Australian Small Business and Family Enterprise Ombudsman Act 2015

The Australian Small Business and Family Enterprise Ombudsman Act 2015 establishes the Australian Small Business and Family Enterprise Ombudsman as a Commonwealth statutory office. The Act gives the Ombudsman an advocacy function and an assistance function, and also allows the Ombudsman to perform any other function conferred by another Act or legislative instrument.

The simplified outline of the Act is useful for business owners because it shows the overall design. On the advocacy side, the Ombudsman undertakes research and inquiries into legislation, policies and practices affecting small businesses and family enterprises, reports and gives advice to the Minister, contributes to other inquiries, helps develop national strategies, reviews proposals and promotes best practice. On the assistance side, the Ombudsman responds to requests for assistance by an operator of a small business or family enterprise in relation to relevant actions.

The Act is therefore not just about disputes. It also creates a policy and advocacy role aimed at identifying concerns affecting small businesses and family enterprises more broadly. At the same time, the Act does not turn the Ombudsman into a court, tribunal or regulator with power to impose binding outcomes on private parties.

The key threshold question is whether the business is a small business under section 5. The Act says a business is a small business at a particular time in a financial year if either of two tests is met. The first is the employee test, being fewer than 100 employees at that time. The second is the revenue test, being revenue for the previous financial year of $5 million or less, or if there was no time in the previous financial year when the business was carried on, revenue for the current year of $5 million or less.

This is an either-or test. A business does not need to satisfy both limbs. That is important in practice because some businesses will qualify through employee numbers even if revenue is above the threshold, while others may qualify through revenue even if their workforce is larger.

The Act also says that business includes an enterprise, activity, project, undertaking or arrangement. That broad wording means the Act is not limited to a narrow company-only concept of business. A family enterprise is defined by reference to a small business operated as a family enterprise, so the family enterprise concept depends on the small business definition rather than replacing it.

The Act binds the Crown in each of its capacities and extends to every external Territory. It also defines agencies broadly enough to include Commonwealth departments, public bodies, office holders, State and Territory departments, local government bodies and other public purpose bodies established under law.

For many businesses, the most important practical issue is proving that they fall within the Act before asking for help. The employee limb is not just a simple headcount if your workforce includes part-time staff. The Act says part-time employees are to be taken into account as an appropriate fraction of a full-time equivalent. That means businesses should not simply count every part-time worker as a full employee if that would distort the result.

The legislation text available here does not prescribe a single public formula for calculating that fraction. Because of that, businesses should keep a sensible and consistent record of how they worked out the full-time equivalent figure at the relevant time. If eligibility may be disputed, it is worth keeping payroll records, employment arrangements and the date of the request for assistance together in one file.

The revenue limb also needs care. The Act says revenue is to be calculated in accordance with accounting standards in force at the relevant time. That means businesses should avoid relying on rough estimates, informal turnover assumptions or incomplete figures where the threshold is close. If the business did not operate at any time in the previous financial year, the Act allows current year revenue to be used instead.

Because the definition applies at a particular time in a financial year, eligibility can depend on timing. A business may qualify at one point and not at another. If you are preparing a request for assistance, it is sensible to identify the date you say the business qualified and the basis on which you say it met the Act’s definition.

Section 13 says the Ombudsman’s functions are to advocate for small businesses and family enterprises in relation to relevant legislation, policies and practices, and to give assistance in relation to relevant actions if requested to do so. Section 14 then sets out what is included in the advocacy function. This includes identifying concerns, conducting research and inquiries on the Ombudsman’s own initiative, inquiring into matters referred by the Minister, providing advice to the Minister, working cooperatively with agencies to develop national strategies, contributing to inquiries, reviewing proposals and promoting best practice.

Section 15 sets out what is included in the assistance function. This includes responding to requests for assistance in relation to relevant actions, referring requests to another agency, working cooperatively with another agency, making recommendations about how a dispute may be managed, including recommendations that an ADR process be used, and giving assistance in relation to preparing a case for a no adverse costs order issue under the Competition and Consumer Act 2010.

The Ombudsman also has flexible working methods. Unless the Act or another law requires formality, the Ombudsman does not have to act formally and may inform themselves in any way they think fit, consult with anyone they think fit, and receive written or oral information or submissions. The Ombudsman also has power to do all things necessary or convenient in connection with performing the Ombudsman’s functions.

But those powers have limits. The Act does not make the Ombudsman a judge, arbitrator or mediator. The Ombudsman may recommend how a dispute should be managed, but section 73 makes clear that ADR processes are not to be conducted by the Ombudsman. That means recommendations may be influential, but they are not binding rulings and they do not compel the other side to settle.

Part 4 of the Act deals with assisting a small business or family enterprise. It includes requests for assistance, when the Ombudsman is authorised to deal with a request, when the Ombudsman may decide not to provide assistance, when the Ombudsman must transfer a request to another agency, and when the Ombudsman may work cooperatively with another agency to give assistance.

The Act’s definition of action is broad. It includes an activity or series of activities, a project, development or undertaking, making a decision or recommendation, formulating a proposal, requiring communications with an entity to be in a particular manner or form, altering those things, failing or refusing to do those things, and conduct within the meaning of the Competition and Consumer Act 2010. That broad definition matters because it shows the Act is not limited to a narrow category of formal disputes.

If a request for assistance relates to a dispute in relation to a relevant action, the Ombudsman may make recommendations about how the dispute may be managed. That can include recommending an ADR process. The Act also allows the Ombudsman to keep a list of ADR providers to assist small businesses and family enterprises in accessing ADR.

