Is the Fair Work Act Fair for Small Business?

Guest post by Christine Broad, Solicitor.



In a previous article we wrote about the increase in the number of unfair dismissal claims since the introduction of the Fair Work Act in 2009. (see "Unfair Dismissal Guide for Employers" dated May 2011). Yet again we are hearing this discussed in the media having just passed the 2 year anniversary of the introduction of the Act.

In particular it is the application of the Act to small businesses that is in the spotlight at the moment. It is our experience, and this is reflected in recent commentary, that small businesses are struggling with compliance given the number of modern awards and the sometimes daunting task of calculating the correct application of the award, particularly where there are also transition provisions that apply.

On 15 July 2011 a case came before the Federal Magistrates Court regarding the provision of payslips to a former employee of a small business. The Federal Magistrate was critical of the Fair Work Ombudsman for its "heavy handed approach" to the small business owner, and suggested instead that it would have been more appropriate to assist the employer with guidelines as to how he could establish a compliance programme. Instead of enquiring as to what systems the employer had in place and how they could be improved, the FWO took a "strict compliance" approach and proceeded to prosecution.

The Federal Magistrate further commented on the purpose of the legislation and reflected on the intention stated at the time of its introduction which was "to provide information and advice on Commonwealth workplace laws to …employers."

The current trend of the number of unfair dismissal claims continuing to rise each quarter, along with the cost and confusion around application of some awards, is causing many small business owners to make decisions that are not necessarily in the best interests of the business. Professor Judith Sloan, in her commentary on ABC’s The Drum, recently made the point that for some employers the loadings and penalty rates (for example in retail) become so onerous that they decide they are better off not opening on certain days rather than face the cost of doing so. In addition to this the protections provided to small business employers were recently narrowed so that the test for a small business is now an employer with fewer than 15 employees (rather than 15 effective full time employees)- meaning that casual and part time workers are also included in the head count. Sometimes it is easier – less time consuming and less time out of the business- for the employer to pay an amount of money to the disgruntled employee rather than fight the unfair dismissal claim.

The commentary in the media is consistent with our experience at BlandsLaw regarding the small business owner and their efforts to comply with the modern awards and the provisions of the Fair Work Act. Often it is not until they are contacted by the Fair Work Ombudsman that they are aware they are not compliant, despite having made efforts to be compliant. It seems that many of these businesses face the same challenges of limited resources and limited ability to interpret the legislation. There is no doubt that these businesses would benefit from some guidance and advice from the FWO where it is apparent there has not been a deliberate attempt to avoid their obligations to their employees.

The following guidelines may assist employers who are concerned about their compliance with the relevant workplace laws:

• Identify the appropriate award applicable to your employees and ensure the conditions of the award are being met.


• Check if there is a transition period that applies as this may alter some or all of the conditions .
  Ensure you have a clear and complete employment contract which covers both compliance and business protection issues.


• Ensure you have clear policies and procedures with documented proof that all employees have received a copy.


• You may consider putting in place Individual Flexibility Agreements where there is agreement with the employee to pay an amount that is different to that contained in the award (provided of course it meets the BOOT test).


• If you are unsure about any of the above seek legal advice on the applicable award and arrange for an audit to be conducted to ensure you are compliant.

For further details about application of the Fair Work Act 2009, modern awards, unfair dismissal or any other workplace issue please contact BlandsLaw http://www.blandslaw.com.au/.