Small business should not be exempt

Small businesses are often exempt from a lot of industrial relations and tax laws because they are likely to be swamped in red tape or go under. But that often puts their employees at a disadvantage.

Businesses have a lot of laws and regulatory obligations they have to fulfil. These have been put in place largely because of past abuses or criminal behaviour of many of their principals. Consumers and employees have to be protected from predatory practices, such as having their safety put at risk. Complying with laws and regulations takes time and effort, and it is generally recognised that compliance costs of smaller businesses will be a larger part of their expenses than for larger ones that can amortise their costs over their larger revenue base.

This leads legislators to exempt small businesses from the more demanding obligations of laws or simplify their compliance obligations. What constitutes a small business varies between laws but usually takes into account being below specific employee count and yearly gross income levels. This is so that compliance costs are minimised when they would otherwise be significant threats to continued viability of the typical small business. Of course there is a certain amount of arbitrariness involved, otherwise the legislation would be more complex.

Small businesses often cannot afford to run separate human relations (HR) departments that would normally be given the time and resources to ascertain corporate risk from such laws and develop detailed policies to handle their obligations. It is the recognition of a small businesses' reduced opportunity to develop such compliance policy competencies that is cited as a reason for reduced or exempted compliance requirements. Unfortunately, this often puts the employees of small business at a disadvantage compared to those in larger businesses.

When small businesses, as a group, are the biggest employer group, it means that such compliance reductions affect a substantial part of the working population. In some industries, many employees are already under such precarious employment stability due to the extremely variable income dependencies of their employers that could put them under financial difficulty in a short time. Employees in such industries are often the least skilled and thus the most vulnerable to exploitation.

While small businesses have representative groups, their employees are often less able to form collective bargaining like unions, and are often under threat by their employers not to. The neoliberalist politico-economic regime that has gained prominence in politicians thinking over the last 40 years has resulted in concerted legislative efforts to weaken unions and has led to the rise of the gig economy where workers are basically made into micro-businesses with even fewer or no rights but loaded with the significant expenses and obligations of their blackmail into self-employment.

This situation is totally unfair and exploits those who have the least individual bargaining power. These are the people governments are supposed to protect, but lose out in the government favouring of businesses, especially the larger ones. Employees should not be treated differently depending upon the size of their employer, or forced into fake self-employment due to the excessive power of those controlling them.

Governments should provide model rules for various industries to minimise their set up costs. If small businesses in an industry generally cannot afford compliance that protects their employees and customers, then perhaps they should not exist as totally separate entities. They could be forced to form a collective that can provide the HR services and perform collective bargaining with their aggregated employees in a union.

This may rankle some small business owners who wanted to be lord over their own fiefdom, but that must not be allowed at the expense of being unfair to their employees. Lack of profit margins is often cited as a reason for why small businesses should be exempt from many regulations, but they should not be the basis for relying on the continued discounting of the employees' wages and conditions to subsidise them. If a class of business cannot operate by the same rules as everywhere else, then perhaps society needs to learn the real cost of having those businesses and foot the bill or do without.

We have to have learn as a society to respect all and have evenhandedness in employment. None should be exempt just because society has got used to not paying the real cost of their goods and services. For too long have those used to privilege taken the sacrifices of others for granted, feigned concern for people while resenting, or even preventing, them the opportunity for equal treatment before the law. This goes for employment across international boundaries as well, as privileged nations have tolerated the severe exploitation of workers in other counties to underwrite their own lifestyles.