Research has shown that small business all over the world face a common problem complying with employment legislation. They are usually at loggerheads with labor departments and trade unions on areas concerning the employer employee relationship. In New Zealand, this problem is on the rise. Majority of the small businesses have difficulty in observing the employment legislation. On the other hand, the ministry of labor and the relevant government departments have not been able to accurately articulate the grievances of the employers as well as the employees in finding the probable solution to these problems. Due to economies of scale, small firms are not in a position to comply with all the laws and regulations set up by the employment legislation act (Rasmussen, 2009. pp. 26-28).
Considering the weight and complexity of the legislation, coupled with the frequent changes which are in most cases not well consulted, small businesses are getting frustrated day by day. These businesses are subjected to a number of bottlenecks that bars them in complying with employment legislation. These businesses in most cases are not given enough time to effectively manage their responsibilities. The cost of getting the necessary advice is too high and there is overall lack of support and the necessary information from organizations and government departments that are responsible to administer compliance. They are not able to meet the minimum pay to their employees as well as provide the laid down working conditions provided for in the legislation. Due to their small scale of operation these business cannot meet the minimum set conditions on how the employees are supposed to be treated in the work places. Research has indicated that the aspect of compliance has stifled the innovation and competitiveness that is always necessary for successful growth of any business. This phenomenon has indeed resulted to reluctance by small businesses to employ more employees or to expand their scale of production and operations. Small businesses view these legislations as a ploy by the government to meet its needs rather than address the needs of the businesses (Gwartney, & Stroup 2006. pp. 559-562).
The entire Small business fraternity feels undermined by the legislation. They are ready to comply with individual acts but the cumulative effect of the entire legislation affects their capability to perform effectively. The small business sector is heavily impinged by the enactment of the legislation and the cost that is associated with the compliance is disproportionate to their capability to pay. They argue that the fundamental purpose of enacting regulations and legislations is to provide a conducive and enabling environment for both domestic and international for running of the bossiness. The small business fraternity has enumerated a number of legislation and regulations that have been identified and grouped according to their relation in areas of compliance. The areas that the small businesses feel oppressed include the Resource management act, Taxation, Occupational safety and health legislation, Accident compensation and Employment regulations (Geare & Edgar 2004.pp. 59-63).
On resource management, the small businesses complain that the act is administered and interpreted inconsistently. The inconsistent application of the act by the local authorities always increases the cost of compliance especially to those businesses that has operations in a number of local authorities. These businesses are denied the right type of assistance in their efforts to comply. The complexity of the system makes the process tedious and introduces time delays which make the system even more costly. The local authority employees who are responsible of administering the act seem to lack the required knowledge about the system and hence are of no much help to the businesses. The delay in implementation and hence cost is also brought by objections by opposing parties whose motives are in bad faith to the growth of small businesses. On the taxation issue, the Internal Revenue Department (IRD) due to its inefficiency in tax collection has forced the businesses to incur extra costs. The businesses are tending to pay fines irrespective of whether they have acted right or wrong in order to reduce time wastage and inconveniences involved in the tax collection processes. The internal revenue department has failed to effectively use electronic mail systems to send and receive information efficiently. This department has to a higher extent failed to offer advice and provide the required customer service to the businesses (Ehrenberg, & Smith, 1994. pp 165-168).
The small businesses argue that the Occupation safety and health administration legislation is punitive to the employer. The cost impact of the legislation is too high for small businesses to cover. They argued that the legislation shifted the burden of responsibility from the employee to the employer. The resultant effect is that the employee is discouraged from taking a higher level of personal protection having in mind that the business is responsible for his or her carelessness. The small business advocacy committee cautioned the possibility of interpretative and managerial discrepancies with the body responsible for the administration of the legislation. The body further cautioned that the costs of compliance lies more on small businesses compared to large businesses. The legislation points out that employers have a duty of providing a save working environment for its employees. Beside security they should offer good training and supervision and provide proper equipments. The small businesses refused to comply with accident compensation legislation on the bases that those responsible for overseeing and advising on the legislation lacked adequate knowledge and skills. Numerous changes have also increased the administrative cost and hence difficult in compliance. The small business community noted of foul play in the employment regulations and in that the goal of the legislation is uncertain. More so the lack of proper communication and guidance by the administrators when the laws were amended have highly increased the burden of compliance to greater levels (Boal &.Ransom. 1998. pp. 86-112).
