John Durie: It’s time for a small business-specific IR award

It is nonsense to set the same industrial relations regime for Coles as for the corner store, so why doesn’t the federal government revive the old plan to establish a small business industrial relations award?

Better still to have neither, but acknowledging the politics of the day, the government could do a lot worse than revive the plan suggested a decade ago by former Council of Small Business Organisations of Australia (COSBOA) boss Peter Strong.

Small Business Ombudsman Bruce Billson doesn’t walk quite that far, but in his recent submission to the Senate education and employment committees, he rightly highlighted the fact small business is different.

He argues instead this fact should be accommodated by annexures to the government’s main industrial relations bill covering small business.

The Fair Work Act says the rules should “acknowledge the special circumstances of small and medium-sized businesses”.

There is the usual argument about what is defined as a small business, with the Australian Bureau of Statistics saying a small business is one with fewer than 20 people, while the ombudsman has carriage over businesses with fewer than 100 people or turnover of less than $5 million.

The present industrial relations bill sets a cut-off of 15 people, which means you are included in the new legislation if you are above that level, which is frankly ludicrous.

Small business is different

The ombudsman suggests instead we should have a small business code, which sets out the conduct by which the owners have to operate.

This idea is not a million miles from the former COSBOA boss’s idea of separate legislation for small business and both have the distinct advantage of recognising the different operating regimes for companies of different sizes.

Even a separate schedule in the law covering small business would rid it of many of the anomalies, while at the same time protecting the rights of trainees and apprentices.

The fact is small business is not travelling so well; according to the ABS, cash levels were 35% lower than usual levels in January.

Pre-COVID in the 2020 financial year, 45% of small businesses were not making a profit. So no one is asking for sector-specific handouts here, just a rational approach to regulation that doesn’t handcuff business as it attempts to keep its head above water as interest rates rise.

Pick your size but the café in Footscray faces different challenges than the one in Double Bay, so just how does the government propose imposing the same rule on both employing 15 people?

The businesses may have different structures, cost bases, consumer preferences and strategies, and certainly all of the above will be different from the neighbouring Coles supermarket.

The government doesn’t want to delay passage of the bill or split off more controversial sections like multi-employer bargaining, so why not see the light and draw up a different schedule for small businesses?

The difference between the local Coles and local café is the latter will often be a small team that includes the owner-operator, who is usually from the same extended family and or well-known to each other. This means it works on a more flexible structure that lets Daisy come in late on Wednesday because she has yoga or Bill leave early to pick up the kids from school. This is all handled in-house because everyone is part of a close-knit team.

The simple argument is you can’t just shrink-wrap a big business and call it a small business.

Small business is on the warpath on this issue, but its concerns could be accommodated by some simple common sense.