Anger from the shop floor: SMEs slam “go away” money and lack of support ahead of Fair Work review

Submissions to the Government’s review of the Fair Work Act have started to trickle in, with two small businesses complaining that Labor’s industrial relations laws fail to take into account small- and medium-sized businesses’ special circumstances and force them to pay more “go away” money on unfair dismissal claims.

Julia Rhodes, of the rural tourism facility the Eltham Valley Pantry in New South Wales, says current penalty rates – requiring 2.5 times normal pay for public holidays – are “unsustainable for cafe/restaurants” and says the current definition of small business, at 15 full-time employees, limits job opportunities for those who prefer to job-share.

“No one in the restaurant industry is opposed to a reasonable penalty rate regime, but penalty rates in the new Modern Award are so high that it has now become unfeasible for many cafes restaurants to open on public holidays, with Sundays becoming increasingly at risk too,” Rhodes states in her submission.

“When one sees the margins on which most cafes and restaurants are operating, it is obvious why the industry is low waged. The price of eating out has declined significantly in real terms over the past 10 years, while input costs such as labour, electricity, insurance etc have all dramatically increased.”

Rhodes adds that allowing a business with a head count of more than 15 to be sued for unfair dismissal is “onerous for the hospitality sector as businesses with only eight full-time employees can easily exceed the ‘headcount of 15’ definition through job-sharing arrangements.”

Another small business operator, Nadine Fitzpatrick, who has four full-time employees and a range of sub-contractors, says the Act fails to fulfil its objective of acknowledging the special circumstances of small- and medium-sized businesses.

Fitzpatrick states that the Act is flawed for allowing a former sub-contractor to proceed with an unfair dismissal case, which moved to conciliation. She says conciliation provides employers with two options: paying money to make the matter go away, or committing to arbitration with its associated costs.

“As a small business owner trying to make ends meet and keep staff in employment, the maxim ‘throwing good money after bad’ was the driving force to settle at conciliation, and pay the contractor an amount of money, that really went against all principle,” she writes in her submission.

But another submission by Matthew Bannon, who says he has neither made a claim about being unfairly dismissed or been accused of it, makes the case that the legislation “does not seem to take sufficient account of the many situations where the employee is not even aware they have been dismissed nor the shock experienced when they realise they are no longer employed.”

It says the FW review panel, which comprises John Edwards, Ron McCallum and Michael Moore, could recommend a “more flexible provision for dismissed employees to invoke the general protection provisions to challenge their termination. A relevant time period beyond 14 days would be appropriate.”

He adds that the “unfair dismissal provisions in the Fair Work Act are not working as well as they could or should.”

“This is mainly because an employer can breach more than one section of the Fair Work Act and be exempt from punitive or coercive decisions by FWA that would modify their behaviour (and potentially the behaviour of other employers) simply because an applicant fails to meet what should essentially be an administrative requirement.”

Submissions for the Fair Work Act review are due this week.