In an effort to assist small businesses comply with the employment legislation; the government of New Zealand has created department s responsible for solving employer – employee problems and setting standards on what to be expected of the employer towards employee and employee towards employer. The government have enacted new employment laws that provide two types of employment rights. The first law sets the minimum wage and the conditions the employee will face in the work environment and the second law stipulates the way employees should be treated by their employer in the work environment. The government through the Department of Labour Health and Safety Site assists the business persons by providing them with the required details about the rights, duty and responsibility of the employer and the employee on matters concerning health and safety. The employers are enlightened on the need to provide safe working conditions for their employees and provision of proper tools and equipment which ensures maximum productivity of the employees. The employees on the other hand are educated on the need to take adequate care for their safety as well as for the others during execution of their duties (Dr Lamm & Dr Rasmussen 2001. pp. 142-148).
The government through the department of labour has made written employment agreement mandatory whether individual or collective. The department of labour assists the businesses prepare employment agreements through the Employment Agreement Builder so that the agreement made is acceptable by both parties i.e. the employer and the employee. Through the department of labour, the government has enacted legislation that spell out the minimum wage an employees should accept. The labour department have set up two levels of minimum wage. The first one applies to employees entering the job market for the first time. These are entrants aged between 16-17 years, fresh from college and with no skills for the job. This is the minimum training wage. The other level is for employees who are 16 years and over and with experience on the job. To avoid confusion, the labour department clearly spells out that the minimum wage should be paid to permanent time employees, casual labourers, home-workers and those paid on piece rate by commission whether totally or partly paid. According to statistics currently released by the labour department the minimum wage rate for an adult stands at $12.75 per hour. This transform to $102 for a working day (eight working hour) and $510 for a week (40 working hours). The new employees who are in the job training are supposed to earn a minimum wage of $10.20 per hour. This translates to $81.60 per day (eight hour Day) and $408 for a 40 hour week (Card, & Krueger, 1995. pp. 6-17).
To solve any probable confrontation between the employer and the employee, the government enacted the holiday act 2003 to protect the employees from exploitation by the business owners. The law gives the employee an annual paid leave of four weeks. The employee agrees with the employer on when to take the leave. The law permits the employee the right to take at least two leaves continuously if in need. In cases where the employee leaves employment before completing a year in the job, he or she is entitled to 8% of the gross earnings. In a case where a holiday occurs on a normal working day, the employee is supposed to be given a day off or be paid for the day. If an employee has to work on a holiday, he or she is entitled to payment greater of time and a half of the rate stipulated in the employment agreement. To further assist the small businesses overcome the barriers of compliance the government have set up a law to guide the employer and the employee on matters relating to sickness, bereavement and parental love (Steensland, 2007pp. 70-71).
The legislation is to assist in building up good relationship between the employer and the employee. The legislation stipulates that after working for six months continuously with a certain company, the employees automatically enjoys a privilege of a sick leave, bereavement leave and parental leave. An employee is entitled to a paid sick leave of at least five days in a year. The leave is not restricted to the employee alone. It can be extended to a partner or any other person dependent on the employee in case of an emergency. The law also allows unused sick days to accumulate to 15 days. Bereavement leave is given for three days to an employee in case of death of a partner, child, parent, spouse parent, grandparent or grandchild. Employees who have been employed for more than six months and wish to adopt a child may be entitled to a parental leave of 14 weeks or if the employee qualifies for the 12 months eligibility standard, he or she can be allowed to take up to 52 weeks parental love including any paid parental leave taken (Bernstein, 1992. p. D3).
To assist the small businesses comply with the employment legislation and lower the costs that are associated with those legislations, the government created the ministry of small business. Within the ministry, the small business directorate was set up. This body is mandated to advice the government on how to effectively set up an economic environment that could actively regulate and promote the development and encourage small and medium businesses. The directorate is further mandated to provide advice and research on small business issues concerning availability of capital, business growth and the accepted business practices. The small business directorate unit provides a good background where the government officials through the minister for small businesses and the small business representative, the small business advisory group meet to exchange their views as well as engage in a healthy discussion on issues affecting the operation of the small business and how the government can assist these business overcome these hindrances. The directorate unit is concerned with informed advocacy, increasing perception of the small business and their contribution to the economy, ways on how to increase the input of the small businesses in the formulation of the laws that affect them and devising ways on how the government can improve its service delivery to the small businesses. The government of New Zealand with no doubts accepts that small businesses are the drivers of its economy. It recognises the fact that small businesses are the solution to unemployment. Despite theses facts the government has not been able to remove the bottlenecks inhibiting their growth. However the government is slowly focusing its attention in improving the conditions that will assist small businesses comply with employment legislations (Deeks & Rasmussen. 2001. pp 98-101).
Reference
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