Unfair dismissal claims surge highlights urgent need to modernise small business definition

The Council of Small Business Organisations Australia (COSBOA) says the surge in unfair dismissal claims underscores how Australia’s workplace system has become unsustainable for small employers, and that modernising the definition of a small business is a critical part of the solution.

New Fair Work Commission (FWC) data shows unfair dismissal claims have risen 27 per cent above the long-term average, with total cases expected to exceed 50,000 this year. FWC President Justice Adam Hatcher has acknowledged the volume is now stretching the Commission’s capacity to cope.

COSBOA Chair Matthew Addison said small businesses are disproportionately affected by a system that allows claims to be lodged easily and cheaply, even when they lack merit.

“For a small business owner, the process is time-consuming, stressful and expensive, even when they’ve done nothing wrong,” Mr Addison said.

“The system has become a commercial bonanza for claimants, with limited barriers to entry and almost no consequences for lodging vexatious or weak claims. That has to change.”

COSBOA says the trend can only be addressed by bringing Australia’s small business definition into line with modern business realities.

The organisation is calling for the Fair Work Act’s definition of a small business employer to be updated from fewer than 15 employees to 50 full-time equivalent (FTE) positions – consistent with global benchmarks in the EU, UK and Canada.

“Expanding the small business definition would mean fewer claims could be lodged against genuine small employers, easing pressure on both business owners and the Commission,” Mr Addison said.

“It would also better reflect how businesses actually operate today, where a café with 20 staff or a manufacturer with 30 people is still small in every practical sense.”

COSBOA has also called for the FWC to be properly resourced to screen and resolve vexatious or low merit claims early, and for the onus of proof in adverse action cases to return to the claimant, ensuring fairness for both sides.

“Small business owners want a fair system – not a free-for-all,” Mr Addison said.

“Updating the small business definition, rebalancing the burden of proof and properly resourcing the Commission are the practical, common-sense steps that would make the system work better for everyone.”

For more information, visit www.cosboa.org.au.

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For media enquiries or interviews, please contact Matthew Addison, Chair, COSBOA on chair@cosboa.org.au or call +61 (0) 421 553 613.

About COSBOA

Established in 1979, the Council of Small Business Organisations Australia (COSBOA) is a member based not-for-profit organisation exclusively representing the interests of small businesses. The capability, representation, and reach of COSBOA are defined by a mix of over 50 national and state-based members. COSBOA's strength is its capacity to harness its members' views and advance consensus across policy areas common to many.

Our member organisations work with the COSBOA team to assist us with policy development and guide our advocacy - not just for small businesses but also for the benefit of the Australians they employ. In this capacity, COSBOA makes submissions and representations to the government, including its agencies, on issues affecting small businesses and to pursue good policy.benefit of the Australians they employ. In this capacity, COSBOA makes submissions and representations to the government, including its agencies, on issues affecting small businesses and to pursue good policy.