Volunteer, employee or contractor: It’s essential that you know the legal difference

Can you imagine a volunteer launching a $100,000 legal action against your organisation for unpaid wages?

Can you say with certainty that your organisation’s policies and procedures would protect you from a such an action from a volunteer or contractor?

This week, Liz Morgan, Senior Lawyer and Trainer with NFP Law shares some tips on how people managers in NFP organisations should differentiate between staff, volunteers and independent contractors. She’ll be exploring this topic in more depth at the NFP People Conference November 13 & 14. 

“…The infinite variety of human affairs means that work relationships present as a spectrum, some of which are clearly relationships of employment and others of which are clearly relationships of independent contract but some of which are less clear cut….” French Accent v Do Rozario [2011] FWAFB 830

Work relationships are often analysed in law as a dichotomy; for example, the much-litigated question of who is an ‘employee’ and who is an ‘independent contractor’. While this question remains an important one for people managers in the not-for-profit sector, understanding that those who are ‘involved in’ or ‘engaged by’ a NFP organisation sit on a legal spectrum is critical in contemporary NFP management.

For example, in the NFP sector there has always been a need to distinguish the volunteer from the traditional employee/independent contractor. The difference is extremely important – a point well illustrated in a recent case where a person who was asked to ‘help out’ in a children’s charity later sought $100,000 in unpaid wages and leave entitlements.

In this case, the person disputed their volunteer status and there appeared to be a lack of documentation about the way they had been engaged by the NFP organisation.

Because different laws apply to people engaged to work under a contract as opposed to people who are volunteering – examples include laws about wages, superannuation, and civil liability for actions – people managers in NFP organisations need to ensure that they have clear policies about volunteer engagement.

But the ‘volunteer’ category itself is being stretched and becoming less clear-cut. For example, in the last few years there has been an increase in ‘mutual obligation volunteers’ – those whose volunteering meets a requirement set by Centrelink for receipt of a government payment. Does the nature of this arrangement change the legal status of the volunteer?

At the same time the Federal Government is expanding the Work for the Dole (WFTD) program and Job Services Australia providers will increasingly be seeking the assistance of NFP organisations to host WFTD participants in community projects. What is the status of these participants? Do they fit into the category of employee, independent contractor or volunteer – or do they form a new category in the spectrum? Whatever the case, how does the law apply to these participants?

Then there is the rise in internships, work experience and vocational placements, and unpaid work trials.

The Fair Work Ombudsman recently undertook research in this area and has provided guidance on when and how these kinds of arrangements are lawful (and when they may not be). This points to the increasingly complex terrain of volunteer-related definitions and the need for NFP people managers to be vigilant about engaging people in a way that is lawful.

The law differs in the way it applies to different categories of ‘people involved in’ a NFP organisation. It is therefore crucial that NFP people managers clearly understand where a person sits on the spectrum, how the law applies, and what policies and procedures are required to ensure all parties are protected.

Where to get help

Understanding the difference between who is an employee, volunteer, or contractor at a NFP can be difficult – especially when some people may take on more than one role.

The NFP Law website has developed a guide for NFP managers that lays out the attributes of an employer, contractor and volunteer and provides an overview of some of the main legal obligations an organisation owes to its employees, independent contractors and volunteers.

And if you have any questions you’d like answered, come along to the NFP People Conference in Melbourne on November 13 & 14, and ask Liz in person!

Do you have any tips to share from your experience on how to differentiate between the different types of people that work within your organisation? Please share your thoughts in the comments below.