Are Labor’s IR Laws Actually Hurting Productivity? Here’s What SMEs Need to Know

A recent report in The Australian claimed Labor’s industrial relations reforms are putting $50 billion of mining contracts at risk, with employer groups warning the changes are dragging on national productivity. Big miners and big unions make headlines. But the same laws apply to a business with twelve staff in a suburban industrial estate.

Here’s what’s actually changed, why productivity keeps coming up, and what it means if you run an SME.

What Are the IR Changes Everyone’s Talking About?

Since 2023, the Albanese Government has passed a series of workplace relations reforms under the banner of “Closing Loopholes.” The headline changes include:

• Multi-employer bargaining – unions can now negotiate pay and conditions across several businesses in the same industry at once, not just one employer at a time.
• Same job, same pay – labour hire workers doing the same job as direct employees must be paid the same rate.
• Casual employment changes – a new definition of casual work and a pathway for casuals to convert to permanent roles.
• Right of entry changes – expanded powers for union officials to enter workplaces in some circumstances.

Most of the political fight has played out in mining, aviation and other heavily unionised sectors. But the legislation isn’t sector-specific. If you employ people in Australia, it applies to you.

Why Are Employer Groups Linking This to Productivity?

The argument from groups like the Minerals Council and AREEA is straightforward: more centralised bargaining and more union involvement in pay-setting means less flexibility for individual businesses to negotiate what works for them. Less flexibility, they argue, means slower decision-making and higher costs, which drags on output per worker.

The government’s counter is that wage theft, underpayment and insecure work were already dragging on productivity and trust, and that closing those loopholes protects workers without adding real cost for compliant employers.

Both sides have a point, and neither tells you what to actually do on Monday morning. That’s the gap we want to close here.

Does This Actually Affect My Small Business?

If you’re not in mining, aviation or a heavily unionised industry, the multi-employer bargaining and right of entry provisions are unlikely to land on your desk any time soon. But two changes apply broadly and are worth checking now:

• Casual conversion – if you use casuals regularly and on a fairly predictable roster, you may have obligations to offer conversion to permanent employment.
• Same job, same pay – if you use labour hire staff alongside direct employees doing comparable work, pay parity obligations may apply.

Neither of these requires a lawyer to get right. They require a policy, a process and someone checking your rosters against the rules every few months.

A Small Business Just Learned This the Hard Way

In June 2026, the Fair Work Commission handed down a decision involving a small business, Tegrity Services Pty Ltd, that shows exactly why this isn’t theoretical.

A worker started as a casual in October 2023, then moved to a permanent part-time role in February 2025. He was dismissed in September 2025, after only around seven months as a permanent employee. On the face of it, that’s well short of the one-year minimum employment period small business staff need to bring an unfair dismissal claim.

The employer argued the earlier casual period shouldn’t count. The Commission disagreed. It found the worker’s 16 months of casual work were regular and systematic, and that he had a reasonable expectation of ongoing work, so that casual service counted toward his minimum employment period. His unfair dismissal claim is now proceeding.

The lesson for SME employers: the eligibility clock doesn’t reset the day someone goes from casual to permanent. If a casual worked a consistent pattern for months or years before converting, that time can count against you in a dismissal claim. Rosters and payroll records are exactly what the Commission will look at.

Read the full decision on AustLII

What Should SME Employers Do Right Now?

1. Audit your casual workforce. Look at anyone who has worked a regular pattern for six months or more. Know who’s eligible for conversion before they ask, and know their true length of service, not just their permanent start date.
2. Review labour hire arrangements. If you use contractors or labour hire alongside employed staff, check the pay rates line up for comparable roles.
3. Update position descriptions and contracts. Ambiguity here is what gets picked up in a Fair Work claim, not the legislation itself.
4. Keep clean rosters and payroll records. As the Tegrity Services case shows, the Commission will look at exactly this evidence when deciding whether casual service counts toward eligibility periods.
5. Don’t panic about multi-employer bargaining. Unless you’re in a heavily unionised sector or a union has already approached your industry group, this isn’t an immediate risk.
6. Get a second opinion before you restructure. If reform anxiety has you thinking about cutting headcount or switching everyone to labour hire to avoid these changes, talk to us first. Getting the strategy wrong here creates more risk than the law itself.

The Real Productivity Lever Is Rarely the Law

Most SMEs lose more productivity to unclear job descriptions, avoidable disputes and managers who don’t know how to have a hard conversation than they ever will to industrial relations legislation. The law is a factor. It’s rarely the biggest one.

If you’re worried about where you stand, that’s a conversation worth having before it becomes a Fair Work matter.

FAQs

Do these IR changes apply to small businesses?

Yes, in part. Casual conversion and same job, same pay obligations apply broadly. Multi-employer bargaining mostly affects heavily unionised sectors so far.

What is multi-employer bargaining?

It allows unions to negotiate pay and conditions across multiple employers in the same industry in a single process, rather than negotiating with each business separately.

What is same job, same pay?

It requires labour hire workers doing the same role as direct employees to be paid at the same rate as those employees, where certain conditions are met.

Do I need to worry about union right of entry?

Only if your workplace is unionised or a union already has coverage in your industry. Most SMEs outside heavily unionised sectors are unaffected.

What should I do if I use a lot of casual staff?

Review rosters regularly and know who’s eligible for permanent conversion. Waiting for an employee to ask puts you on the back foot.

Does casual service count toward unfair dismissal eligibility?

It can. A June 2026 Fair Work Commission decision involving Tegrity Services Pty Ltd confirmed that regular, systematic casual work can count toward the minimum employment period, even after an employee converts to permanent.

Where can I get help understanding how this affects my business?

Talk to HR Gurus. We’ll tell you honestly whether this is a real risk for your business or noise you can safely ignore.