Not-for-Profit Structure Articles

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Bullying, The Fair Work Act, and Constitutional Corporations

Not-For-Profits come in all shapes and sizes. With different laws affecting different types of Not-For-Profits, it is important that you know the structure of your charity and the laws that govern it. For example, recent anti-bullying provisions were inserted into the Fair Work Act, affecting some entities, such as constitutional corporations, but not others. Is your charity a constitutional corporation affected by this recent change?

The Federal Court recently ruled on what sort of entities might be considered corporations. Its judgment related to proceedings commenced by the United Firefighters Union of Australia (the Union) against the Country Fire Authority (CFA). The Union claimed that the CFA had failed to comply with an enterprise agreement governing working conditions as required by the Fair Work Act. As part of its defence, the CFA argued that the agreement was not valid, as it was not a constitutional corporation (or specifically, could not be characterised as a ‘trading corporation’). It claimed that while it did engage in some trading activities, it had been formed for the predominant purpose of preventing and suppressing fires in rural Victoria.

The CFA argued that they were not a constitutional (trading) corporation. However, the Court examined whether the predominant activity of the CFA was trading, as this would indicate whether it was a constitutional corporation. The CFA engaged in some trading activities, such as fire equipment maintenance services and road accident rescue services ($13 million came from these trading activities in a budget of $466 million). The Court found that these trading activities indicated that the predominant purpose of the CFA was trading and was therefore indeed a constitutional corporation.

From 1 January 2014, workers at constitutional corporations (including employees and contractors) may apply to the Fair Work Commission where they reasonably believe that they have been bullied at work. The Commission must begin to process the application within 14 days of it being made and can make any order it considers appropriate, except for reinstatement or monetary compensation.

A worker is bullied at work if they are the recipient of repeated unreasonable behaviour that creates a risk to health and safety. However, a worker is not bullied under the new provisions if they are the recipient of reasonable management action carried out in a reasonable manner. If facing an application from a worker, the employer will have to incur the expense of arguing the reasonableness of its management action as a defence. Failure by an employer to adhere to an order by the Commission to stop bulling will expose it to fines of up to $51,000.

Do you know what laws affect your charity? Do you know your charity’s structure?

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