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What SMEs can expect this election year

What SMEs can expect this election year (Last Updated On: August 9, 2016)

Employment legislation is an ever changing and a crucial political football. With elections looming this year, employment will once again be in the spotlight.

Last year saw the inclusion of some significant budget items, affecting small and medium businesses (SMEs), as well as changes to the Fair Work Act 2009.

This month we look at the possible changes as a result of the federal election, which could affect you.


Productivity Commission Report

The Productivity Commission (the Commission) is the principal advisory body to the Federal Government on economic matters. The Commission recently released a report on how our current employment relations framework affects the economy.

The report includes a number of recommendations, but it will be interesting to see what stance the Labour and Liberal parties take on these matters. Senator Michaelia Cash (Minister for Employment) has already indicated that the Government will undertake further consultation with key stakeholders on the report, including SMEs, prior to taking any particular action.

  • Penalty rates: the Commission has recommended that Sunday penalty rates should be reduced to be the same as Saturday rates in the hospitality and retail sectors, allowing more businesses to open on Sundays, and hence grow and engage more staff. Reducing penalty rates would also significantly decrease overheads, placing many businesses in a much better finance position.
  • Unfair dismissal: the Commission is recommending the removal of reinstatement as the primary remedy for unfair dismissal, but also recommends compensation should not be awarded for procedural errors in terminations. This would be a real win for SMEs as currently, even where there is a very justified reason for termination, employers can still end up paying out compensation purely because they did not follow a cumbersome ‘best practice’ process.
  • Adverse action: the Commission report recognises that the opportunity for uncapped compensation in adverse action claims are driving up the number of these claims. Sensibly, the Commission has recommended these claims be capped at the same level as unfair dismissal claims (26 weeks compensation pay).


The Fair Work Commission (FWC)

The FWC continues to perform an ongoing review of Modern Awards. The FWC is looking at resolving inconsistencies between the National Employment Standards (NES) and the awards, as well as some important changes offering greater flexibility for employers and employees.

  • Annual leave: the FWC is looking at various changes to awards to allow more flexibility in relation to annual leave, including permitting cashing out of annual leave, for annual leave to be taken in advance of accrual and requirements for employees to take excessive leave. At this stage, the FWC is still taking submission on these inclusions.
  • Time off in Lieu (TOIL): the FWC has also indicated that provisions allowing TOIL for overtime should also be added to almost all awards where this is not currently included. This would allow employees to take time off equivalent to any overtime worked (instead of being paid for the overtime), providing greater flexibility for businesses to manage overtime.
  • Penalty rates: another big ticket item for the FWC, which is accepting submissions from interested parties on this across all awards.


In addition to these amendments, the FWC is constantly reviewing and changing individual awards in order to resolve inconsistencies with the NES. As this can happen on a monthly basis, it makes it exceptionally tricky for businesses to keep up with the ever changing landscape.


What can you expect from the Liberal and Labour party?

The major parties are keeping their cards relatively close to their chest on their employment policies. The Liberal party has hinted that they will use this election to obtain a mandate for changing the employment relations framework.

Whereas, the Labour party has hinted that they will seek to increase fines for employers that take advantage of vulnerable employees, and even introducing jail time for breaches of employment obligations. Considering how complicated our current employment relations framework is, there is a risk this could affect employers who unintentionally fail to comply, rather than those who deliberately seek to breach their obligations.


Whichever party draws your interest, employment relations will continue to be a complex, ever-changing and uncertain area that is a focal point for campaigns.  The 2015 budget saw Tony Abbott seek to prevent parents claiming both employer-funded and taxpayer-funded paid parental leave in a remarkable change of policy, meaning just about anything is possible.

Employsure can assist you navigate the changing landscape and is always on hand to advise on any changes and what these mean for your business.

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