IR reform: Burke open to changing small business coverage after Senate inquiry calls for 20 employee cut-off

Lawmakers should pass the federal government’s highly contested industrial relations reform package if small businesses with fewer than 20 employees are excluded from the single-interest agreement overhaul, a Senate inquiry has found.

The Senate Education and Employment Legislation Committee handed down its 121-page report on the Labor government’s contentious Secure Jobs, Better Pay bill on Tuesday, calling the package a “positive first step” to delivering better outcomes for Australian workers.

Just 14.7% of Australian workers are covered by an enterprise bargaining agreement that has not expired, the committee says, highlighting the need for a reinvigoration of the industrial relations system to boost wages and bolster productivity.

However, the report recommended several amendments to the bill before the Upper House deliver its vote.

Most prominent for small businesses is the recommendation to change the minimum size of enterprises covered by reforms to the single-interest enterprise bargaining stream.

The bill would make it easier for bargaining representatives to nominate multiple businesses and their workforces for coverage under a single agreement, a move the government says will drive wages and improve working conditions.

As it stands, the minimum size of businesses covered by that plan is 15 employees, based on the definition of a small business under the Fair Work Act.

But business representatives argue that exposing employers with fewer than 15 employers to the process would place an unnecessary burden on employers, who already deal closely with their employees and could face vastly different circumstances to seemingly similar enterprises.

The Council of Small Business Organisations Australia, which called for the government to explore multi-employer bargaining reforms ahead of September’s Jobs and Skills Summit, used a submission to the Senate inquiry to call the 15-employee limit both “problematic” and “not fit for the purpose of this bill”.

“Broadly, the view by these peak bodies is that the Fair Work Act‘s current definition of ‘small business employer’ (fewer than 15 employees) is too restrictive a number within contemporary workplaces and not fit for purpose to define the scope of the single-interest stream exemption,” the report said.

Acknowledging those concerns, the committee argues the bill should raise the cut-off from 15 employees to 20, while leaving the ‘small business’ definition under the Fair Work Act intact.

Yet the inquiry did not acquiesce to every complaint from business groups, arguing that some claims of small business harms from the bargaining reforms were unfounded.

“The committee notes with disappointment the astroturfing that has taken place throughout the inquiry, with lobby groups representing big business consistently framing their opposition to provisions of the bill through baseless assertions about its purported impact on small business,” it said.

Further reforms on the table as vote looms

The report calls for further amendments to the bill, including guarantees that workers and employers undergo a conciliation process for disputes over flexible working arrangements before roping in the Fair Work Commission for arbitration.

Elements of the bill expressly prohibiting sexual harassment should be cross-referenced with existing legislation, and all lawmakers should guarantee all measures in the bill cover workers regardless of their immigration status.

The Fair Work Commission should only declare an intractable bargaining declaration if negotiations break down after nine months, the report added.

The bill should also ensure “no party can unreasonably withhold agreement for a proposed enterprise agreement being put to a vote”, with the FWC given powers to push the agreement along.

Support from the committee, chaired by outspoken Labor Senator Tony Sheldon, will now weigh on the crossbench — including committee member and independent Senator David Pocock, whose pivotal vote could determine the fate of those reforms.

Pocock has previously called to separate the most contentious multi-employer bargaining reforms from measures enforcing gender pay equity, abolishing pay secrecy clauses, and bargaining updates for low-paid workers, allowing the Senate to more easily pass those reforms.

However, the report did not call for splitting the bill.

“While it is urgent that low-paid Australian workers get a pay rise, it is no less urgent that those on middle incomes are given a long overdue opportunity to collectively bargain for a fair pay increase after a decade of declining real wages,” it said.

There are now fewer than two weeks left for the Senate to pass the bill into law before the Christmas break, a major goal of the Labor government.

In a sign of the government’s eagerness to pass its legislative reforms, Industrial Relations Minister Tony Burke has reportedly signaled the door is open for negotiations on that employee number cut-off.

Hearings heighten debate over cost to small business

The tabling of the report was preceded by contentious committee hearings, in which Opposition Senator and former industrial relations minister Michaelia Cash accused the federal government of Googling the information on consultancy fees to determine how much small businesses could expect to pay for bargaining support under the new legislation.

The Department of Employment and Workplace Relations defended its methodology, but the discovery led to further discord among the business community.

“Surely the costings for seismic changes to Australia’s workplace architecture should be the product of a more rigorous analysis than the top result on a Google search,” Australian Chamber of Commerce and Industry chief executive Andrew McKellar said in a statement.

With the inquiry now at a close, other industry players say employers are still in the dark about the bill — let alone its potential implications.

In a recent survey of 545 businesses, human resources platform Employment Hero found 35.6% of respondents knew “a little” about the bill, with a full 25% not knowing anything about it at all.

Of those who were familiar, some 36.5% reported feeling “represented” in the legislation.