Small businesses will be liable for redundancy under proposed new awards

The Australian Industrial Relations Commission has recommended making small businesses liable for redundancy pay in industries including retail, hospitality transport, security and textiles, clothing and footwear.

The Australian Industrial Relations Commission has recommended making small businesses liable for redundancy pay in industries including retail, hospitality transport, security and textiles, clothing and footwear.

The AIRC’s recommendations were contained in 14 draft awards published late last week as part of the Rudd Government’s award modernisation process. The new awards are set to come into effect from 2010.

Currently, small businesses are exempt from having to pay severance pay to sacked employees.

But the AIRC says businesses with 15 or less employees should be liable for severance pay, although the commission says this should be capped at eight weeks’ pay after four or more years of service.

Employer groups have lashed out at the AIRC’s stance, with the Australian Chamber of Commerce and Industry estimating small businesses could face extra costs of up to $190 million a year.

Chief executive Peter Anderson says the Government “risks losing the confidence of the business community” if the redundancy provisions are incorporated in the final awards.

Anderson says the proposed rules contradict previous statements from Workplace Minister Julia Gillard that the award modernisation process would not lead to an increase in costs for employers.

“Employers across Australia need to take these developments seriously because modern awards will set mandatory wages and conditions across industries from 2010. Unlike current law, new businesses will be forced to comply with this expanded award system, as well as the Government’s new universal employment standards.”

Tony Steven, chief executive of the Council of Small Business Organisations of Australia, said the draft proposal was a concern and he would be consulting with the Government to find out more.

“On the face of it, it’s an undue impost on small business,” Steven says.

The ACCI has been encouraged by comments from Gillard over the weekend that she and Small Business Minister Craig Emerson will make a submission to the AIRC specifically addressing the issue of redundancy for small business.

“The Government respects the role and work of the independent umpire and is mindful that the AIRC is part way through an extensive consultation process with all relevant parties,” Gillard said in a statement.

“The Government is however concerned about the potential impact on small business of the newly proposed redundancy pay model award clause.”

The Australia Retailers Association is also unhappy with the draft award for its industry, and executive director Richard Evans says its requests for a more flexible penalty rate structure that took into account seven-day-a-week trading have been ignored.

“Penalty rates such as overtime and loadings should take effect after prescribed working hours and not prescribed days. Why should someone flipping burgers on a Sunday get paid more than someone doing the same job on a Monday?”

Related stories:

• Award shake-up to disrupt SMEs
• Retail and hospitality sectors wrestle with award modernisation