Workplace legislation: for the community sector, it’s just not working

Over the past few weeks the Community Council for Australia (CCA) has been involved in extensive discussions about industrial legislation and the charities and community sector.

This is not an easy area for many charities. Workplace law is a contested space, an area where case law is the key reference point, and legal opinions can vary enormously.

Industrial law is also highly contested between unions and employer groups, between political ideologies, and between profit and the cost of labour and workplace safety.

Most charities are quite small and don’t employ staff. Some charities are very large, employing hundreds, even thousands of staff. The biggest charities tend to have their own legal counsel and draw on specialist workplace legal advice.

There are also thousands of charities that employ staff but are not big enough to afford workplace law specialists. It is this latter group that face the most challenges with workplace law and compliance.

What makes industrial relations even more complex for charities is that workplace law is written from a business perspective and doesn’t really factor in purpose-driven organisations. This is despite charities employing around 11% of the Australian workforce.

The fact that charities and community organisations have not been seriously factored into workplace law has again been demonstrated by the government’s Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022, with further amendments to the regulations made on 20 June 2024, extending the contracting deadline on some exceptions.

It is important to note that CCA and most charities have no problem with the policy intent of this legislation, just what it will mean for many charities and community organisations already struggling to meet employment costs that are increasing faster than their income. I should also note that CCA and others raised concerns with this legislation before it was finalised.

The main reason this legislation matters to charities is that it now effectively limits the way charities can contract their staff. A key provision of the legislation is that, assuming no eligibility for any of the exceptions, staff who have had two successive contracts of employment cannot have a third contract and must either be given a permanent staff position or no longer remain contracted to the organisation.

Exceptions to this requirement include if the contracted staff member is paid more than $167,500, or if the contract is a traineeship, or a short-term peak demand contract. There are also some exceptions around philanthropic funding, but only until July this year.

Where a project is funded by government for at least two years and there is no reasonable prospect of the funding continuing, a fixed term contract may be allowable.

CCA has had extensive discussions with specialist lawyers and "people and culture managers" across our sector. The consistent message to us has been that the new provisions are unworkable in organisations that operate on multiple fixed term funding contracts from government and philanthropy.

The new legislation makes it very difficult to employ staff only for the term of the funding contract, particularly if the employee has previously been contracted in a similar role.

Since the legislation was passed, CCA has repeatedly raised concerns with various politicians and their staff. We have held roundtables between senior managers from our sector and the Fair Work Ombudsman’s office, raising case studies that demonstrate how unworkable the new legislative provisions are.

One case study involved a medium sized charity that received 12 months of funding for an innovative new project. The project was working well and a second 12-month funding grant was obtained. Then the charity was offered the possibility of gaining further substantial funding for the program after two years if it continued to run the program for a further four months to allow for an independent evaluation of its effectiveness.

Under the new workplace legislation this would require the charity to put the existing project staff on permanently because they had already been contracted twice in the same roles, even though only four months funding was guaranteed.

CCA has spent some time drawing on our networks to develop an exception from the legislation that would match the reality of the way charities are funded in Australia.

In short, the exception would apply to charities where the contract end date was aligned to the end date of a funding contract, even if the person being contracted had previously been contracted in a similar role.

This would allow multiple contracts that matched funding terms, although this exception could only apply for charities if the contracted funding was for less than five years, and the employee would not reach seven years total employment in the organisation.

With longer contracts or staff who have been with a charity for seven years, permanent employment should be provided, consistent with the policy intent of the original legislation.

CCA is now working to try to advance this solution in recognition that charities are not funded in the same way as businesses, and the typical short term funding cycles do not always allow permanent employment, even though we may as a sector desire that level of employment certainty.

The issue here is not just the failure to appropriately consider the needs of a sector that employs more than 1.4 million Australians in developing new workplace laws – although this is an important point to make. It is also not just about what needs to change in the workplace policy making area.

The bigger issue is that this is yet another area where charities and community organisations are not in the room when key national policies are being framed. We could be talking about cybersecurity, or energy transition, data management and privacy, climate change adaptation, the future of AI, intergenerational wealth inequality, the future of housing and employment, health and education.

The ongoing frustration that groups like CCA continually experience is that it appears charities and community organisations are not a priority in most areas of government policy making. This doesn’t just affect our sector; it affects the communities we serve.

Gaining some acknowledgement of our specific requirements through changes to workplace laws would be a step in the right direction, but perhaps we need to think bigger about the kind of input charities and community organisations could and should have into government policy making. Because what is happening now is not working.

David Crosbie has been CEO of the Community Council for Australia for the past decade and has spent more than a quarter of a century leading significant not-for-profit organisations, including the Mental Health Council of Australia, the Alcohol and Other Drugs Council of Australia, and Odyssey House Victoria.