Unfair dismissal exemptions for small business

The new Coalition plan is to restrict sacking immunity to firms of no more than five workers.

The federal Coalition is considering softening a key plank of its workplace relations policy, limiting the exemption from unfair dismissal laws to businesses with five workers or fewer.

Tony Abbott has previously flagged exempting businesses with up to 20 employees from the laws, prompting attacks from Labor and the unions that millions of workers would lose protection.

But senior Coalition sources told The Australian a new plan to restrict the exemption to so-called micro-businesses of up to five full-time equivalent employees was now under “active consideration” by the federal opposition.

It is understood the revised plan is an attempt to neutralise industrial relations as a political negative in the lead-up to this year’s federal election, while appeasing the Coalition’s core small business constituency.

As part of the compromise, the Coalition would extend the application of Labor’s Fair Dismissal Code to businesses with up to 20 employees instead of the current limit of 15.

The Coalition proposal contrasts sharply with the position under Work Choices, which removed unfair dismissal protections from people working in companies with 100 or fewer employees.

Over recent months, the Opposition Leader has promised to “take the unfair dismissal monkey off the back of small business”, and was expected to seek a mandate for the Coalition’s pre-Work Choices position that exempted business with 20 or fewer employees.

But sources said the broad exemption did not have wide support among stakeholders during consultations over the Coalition’s workplace policy.

Under the revised proposal, the Coalition would create an entire exemption from unfair dismissal laws for businesses employing up to five full-time-equivalent employees. In addition, the application of the exemptions applying under Labor would be extended to businesses employing up to 20 full-time equivalent employees,

Under Labor’s Fair Work Act, employees must have worked for 12 months before they can make a claim if they are employed by a small business with fewer than 15 employees. This category of employee is also subject to the Fair Dismissal Code.

Coalition sources stressed while the revised plan was favoured by key opposition figures, it was yet to be endorsed. Sources said members of the opposition and the business community wanted Mr Abbott to proceed with the blanket exemption applying to up to 20 employees.

Speaking at the weekend, opposition workplace relations spokesman Eric Abetz singled out micro-businesses as the “forgotten sector” of workplace relations.

“My aim for Coalition policy is to put people first, especially `the forgotten people’ to borrow a phrase,” he told the annual dinner of the conservative H.R. Nicholls Society in Melbourne.

Senator Abetz said business growth had been highest in the micro-business sector in recent times, with the creation of 162,910 entities.

“These micro-businesses since 2007 can genuinely lay claim to being considered the ‘forgotten sector’,” he said.

“They have been ignored by Labor in every decision and especially in workplace relations policy.”

Senator Abetz said these businesses “complain most fiercely” about Labor’s workplace laws as they were worried their right to engage and work cooperatively with their own staff was being eroded.

“Our concern is for Australians to obtain and keep rewarding employment,” he said.

“To achieve you need men and women willing to employ. And under the Coalition those most willing to employ were the men and women in micro business.”

Julia Gillard and the ACTU have sought to use Mr Abbott’s statements on industrial relations to claim the Coalition would bring back Work Choices if it won office.

The ACTU has financed advertisements featuring Tracy, the actress who became the face of the union movement’s successful 2007 campaign against the Howard government’s industrial relations laws.

The Coalition’s shift on unfair dismissal policy reflects a bid by senior opposition strategists to try and avoid falling victim to what they claim is a “scare campaign” by Labor and the unions.

It reflects an acknowledgment that industrial relations remains an electoral negative for the Liberals.

Sources said the Liberals want to “tweak” Labor’s workplace laws, changing the “worst aspects” rather than fundamentally rewriting the legislation.