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Industry leaders believe the current 15-employee threshold causes red tape and compliance costs for enterprises.
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Push to expand small business definition hits roadblock
16 October 2024
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Employer groups’ proposal to expand the definition of a small business from 15 to 25 employees has hit a roadblock over the government’s fears it would weaken worker protections.
Groups like the Australian Chamber of Commerce and Industry (ACCI) and Australian Industry Group argued that raising the threshold for tax and employment purposes would cut red tape for entrepreneurs.
“Small business is grappling with ongoing higher costs to do business, and they’re also struggling with an increasing burden of red tape,” ACCI boss Andrew McKellar said.
“The best thing that should be done is to increase the definition of small business in the Fair Work Act from 15 to 25 employees, we think that would have a very significant impact in helping to reduce the level of compliance and red tape that small business has to deal with under current arrangements.”
McKellar said the sector was struggling in the wake of recent industrial relations reforms, such as the right for employees to disconnect and a new definition of casual employees.
“The level of regulation has gone up significantly in the past 12 months,” he said.
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“We want small business to be given a fair go, to be given an even break and to have a much better chance to thrive and grow in the Australian economy.”
Ai Group chief executive Innes Willox backed the ACCI’s proposal, calling the current definition “ham-fisted, unsophisticated and outdated”.
He said it was “ludicrous” for exemptions extended to small businesses to end when owners hired a 16th staff member.
“Any business with 25 employees or less is in reality still a very small business. Very often it is a family business or a start-up,” he said.
"The current definition clearly discourages growth, investment and employment in businesses that have the potential to be significant contributors to their local as well as the national economy.”
The legal definition of a small business is the subject of a review by the Fair Work Ombudsman.
But the government this week said it would not be considering a change despite the still-underway FWO review.
Employment and Workplace Relations Minister Murray Watt said expanding the definition would make it easier for more businesses to fire workers.
“So many Australians are doing it tough and the last thing we should be doing is making it easier for businesses to sack people,” he told Nine morning program Today.
“This is a time that people need to hang on to their jobs, not be at risk of losing them and we don't want to do anything that’s going to jeopardise this.”
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