One in four SME bosses threatened by employee legal action: Survey

The Fair Work Act has again come under fire after a survey revealed more than 25% of small business managers have been threatened with legal action by a disgruntled employee.

The survey, conducted by employment law consultancy Employsure, reveals the views of Australian small business managers in relation to HR red tape and the Fair Work Act.

According to the survey, more than one in four small business managers have been threatened with legal action by an employee.

While this figure is worryingly high, the survey also highlights small business managers’ hazy knowledge of the Fair Work Act, and their attitude towards it.

A whopping 90% of the business managers surveyed admit to not knowing their obligations under modern awards, while 76% believe unfair dismissal rules are restrictive and complicated.

According to the survey, 87% of business managers are frustrated at the amount of red tape they have to follow, while 89% say the Fair Work Act is getting in the way of running their business.

Edward Mallett, managing director of Employsure, believes the Fair Work Act is holding back small business growth, saying “serious thought” needs to be given to reduce red tape.

Mallet is the managing director of Employsure, a Sydney-based employment law consultancy. He set up his business last year after recognising a gap in the Australian market.

“There is a lot of talk about finding a happy medium between employers and employees, but the Fair Work Act does not achieve that,” Mallet says.

“It is unduly complicated and contains too much red tape… How are employers supposed to comply with legislation if they are unsure of what their responsibilities are in the first place?”

Mallet says the current system is behind the rest of the developed world in many respects, and businesses suffer as a result.

“In addition, there is a real fear factor as it is relatively simple for disgruntled employees to file a complaint against their employer,” Mallet says.

“Our research shows that the biggest headache for bosses is dismissing someone.”

“Businesses are employing people that are underperforming because it is too hard for them to manage them out of the business.”

“I appreciate that employees need protection as well, but this should not compromise the chance of the business succeeding.”

According to Mallet, the modern award system is “torturous” for businesses.

“There are 122 awards covering almost all professions, with many businesses being subject to an award without knowing about it. This is alarming when a company can be fined $33k for this lack of awareness,” he says.

“The Fair Work Ombudsman is then heavy handed in the way in treats contraventions, rather than helping businesses to understand what they need to do.”

“The idea that the employer is the bad guy does not help anyone. The reality is that the law is just too difficult to follow without expert help.”

“I encourage fair work processes but there has to be a balance because, at present, the amount of red tape in place means the rules are stacked against employers.”