Second Submission to the Senate Employment, Workplace Relations and Education References Committee. Regarding Small Business Employment

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1 Second Submission to the Senate Employment, Workplace Relations and Education References Committee Regarding Small Business Employment Date: September, 2002 Via Contact: Senator Guy Barnett Julie Mills Chief Executive Officer Recruitment and Consulting Services Association Level Collins Street MELBOURNE VIC 3000 Ph:

2 INTRODUCTION The Recruitment and Consulting Services Association submitted a paper to the Senate Employment, Workplace Relations and Education References Committee in May 2002 regrading the impact of legislation on the productivity and efficiency of small business. The RCSA was then invited to present to the Committee in July, where RCSA members Charles Cameron and Kay Strain expanded on the submission. This document provides further material that describes the small businesses within RCSA s membership and the impact the legislative changes, as well as the differences between state and federal legislation that hamper business growth and employment opportunities. Since our presentation in July we have consulted with several members who run small business to gain further information for the Senate Committee. KEY CONCERNS OF SMALL BUSINESS There are 3200 members of the RCSA, in which 70% are small businesses. This is based on the ABS definition that a small business is either a sole proprietorship; partnerships without employees and it has 1-4 employees or businesses with 5-19 employees. There are five types of services that RCSA members provide: 1. On-hired Employee Services 2. On-hired Contractor Services 3. Recruitment Services (permanent placement) 4. Employment Consulting 5. Managed Project/Contract Services The majority of RCSA provide On-hired Employee Services and Recruitment Services. As a consequence members may only have a small number of employees as consultants on their payroll, but because they may have 100 on-hired employees out at worksites they actually have a cashflow that is quite disproportionate to small businesses in other industries. As a consequence small business providing on-hired employee services have the same compliance, OH&S, privacy requirements as firms almost twice or three times their size. The following list outlines key areas where regulatory compliance places either a time or financial burden on members. Payroll - Permanent and Temporary Staff Completing Section B of TFN Declaration Forms & preparation for return to ATO. Allocation of payroll tax-exempt clients and completion of Payroll Tax reporting and payment (monthly)

3 Complete yearly reconciliation of Payroll Tax Superannuation Reconciliation and payment (Monthly) Centre Link requests for employment records (Daily) Workers Compensation Annual Reconciliation and forecasting Group Tax reconciliation and payment (Monthly) Occupation Health and Safety Consultant time in relation to induction and training of temporary employees and client visits to ensure compliance. Training costs associated with keeping abreast of the changes in the OH&S legislation. Pre-placement client workplace assessments General compliance Industrial Relations Record keeping Award compliance EBA negotiation Roping-in applications / Logs of claim Procedural fairness in performance management Award interpretation EEO Claims management Contact officer training Policy renewal Privacy Act Consultant time in relation to going through the aspects of the Privacy Act prior to any phone call from a prospective candidate and of course reference checking Privacy - increased costs in relation to printing and stationery Training costs associated with the introduction of the Privacy Act Australian Bureau of Statistics (ABS) The RCSA welcomes the research on the industry. It is vital information that enables the association to plan and inform our members about the needs of the market. Unfortunately, for small businesses, research surveys can add to their already significant level of compliance and documentation. Members are aware of the value of the information, but would appreciate less time consuming ways to collect it (the recent ABS survey took a small business members bookkeeper and accountant (at additional cost) approximately 6 hours to complete the research

4 GST Monthly reconciliation and quarterly completion of BAS (approximately 3 hours per return). Those areas that require the most resources and are compliance to the OH&S and Privacy Act which restricts consultants revenue-making activities. Please note that the industry recognises the importance of OH&S compliance and has been acknowledge by the Privacy Office as on of the industries to fully take on board the requirements of the privacy act. The RCSA and members support the intentions of the Acts, however the administration and process required to comply with both. THEN AND NOW The legislative environment has not always been a limitation to business growth and employment, but unfortunately appears more apparent today. The RCSA asked members to compare how the operation and efficiency of their businesses today compared with five years ago. All the issues listed above are recent legislation that has changed the way a business operates. Likewise the RCSA notes there appears to be more changes to legislation and interpretation of awards and enterprise agreements. Consequently this has a flow on effect that requires members to undertake more training which requires more time and in the end a cost to their bottom line. At the same time, legislative changes mean that expensive accounting and management software needs regular updating. By example, one member cites that five years she had part time book keeper who looked after payment of on-hired employees, today she has a full time bookkeeper purely meeting compliance let alone looking after payroll. EMPLOYMENT OF AUSTRALIANS The response from members was very clear that legislative and regulatory obligations increased the risk and reduced their willingness to employ new staff. Small business already find it hard to attract the best employees when large internationals can offer attractive benefits such as child care facilities, carers leave, paid maternity leave. Likewise the nature of a small business means that they do not have an HR Department to performance manage the personnel and consequently some are fearful of unfair dismissal claims

5 However the key reasons for the impediment to small business taking on more employees is that their business are so stretched in terms maintaining compliance with ever-changing legislation that they are reduced in their capacity to get more work in order to justify further employment. STATE vs FEDERAL Another inhibiter of small business employment development is the confusion between state and federal legislation. This is particularly true for RCSA members who s employment offering sees them manage the pay role for on-hired employees which can become very confusing when they have to determine if the employee is under a state, federal, industry award or an enterprise agreement. This situation creates confusion for all parties on-hired agencies, the employee and clients. One member has stated that this is one the reasons for their decision not to expand interstate. In order to learn a new set of workplace relations, OH&S, workers compensation and EEO regulations they would need significant investment or buy in the knowledge, which is simply not viable for many small operators. Although not developed into a formal position by the RCSA, the association supports moves to remove the confusion between state and federal legislation and create a uniform system for employment legislation

6 RECOMMENDATIONS As mentioned in our previous submission, the RCSA is keen to work with Government to remove the compliance issues that are placing burdens on Australia s small businesses. Members use the RCSA as a vital resource to ensure they remain compliant and aware of legislative or regulatory changes. To ensure we keep members up to date we are keen work closely with Government to either educate members or develop strategies that make compliance easier for small businesses. The RCSA proposed in its first submission that: It is consulted by the Government on employment related issues to provide relevant industry feedback Works with the Government on developing industry research to define issues facing small business Works with the government to communicate and manage programs targeted to the employment sector Develops stronger dialogue with the Department of Workplace Relations and Education to review and implement employment programs Note that if the RCSA was to take on the industry education role it would need the tools and information from the Government to ensure it communicates and educates correctly, and likewise appropriate funding would be required, as the RCSA is a non-profit organisation. The RCSA stands by its initial recommendations

7 CONCLUSION The RCSA welcomes the opportunity to provide a submission and present to the Senate Committee. We hope that this supporting documentation has addressed questions raised by the Senators and provides a way forward to grow Australia s small business sector and with it Australian employment

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