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Appendix 4 - Summary of attitudinal evidence[1]
A summary of attitudinal evidence demonstrating the need for
differential treatment of small businesses in relation to unfair dismissal:
- A Morgan and Banks survey conducted during 1996 (when the
previous Government’s laws were in force) indicated that 16.4% of businesses
with less than 30 employees had been adversely affected in their intentions to
hire people by the federal unfair dismissal laws.
- A survey released by Recruitment Solutions on 10 April 1997 indicated that almost 9% of businesses had employed fewer permanent staff, or deferred
plans to employ permanent staff, as a direct consequence of the unfair
dismissal laws.
- In a survey conducted by the New South Wales Chamber of Commerce
with St George Bank in May 1997, 56% of businesses said that the prospect of
unfair dismissal claims had discouraged them from recruiting additional staff
to their businesses.
- ‘Trends in Staff Selection and Recruitment’, a Department of
Employment, Education, Training and Youth Affairs-commissioned report compiled
by the National Institute of Labour Studies and published in May 1997, found
that unfair dismissal laws ‘strongly influence’ hiring decisions, on the basis
of survey and statistical data.
- Further comments on this report were provided by one of the
editors, Dr Mark Wooden, for an article in the Financial Review on 27 March 1998. Mr Wooden stated that 48% of employers had claimed unfair dismissal
legislation influenced their hiring decisions either to a ‘large’ or a ‘very large’ extent.
In June 1997, the Tasmanian Chamber of Commerce and Industry
conducted a survey in which it asked businesses with between 1 to 20 employees
to rank 58 issues in terms of their relative importance. Unfair dismissal was
rated 11th, with 70% of respondents rating it as at least a ‘large’ problem.
- The Yellow Pages Small Business Index Survey is the largest
economic survey of small businesses in Australia, covering approximately 1,200
randomly selected proprietors of small businesses. The survey conducted from 23 July 1997 to 5 August 1997 asked respondents to nominate the barriers to employing new
employees. The cost of employment was the second most popular response, with
18% of those respondents who believed there were barriers to hiring new staff
citing this reason.
- The Yellow Pages Small Business Index Survey conducted from 30 October 1997 to 12 November 1997 contained specific questions in relation to the effect
of unfair dismissal laws. The answers to these queries indicated:
- 79% thought small businesses would be better off if they were
exempted from unfair dismissal laws;
- 33% reported that they would have been more likely to recruit new
employees if they had been exempted from unfair dismissal laws in 1996 and
1997; and
- 38% reported that they would be more likely to recruit new
employees if they were exempted from the current unfair dismissal laws.
In February 1998, the Micro Business Consultative Group published
its report. In its report, the group stated that ‘unfair dismissal laws have
dampened employment growth in micro businesses. Indeed, we believe there’s
strong resistance from many micro businesses to employing more people for fear
of potential claims.’
- On 5 March 1998, in an interview on Radio National’s AM program, Mr
Rob Bastian, then of the Council of Small Business Organisations of Australia
(COSBOA) estimated 50,000 jobs would be created if small business exemption was
introduced. Mr Bastian’s estimate was based on 1 in 20 small businesses hiring
an extra person if such businesses were excluded from the unfair dismissal
laws, which he believed was a conservative assessment.
- However, on the basis of his evidence to the Senate inquiry into
the Workplace Relations Amendment (Unfair Dismissals) Bill 1998, it appears
that Mr Bastian’s estimate of 50,000 jobs being created is based on the
exemption of small business from both federal and State unfair dismissal laws.
- It should be noted that it is not possible to determine how many
small businesses are subject only to federal unfair dismissal laws, as opposed
to those that are subject to only State unfair dismissal laws. Further, small
businesses in many jurisdictions could be subject to both federal and State
laws.
- On 22 March 1998, the NSW Chamber of Commerce issued a press
release stating that 85% of small businesses nominated unfair dismissals as a
key issue for businesses with 15 or fewer employees:
- 42% of businesses surveyed claimed that the prospect of an unfair
dismissal claim was a deterrent to employing more staff.
- 51% of businesses surveyed stated that the unfair dismissal laws
were a deterrent to employing more staff.
- In a survey conducted by the SA Employers’ Chamber of Commerce
and Industry over the period May to July 1998:
- 51.5% of respondents who had been subject to unfair dismissal
claims had not hired replacement employees:
- 52% of respondents who had been subject to unfair dismissal
claims and did not hire a replacement employee were deterred from hiring new
staff because of the prospect of facing another unfair dismissal claim;
- 74% of all respondents claimed that they would hire new employees
if employee access to unfair dismissal laws was restricted; and
- 77% of respondents with less than 15 employees indicated that
they would hire more employees if exempted from unfair dismissal legislation.
