A clear majority of business owners around Australia feel the government’s industrial relations (IR) reforms have burdened their companies and have made it more difficult for them, new research reveals. From the 2022 minimum wage increase of 5.2 per cent to limiting the use of fixed-term contracts among other changes, Australian businesses of all sizes are grappling with the impact of these changes in an economy that is continuing to face many headwinds.
 
Amid the uncertainty created by at least 20 amendments to the Fair Work Act since December 2022¹. business loan comparison platform Small Business Loans Australia commissioned a survey of an independent, nationally representative panel of 200 business owners and decision-makers to ascertain the impact of the government’s suite of IR reforms.
 
Respondents were presented with a sample of the federal government’s IR changes – including the landmark minimum wage increase after the most recent federal election², encouraging multi-employer bargaining, placing limitations on the use of fixed-term contracts, prohibiting pay secrecy clauses to address the gender pay gap, legislating the right of employees to request flexible working conditions, providing employees with the entitlement to 10 days of paid family and domestic violence leave each year and mandating a duty for employers to prevent sexual harassment, sex discrimination, and victimisation in the workplace.  
 
Only one in three respondents (36%) said none of these changes had become a burden on their business, and that at least one of these changes had not created a more difficult operating environment.   

2022 minimum wage hike and fixed-term contract limitations represent biggest business burdens

Of the listed reforms, businesses felt the single most burdensome was the 2022 lift in minimum wages of 5.2%. More than a quarter (28%) of businesses identified this reform as burdensome.  
 
The placing of limitations on the use of fixed-term contracts to ensure workers have the opportunity to become permanent employees has impacted 25 per cent of businesses. From 6 December 2023 employers in Australia have not been able have an employee on a fixed-term contract for more than two years.  
One fifth (21%) have been adversely impacted by multi-employer bargaining. Enacted from 2 December 2022, this law allowed for employers or workers at multiple companies that share a common interest and location to bargain with each other.
 
Other reforms such as employees being granted 10 days of annual family and domestic violence leave, as well as a duty for employers to prevent sexual harassment, sex discrimination and victimisation in the workplace were also considered burdensome by more than one in 10 respondents – 15 per cent and 11 per cent, respectively.  
 
Small Business Loans Australia asked respondents in what ways the IR laws have specifically made it more difficult to run their businesses. One quarter (24%) said the reforms have made it harder for their company to grow, and a similar proportion (23%) felt that the changes have made it harder to remove toxic or underperforming employees.  
 
One in five respondents said the IR changes have made it harder for the business to downsize during difficult times (21%), adapt to change in the marketplace or economy (20%), and to afford employees altogether (20%). Seventeen (17) per cent said the changes make it more difficult to let go of employees when the business can no longer afford them.  
 
Alon Rajic, Founder and Managing Director of Small Business Loans Australia, says the data shows how the pressure of multiple industrial reforms changes are bearing down on Australia’s business landscape – and have the potential to add to the national unemployment rate.  
 
“People are the lifeblood of any business, yet at a broad level these responses show companies are struggling to afford new staff or indeed be able to let go of workers who are hampering productivity and profitability.” 

Large, medium and small businesses all burdened by IR changes

Segmenting the responses across business sizes, Small Business Loans Australia found that a staggering 92 per cent of large businesses – those consisting of more than 200 employees – felt that at least one of the listed IR reforms had been a burden on their business, particularly multiemployer bargaining (chosen by 50%).   

States show different levels of IR burden  

Across the mainland states, results were more mixed. While NSW businesses are most likely (at 69%) to feel burdened by at least one of these reforms, WA businesses are most likely (at 75%) to find it harder to operate due to these reforms.  
 
Business owners in South Australia are twice as likely to say that the changes have made it harder for them to adapt to change in the marketplace (42%, compared with the nationwide average of 20%) and downsize when things get more difficult (42%, compared with the national average of 21%).  
 
Alon says these results should set off alarm bells for the government: “With the next Federal election not far away, our data shows businesses around the country are feeling burdened with the pace and scale of industrial relations reform. No matter who has a seat in the next parliament, we want to see more opportunities for businesses to take stock of the regulatory landscape.”
 
The full industrial relations study can be found here: https://smallbusinessloansaustralia.com/how-are-the-most-recent-changes-to-australias-industrial-relations-laws-impacting-business/