Secure Jobs, Better Pay and implications for the not-for-profit sector
Australia’s not-for-profit sector is critical to meeting society’s fundamental needs.
The sector is made up of a myriad of service organisations, advocacy organisations and global thought leaders in areas that government have either outsourced or find challenging to navigate within current policy frameworks.
The charity sector in particular is also an important part of the economy, employing 1.38 million people which represents 10.5% of the Australia workforce.
So what do the new changes to the Fair Work Act Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 mean for the sector?
The answer lies in re-thinking employment practices and having an honest conversation about the need to fund indirect costs to effectively run not-for-profit and charitable organisations.
Secure Jobs, Better Pay implications
The key Secure Jobs, Better Pay changes affecting all employers are:
· Prohibiting pay secrecy
· Requests for flexible work arrangements
· Fixed term contracts
· Sexual harassment
· Multi-employer bargaining
The most significant impact for the not-for-profit sector is the ongoing use of rolling fixed term contracts.
Many not-for-profits are funded by government to deliver programs or services. Employees engaged to deliver those programs and services usually have fixed term contracts aligned to the term of the funding.
Common practice has been to roll those contracts over and set new contract expiry dates aligned to funding; with employees seeing multiple contract extensions over a number of years for the same work.
From 6 December 2023, employers can no longer use a fixed term contract that spans for 2 or more years, is continually extended or is a new contract for substantially the same work. Exceptions will apply, including where a relevant Award allows fixed term contracts.
This means that many not-for-profits will transition long-term contract employees to permanent part-time or full-time in order to satisfy the new requirement.
The other impact arising from the Secure Jobs, Better Pay changes is potentially the use of multi-employer bargaining.
Employers in the not-for-profit sector who have ‘common interests’ (eg. Aged Care) could from June 2023 or earlier, be forced to bargain together and be compelled to participate in either supported bargaining or single interest employer authorisations.
The ramification is a ‘one size fits all’ approach to wages which could substantially increase the running costs of many not-for-profits and, in some cases, trigger an extinction event for those organisations running on low- to no-margin.
What about using volunteers?
“Volunteers have a place in supplementing workforce, but they are not a substitute for employees”
51% of all charities still operate without paid staff.
The National Standards for Volunteer Involvement are a framework for supporting volunteers. They provide good practice guidance and benchmarks to help organisations attract, manage and retain volunteers, and help manage risk and safety in their work with volunteers; in essence treat the recruitment, retention and management of volunteers as if they are employees.
However, when it comes to running an organisation, we all know you cannot sustain efficient and effective operations by relying solely on the goodwill of volunteers.
In addition, volunteer numbers are in decline.
So, what's the answer for addressing increasing employment complexity and cost?
Pay What it Takes
As stated at the beginning of this article, Australia’s not-for-profit sector is critical to meeting society’s fundamental needs.
It has some remarkable strengths to build on, but also significant opportunities to expand its aspirations: to grow talent, enhance its execution discipline, and boost innovation and collaboration.
However, many not-for-profits are operating in an increasingly volatile and complex environment, and resort to down-playing their vulnerability by under reporting their indirect costs.
Secure Jobs, Better Pay adds another layer of complexity that potentially amplifies the gap between direct costs and overheads.
Philanthropy Australia’s Pay What it Takes report highlights the need for all funding partners - philanthropy, government and business - to recognise the true cost of overhead to run a not-for-profit.
For the sector to survive and thrive, all funding partners must appropriately pay what it takes – both direct and indirect costs – and not fall into the trap of funding direct costs only.
About the author: Lincoln Size is a NFP Success Senior Consultant and has over nine years’ experience as a not-for-profit sector CEO and thought leader.
