Max Whitehead: It's time small businesses get a look-in

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Photo / Thinkstock
Photo / Thinkstock

Did you know that 90 per cent of New Zealand businesses employ five or fewer staff and 70 per cent of all businesses are sole operators?

Why do 90 per cent of Kiwi businesses fail to grow beyond five employees? Because our employment laws are too complicated and cost-hungry.

Terry McLaughlin, chief executive of the New Zealand Institute of Chartered Accountants, was recently quoted in the Herald as saying that we have too many small businesses in New Zealand and this is restricting our economic growth. He went on to say that we need more big businesses in order to sustain them.

Business owners are scared of what will happen if they make a mistake when handling employment issues.

And because they're small businesses, they don't have the time or money to fully understand the employment law - it's all too hard.

The overall impression is that employment law is about employer bashing, leading to employees swaggering around the work place saying, "step out of line, boss, and I'll shoot you with a personal grievance".

To demonstrate, the Government changed the law regarding when it is justifiable to dismiss an employee.

The legislation now states that an employer can dismiss an employee if that's what a reasonable employer could have done in the circumstances - they changed the word would for could.

No one knew what this meant, including the lawyers at the Employment Relations Authority.

It took a year before the Employment Court had a case where it could show what this change in the wording meant, so how is a small employer supposed to know when it's lawful to dismiss?

For years now, businesses have avoided employment laws by replacing staff with contractors.

These redundant employees have become the contractors (small business operators) and are working harder, longer, and often for less money.

Builders, for example, don't hire staff, they hire contractors.

Telecom, or should I say Chorus, rehired its staff as contractors in order, I suspect, to rid themselves of unions and pesky employment law.

The Ports of Auckland wanted contractors so as to rid themselves of its employees. The reasons there are obvious.

If you visit a large business you will often discover that even the receptionist is a contractor.

Our small-business operators are hardworking Kiwis - mums and dads struggling day in and day out to earn a fair living.

These Kiwi battlers earn for this country - wait for it - 39 per cent of our gross domestic product.

That's huge and they need to be heard, but instead they are ignored by our Government.

According to a 2011 report from the Ministry of Economic Development - titled SMEs in New Zealand: Structure and Dynamics - 90 per cent or 421,823 of New Zealand businesses employ five or fewer staff.

Despite this, the Government only appears to listen to the unions and large employer associations who make the most noise.

They have convinced the Government that big business is all that matters.

To prove this point, the Employment Relations Act is more than 300 pages long and 95 per cent of this is about businesses with more than 20 employees, and unions.

Nothing is mentioned about small businesses.

Unfortunately for small businesses, most politicians come from the unions, the government sector, legal or teaching professions and have only ever dealt with big businesses.

Small businesses need a voice, so what's the solution?

Our friends across the ditch may have an answer.

In Australia there is one employment law for small businesses and another for big businesses. It's time we gave our small businesses a fair go.

Max Whitehead is principal of human resource and employment company Whitehead Group.

- NZ Herald

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