For businesses, the practical lesson is to prepare a request carefully. Identify the action complained of, the parties involved, the dates, the documents available, and the outcome you are seeking. Also consider whether another agency may already have a stronger connection to the issue, because that may affect whether the Ombudsman deals with the matter directly or transfers it.

The Act gives the Ombudsman a role in dispute management, but not in deciding disputes. Section 71 allows the Ombudsman to recommend an alternative dispute resolution process. The definition of ADR processes includes conferencing, mediation, neutral evaluation, case appraisal, conciliation and prescribed procedures or services. It specifically does not include arbitration or court procedures or services.

This distinction is important. A recommendation to use ADR is not the same thing as an order. The Ombudsman cannot conduct the ADR process under section 73, and the Act does not give the Ombudsman power to impose a binding settlement or final determination. Businesses should therefore read the Act as creating a facilitation and recommendation framework, not a compulsory adjudication system.

Section 74 also matters in practice. If an entity does not undertake a recommended ADR process, or withdraws from that process, the Ombudsman may publish that fact. The Act text summarised here does not present that as a direct binding determination on the merits of the dispute, but publication can still have practical consequences for reputation, negotiations and commercial relationships.

If your business is considering whether to participate in a recommended ADR process, the decision should be made with a clear understanding of both the non-binding nature of the recommendation and the possibility of publication if you refuse to participate or withdraw.

Section 16 sets out general policy guidelines for the Ombudsman. The Ombudsman must perform functions in the most convenient and effective way possible, avoid duplicating the operations of any other Commonwealth, State or Territory agency with overlapping functions, work cooperatively as far as possible with other agencies, and comply with all other Commonwealth laws.

This is not just a broad policy statement. The simplified outline and Part 4 make clear that if another Commonwealth, State or Territory agency could deal with a request for assistance and it would be more effective and convenient for that agency to do so, the Ombudsman must transfer the request. The Ombudsman may also work cooperatively with another agency where that is the better practical approach.

For businesses, this means the Ombudsman is often a gateway or coordinating body rather than always the final destination. If your issue is really better suited to another public body, the Act expects duplication to be avoided. That can be useful, but it also means businesses should not assume that lodging a request with the Ombudsman guarantees the Ombudsman will remain the lead body throughout the matter.

The Act gives the Ombudsman information-gathering powers across both advocacy and assistance functions. In Part 3, there are powers to issue notices requiring information and documents for research and inquiries and for Minister-referred inquiries. In Minister-referred inquiries, the Act also provides for hearings, notices of hearings, summonses, refusal to answer questions or produce documents, and rules about documents produced in relation to the inquiry.

In Part 4, the Ombudsman may make inquiries in relation to a request for assistance and may issue a notice to a person to provide information and documents. The Act also includes provisions dealing with documents produced in relation to an inquiry and limitations on powers.

For businesses, the practical point is straightforward. If the Ombudsman formally asks for information or documents under the Act, treat the request seriously. Make sure the material is accurate, complete and organised. Keep copies of what you provide and note the date and basis on which it was provided.

The Act also says privileges are not abrogated and includes provisions about how other Acts operate in relation to information and documents. That means businesses should not assume every issue about disclosure is simple, but they also should not ignore a formal notice. If privilege, confidentiality or overlapping legal process issues arise, they should be considered carefully and promptly.

Section 9 explains when information is confidential for the purposes of a provision requiring or permitting a person to table, publish or otherwise make information publicly available. Information may be confidential if the decision-maker is satisfied that disclosure would cause undue distress or embarrassment to a person, that the information is commercial-in-confidence, or that disclosure would be contrary to the public interest.

The Act also explains when information may be treated as commercial-in-confidence. A person may demonstrate that disclosure could unreasonably affect them, or a business or action related to them, in an adverse manner, that the information is not in the public domain, is not required to be disclosed under another law of the Commonwealth, a State or a Territory, and is not readily discoverable.

Part 5 also contains secrecy provisions dealing with protected information and when it may be used or disclosed, including for the purposes of the Act, to the Minister, to certain agencies, with consent, to reduce a threat to life or health, in summary or statistical form, and for law enforcement and national security purposes. There is also a specific disclosure provision connected to a no adverse costs order issue under the Competition and Consumer Act 2010.

Businesses should not assume that everything given to the Ombudsman will automatically remain private in every context. If information is sensitive, identify it clearly and explain why it is confidential or commercial-in-confidence when providing it.

Part 5, Division 3 provides for review by the Administrative Review Tribunal. That is the review body named in the current legislation compilation.

Not every action taken under the Act will necessarily be reviewable, so businesses should check the particular decision and any notice they receive. If a decision materially affects your business, it is sensible to act promptly and confirm whether the Act gives a review right and whether any time limit applies.

Because review rights can be technical, businesses should not assume that informal discussions will preserve their position. If review may be needed, check the decision carefully and move quickly.

The Act received Royal Assent on 10 September 2015. Sections 1 and 2, and anything not otherwise covered by the commencement table, commenced on that date. Sections 3 to 96 commenced on 10 March 2016 under the commencement table.

The current compilation identified here is Compilation No. 3, dated 14 October 2024, and includes amendments up to Act No. 38 of 2024. The compilation notes also state that uncommenced amendments are not shown in the text of the compiled law. Before relying on the Act for a live issue, businesses should check the Federal Register of Legislation for later amendments, endnotes and any uncommenced changes.