A government initiative to prepare SMEs for the forthcoming IR changes is likely to be sorely needed, says Shane Nichols.
The federal government will roll out an education and awareness campaign to explain the new industrial relations regime for small nad medium business, and if the experts are correct, every bit of it is needed.
For small business experts generally agree that small and medium enterprises (SME’s) will not be ready for the IR changes when they are introduced.
According to the Minister for Small Business, Fran Bailey, the government will organize 17 national small business seminars in metropolitan and regional areas over the next 12 months.
“These interactive seminars will provide small businesses with a range of information on issues such as Work Choices, as well as the opportunity for operators to have their say on small business issues,” Bailey says. “We will also have our network of 57 field officers hard at work providing information support on the ground.”
Small business – there are about 1.2 million trading small enterprises in this country – is naturally one of the key concerns of the new legislation. One of the government’s stated aims is to create a simpler and more universally applicable set of minimum wages and conditions as opposed to myriad state and federal awards operating now.
The president of the Small Enterprise Association of Australia and New Zealand, Michael Schaper, believes most SMEs are not prepared for the coming IR changes. “It’s hard enough running a small business full-time and there’s so much law and regulation to observe,” he says. With the IR regime, not only is there technical complexity but there’s a plethora of it as well.
“Small business can’t digest it all and they’ll rely on third parties to help them. A lot of research shows small businesses pick up a log of advice on an ad hoc or ‘as needs’ bases. Most associations do a very good job of getting information out to members but the sheer number of SMEs makes it hard for governments and advisory services to get to them all.”
Many SMEs will turn to their industrial associations for help, but a large percentage of SMEs particularly family businesses, don’t belong to small business organizations and they especially will struggle when they need help. Research shows that these business are likely to seek help from relatives or a trusted accountant.
Accountant and human resources expect a similar sort of demand for help as when the GST changes swept through the industrial landscape.
“The level of formality in the average SME is quite low,” says business policy adviser, CPA Australia, Hudy Hartcher.
“SME’s are probably not very well prepared for the IR changes. They’re usually the last group to get across any changes. Big business is usually the first.
“Our surveys show that a high proportion of businesses go to their accountants for advice – at least half of our members provide advice for clients.”
And whilst it’s typical of small business to go for help at the last minute, she says, they may also have their expectations dashed due to misapprehension of what the IR changes can and cannot do. “If they don’t have the appropriate information some small business might find they can’t simply do everything they thought they could – they can’t just go and sack someone, for instance,” says Hartcher.
To take advantage of the new regime’s treatment of unfair dismissal, one of the chief concerns for SMEs, an enterprise has to incorporate. This, says Hartcher, is another area where accountants’ expertise is vital.
“The decision shouldn’t be based on the desire to access the IR regime.”
“There are other requirements – such as taxation, partnerships, asset protection, reporting requirements – which mean incorporation may not be the best option for a small business. The IR considerations are only part of the issues SME’s will have to think through in regard to incorporating.”
According to the government, only 49 per cent of small businesses are incorporated.
Business could get brisk for HR consultants such as The Resolution Centre, based in Sydney. A survey by the firm of 1000 SMEs (50-500 employees) last November found that 62 percent where considering consultants’ help to implement the IR changes, 32 per cent would look to government assistance and 82 per cent based their entire knowledge on the process on reports in the media. The Resolution Centre’s managing director, Katie Graham, says a surprise in the survey was the revelation that “lots of businesses indicated they wanted outside help to provide ‘positive awareness’ to employees regarding the changes”.
They also said they wanted consultants to work with top management to map the changes and processes. “They don’t want to implement change without planning and encounter conflict and lose efficiency. They want to prepare the way,” she says.
There is a wealth of information on industrial relations law, awards and conditions and so on, online.
Click here to go back to the In The Media article page
Back to top