Win for charities on fixed-term contracting

Posted on 29 Oct 2024

By Greg Thom, journalist, Institute of Community Directors Australia

Charities and not-for-profits have scored a major win with confirmation that recently passed fixed-term contracting laws will be amended to better reflect funding realities in the sector.

Unintended consequences of changes to the Fair Work Act that became law in December 2023 limited the length of fixed-term contracts and introduced new limits on when they can be used.

The changes, introduced as part of the government’s Secure Jobs, Better Pay package, meant many sector organisations were no longer able to align employment and funding contracts, raising fears of increased overhead costs and a negative impact on service delivery.

New exceptions to the Act, allowing fixed-term contracting of staff to align to funding periods, have now been signed off by the Governor-General and are due to come into effect on November 1 for an initial period of 12 months.

The update means that if a charity offers a contract of less than five years funded by government or philanthropy, and the staff member concerned has not been employed by the organisation for more than seven years, the charity can align the employment contract with the funding period.

The news was welcomed by Community Council for Australia CEO David Crosbie, who joined forces with Shadow Charities Minister Senator Dean Smith to highlight the problem and pressure the government to act.

“All too often when governments are making policies, they don’t take account of the way charities and community organisations are structured and operate,” said Mr Crosbie.

He said many charities operate on relatively short-term funding contracts, and having to make full provisions for redundancy of all staff in almost every funding contract would have meant some charities having to either cut services or cut staff.

“The solution provided through the new regulations allows charities to put staff on permanently wherever they can, but where that would compromise the financial viability of the organisation or its capacity to fulfill its mission, the new exception provides the option of aligning staffing contracts to funding cycles.”

Mr Crosbie said the CCA’s 70 member organisations overwhelmingly supported the intent of the government’s Secure Jobs, Better Pay package in delivering employment security to people on fixed-term contracts but were pleased Canberra had listened to the sector’s concerns.

“The Shadow Assistant Minister for Charities, Dean Smith, who helped amplify our collective voice, the Assistant Minister for Charities Dr Andrew Leigh, and the Workplace Relations Minister Murray Watt have all accepted the clear arguments put forward by CCA members and responded by adopting a solution we support, and that can only be a good thing.”

“All too often when governments are making policies, they don’t take account of the way charities and community organisations are structured and operate.”

Community Council for Australia CEO David Crosbie.

The government’s industrial relations legislation restricts repeated fixed-term contracting for people who earn under $167,000.

However, Mr Crosbie had earlier argued that making charities place workers on permanent contracts made them less viable, less able to retain skilled staff and less able to guarantee the services that communities rely on.

Senator Smith joined the CCA to push for the amendments to the Act after what he claimed were repeated failed attempts by the sector to engage with Fair Work Australia and gain legal clarity on what the changes would mean for organisations, many of whom were under pressure from increased demand on their services.

“The Parliament’s view is clear: the law has changed,” Mr Smith told the Community Advocate in June.

“What’s very clear to me is that how the law will apply to the charities sector is not clear.”

Senator Smith this week said he was relieved to see the amendment implemented, but was disappointed it was only under pressure from the Coalition that the Government finally listened to the sector's concerns.

"This change to fixed-term contracting would have had a devastating effect on charities and their operations and confirms how easily organisations can fall foul of Labor's skewed priorities," he said.

"The sad reality is that the charities and not-for-profits sector, which is doing so much for so many in the cost-of-living crisis, must be ever vigilant for as long as the Albanese Government is in power."