- In a Queensland Chamber of Commerce and Industry survey conducted
in July 1998, businesses were asked to rank 69 issues in order of importance.
Unfair dismissal legislation placed third overall, receiving a rating of 80 out
of a possible scale of 0 (of no concern) to 100 (critical concern) which was
only five points behind the top rating issue of taxation changes.
- The Australian Business Chamber surveyed its members in July
1998. Using a similar grading system as the Queensland Chamber of Commerce,
unfair dismissals placed fourth overall with a rating of 77 (the top three
issues all related to tax). Survey results were also aggregated according to
the number of employees employed by each respondent. Employers with between 0
and 20 employees comprised 62% of the respondents, and they ranked unfair
dismissals as their sixth most important issue. Unfair dismissals ranked
seventh for businesses with 21 to 99 employees and fourteenth for businesses
with 100 or more employees.
- In an August 1998 survey conducted by the Tasmanian Chamber of
Commerce and Industry, to identify relevant issues for a State election later
that year, businesses ranked unfair dismissals seventh out of 28 areas
identified. Rating the problem from 1 (critical) to 7 (not a problem), the
majority of respondents who indicated that unfair dismissals was an impediment
to business growth placed this issue at the top of the scale (i.e. gave a 1
rating).
- In its August 1998 newsletter, the Australian Chamber of Commerce
and Industry (ACCI) ranked unfair dismissals as seventh in a list of 71 areas
requiring change. The Chamber distributed a survey to businesses, asking them
to identify current issues that directly affect their individual businesses.
Unfair dismissal laws were found to be ‘an impediment to employment’,
particularly permanent, full-time employment.
- The Chamber’s September 1998 newsletter reported that the survey results
from businesses with 1-19 employees, viewed in isolation, showed that unfair
dismissals remained a critical concern for this group of businesses, placing
fourth out of 64 issues. The Chamber identified a causal connection between
small businesses’ concerns about the unfair dismissal laws and reluctance to
employ additional employees.
- Statistics from the 1995 Australian Workplace Industrial
Relations Survey (AWIRS) have been used recently by the ACTU to show that less
than 1% of small businesses gave unfair dismissal laws as a reason for not
hiring staff. But this evidence is not supported by the attitudinal data
provided by the survey evidence discussed above.
- A 1998 survey of members of the Australian Chamber of
Manufacturers, jointly conducted by the ACM and Deakin University surveyed 2000
firms with less than 300 staff. It noted that ‘Unfair dismissal legislation and
associated implications for the small business were ... highlighted as employment
deterrents.’
- In 2001, Sweeney Research, on behalf of the Victorian Trades Hall
Council, conducted a survey of 400 small businesses. It found that 39 per cent
of respondents said that unfair dismissal laws affected their businesses.
- In November 2001, ACCI released the results of a survey of
affiliates, to which some 2,500 firms responded. The survey found that unfair
dismissal laws were ranked as the fifth most important problem facing them.
- In March 2002, CPA Australia released its survey results for 600
small businesses and 105 Certified Practicing Accountants (CPAs). When asked to
nominate for themselves the main impediment to hiring staff, five per cent of
small business and 16 per cent of CPAs nominated unfair dismissal laws as a
primary issue. Also, 30 per cent of small business respondents and 44 per cent
of CPAs cited a desire to avoid unfair dismissal laws as a reason for employing
casuals. The research also found that perceptions about unfair dismissal laws
were as much of a barrier to employment as the laws themselves.
- In August 2002, the Centre for Independent Studies issued a short
study entitled Poor Laws (1) – The unfair dismissal laws and long-term
unemployment. This report re-examines international and Australian job
research on job creation and employment protection and concludes that a
possible explanation for Australia’s relatively high unemployment problem is
over-regulation of the labour market.
- DEWR has received the results of a survey designed by Mr Don Harding
of the Melbourne Institute and undertaken by Yellow Pages examining employer
attitudes to unfair dismissal laws. The survey involved 1802 telephone
interviews with small and medium enterprises employing fewer than 200
employees. The results disclose that:
- the cost estimate to small to medium enterprises of complying
with the unfair dismissal laws of $1.3 billion per year is more likely to
result in lower employment and higher unemployment than in lower wages
- 11.1% of small to medium sized employers that don’t have
employees but previously did were influenced by the unfair dismissal laws in
deciding to reduce the number of workers they employed. This translates to the
loss of 77,482 jobs (with 35,000 of those in which unfair dismissal laws played
a major role).
- many employers were confused by or unaware of jurisdictional
issues associated with the operation of unfair dismissal laws
- about two-thirds of employers were unaware of changes to federal
unfair dismissal laws made in August 2001.
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