July 10th, 2025What is a small business employer?
The Council of Small Business Organisations Australia (COSBOA) has responded to the release of the Fair Work Ombudsman’s (FWO) review into the definition of a ‘small business employer’, expressing disappointment that meaningful change has not been recommended.
COSBOA CEO Luke Achterstraat said the review’s outcome is an absolute missed opportunity to bring Australia’s definition in line with modern business realities and global standards.
“While we appreciate the FWO’s work in consulting stakeholders, it is inadequate that the review has not recommended any changes to the outdated 15-headcount definition of a small business employer,” Mr Achterstraat said.
“This was a real chance to create clarity, reduce red tape and unlock growth, but instead, we’re left with a definition that continues to penalise ambition.”
“One has to wonder whether this review was commissioned in good faith or whether it was window dressing, with a foregone conclusion pre-decided at the outset.”
COSBOA’s submission to the review strongly advocated for updating the small business definition under Section 23 of the Fair Work Act 2009 from fewer than 15 employees to 50 full-time equivalent (FTE) employees.
“A headcount-based definition is no longer fit for purpose,” Mr Achterstraat said.
“It discourages growth, burdens businesses with compliance costs, and is completely out of step with international counterparts like the European Union, the United Kingdom and Canada, who use the 50 FTE benchmark as the standard.”
COSBOA argues businesses with 15 to 49 employees make up a significant portion of the Australian economy but are too often treated the same as large corporations when it comes to workplace relations obligations. Despite lacking comparable HR, legal and compliance resources, these businesses are expected to navigate complex requirements –from multi-employer bargaining to workplace delegates’ rights and wage compliance – while continuing to operate within the constraints typical of small enterprises.
The policy recommendations made by COSBOA maintain that updating the definition to 50 FTE better reflects these operational realities, brings consistency across regulatory frameworks, and extends support to 97.5% of employing businesses nationwide.
“The Government has spoken a lot about reducing red tape and boosting productivity, yet has failed at this basic hurdle,” said Mr Achterstraat.
“If the European Union can agree on a universal definition, why can’t we?”
“Australia needs a workplace relations system that reflects the value of small business, not one that panders to vested interests and outdated assumptions.”
“It’s time to stop talking about productivity and start acting,” concluded Mr Achterstraat.
For more information, visit www.cosboa.org.au.
