk making it harder for employers who need to estimate costs in advance, make future business plans or tender for new work.”
Ms Wawn said that with over 98 per cent of the businesses in the building industry being small in size and Australia facing a housing crisis, Australia must make it easier to do business by reducing unnecessary costs and regulatory barriers.
The Business Council of Australia said the legislation for IR reforms is based on flawed data and analysis and severely underestimates the time it would take employers to implement the measures.
BCA chief executive Bran Black said the explanatory memorandum for the bill contains multiple admissions that the data it was relying on to justify the changes was either outdated, limited or unavailable.
“In addition, certain assumptions used by the government as part of its cost-benefit assessment are unrealistic, including the estimated 15 minutes it would take employers to apply the new multi-layered test as to whether a casual employee was entitled to an offer of permanent employment,” said Mr Black.
“These flaws call into question the government’s estimates of the impact on individual businesses, and the extra $9.1 billion the labour hire and gig economy reforms alone are forecast to cost over 10 years – costs that will increase pressures on households already coping with a cost-of-living crisis.”
The explanatory memorandum for the bill explains that the 15-minute estimate for the permanent employee measure is based on the 10-minute estimate for the existing legislated test for conversion at 12 months with 5 minutes added.
However, Mr Black said the new test requires up to 12 different criteria to be considered, compared to just one under the existing legislation.
“Imagine estimating that it will take a small business just 15 minutes to step through a dozen different criteria to determine if an employee is a casual – and then having no idea about the cost to Australian business if the process ends in a dispute determined by the Fair Work Commission,” he said in a recent statement.
BCA has also criticised the lack of research undertaken about the measures, with the government polling 1200 of the 2.7 million casual employees in Australia and interviewing just 12.
“The government is proposing nothing less than a radical rewriting of our workplace relations system, and what is abundantly clear is that the cost impacts of the Bill, which will hit employers, employees and consumers, will be significantly higher and wider-ranging than claimed,” said Mr Black.
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