Small businesses to win reprieve against redundancy payments

The Rudd Government is preparing to wipe out a potential compulsory redundancy plan that it warns would hurt small businesses, and cost taxpayers and employers up to $100 million annually.

The Rudd Government is preparing to wipe out a potential compulsory redundancy plan that it warns would hurt small businesses, and cost taxpayers and employers up to $100 million annually.

The Government will today urge the Australian Industrial Relations Commission to drop a proposal that would see businesses with fewer than 15 employees pay out redundancy wages.

The move will likely upset the Australian Council of Trade Unions, angered by the loss of compulsory redundancy payments through the Howard government’s WorkChoices legislation.

But Deputy Prime Minister and Workplace Relations Minister Julia Gillard told The Australian the Government is concerned about how the moves would affect small business.

“We are concerned about the impact on small business. We do think it would be significant,” Gillard says. “We are concerned about the potential flow-on impacts of taxpayers.”

The Government says analysis estimates taxpayer cost would amount to $58.8 million in 2011, rising to $94.9 million in 2014.

The Government is “concerned that an unknown percentage of these costs may end up being met by taxpayers” if employees from collapsed businesses claim redundancy payments and entitlements from the Government’s schemes that guarantee such payments.

Council of Small Business Organisations of Australia chair Bob Stanton says the move is a welcome one.

“I would suggest that it would be nothing more than a step in the right direction,” he says. “The pressure on businesses is going to get worse as the economy worsens, and it’s harder for small businesses, and we never needed anything like redundancy payments.

“It’s absolutely a good thing.”

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