Don’t extend redundancy protection to small business employees: ACCI

A Government scheme to protect worker entitlements when businesses go bust should not be extended to small businesses, the head of Australia’s largest business lobby group says.

The General Employee Entitlements and Redundancy Scheme (GEERS) provides a government guarantee for accrued employee entitlements and redundancy payments when a business becomes insolvent, but only for businesses with 15 employees or more.

Unions are reportedly lobbying the Government for an extension of the scheme to cover the employees of small businesses that fail when related larger business go under, for example when the failure of a large manufacturer forces smaller suppliers to close their doors.

But Australian Chamber of Commerce and Industry acting chief executive Peter Anderson says any change to include small businesses will take the pressure of small businesses to provide for their employee’s entitlements.

“My concern about extending the scheme right across all businesses is that it could send the wrong message that the Government will bail out any entitlements,” Anderson says. “It would be a poor message to send to businesses that need in their planning to fully factor in all labour costs, including all accrued obligations.”

Anderson rejects the contention that a similar argument could be applied to large businesses because they have more “checks and balances” to avoid insolvency.

And, he says, the much larger numbers of small businesses that become insolvent would put too much pressure on the public purse.

Union leaders such as Australian Manufacturing Worker’s Union secretary Dave Oliver have reportedly called for the imposition of an additional payroll tax levy to help pay for an extension of the GEERS scheme to more businesses and guarantee more entitlements for workers.

ACCI’s Anderson says any changes in this direction would shift the scheme away from being a safety net and would impose an unfeasible additional burden on business.

“It is an absolutely ridiculous idea. Industry already contributes one third of Federal Government revenue and pays its fair share of taxation, so any increase in payroll tax to fund the GEERS scheme is a complete break from the principles that underpin it,” Anderson says.