Australia: Are not-for-profit organisations covered by the new anti-bullying laws?

Not-for-profit Newsletter - April 2015

The answer to the question as to whether Not-for- profit organisations are covered by recent anti-bullying legislation is a definite "maybe".

The anti-bullying provisions are found in Part 6 – 4B of the Fair Work Act 2009 (FWA) and commenced operation on 1 January 2014 ("the anti-bullying provisions"). The focus of the new provisions is to prevent bullying occurring in the future rather than providing compensation for acts which have already occurred1.

Constitutional Basis

Unlike the foundational provisions of the Fair Work Act, the anti-bullying provisions are not based on a reference of power from the States and therefore are necessarily restricted to the Commonwealth's Constitutional heads of power. In other words, the provisions are restricted in application to Federal government (and Territory) agencies and Constitutional (trading and financial, or foreign) Corporations.

The situation with Not-for-profit organisations

In Re Ms Kathleen McInnes2, Commissioner Hampton was required to consider whether Peninsula Support Services Inc (PPS), which was an organisation registered pursuant to the provisions of the Associations Incorporation Act 1981 (Vic), was a constitutional corporation.

The Commissioner approached the issue by examining the activities of PSS noting the following:-

"A limited number of programs delivered by PSS are the result of competitive tendering processes, where the relevant government department invites organisations to bid for funding to undertake [mental health] services in nominated areas....The work is all funded by the Department of Health3".

After conducting a detailed review of relevant authorities, Commissioner Hampton identified two ends of the "spectrum" for determining whether a Not- for- profit organisation was engaged in trading activities (for the purposes of being a trading and financial [Constitutional] Corporation).

At one end were organisations "where the government pays for a service to be provided". The Commissioner said that:-

"Typically, these involve the delivery of services to government (often in the form of services available to the community) that result from competitive tendering processes where the government is seeking specific services at competitive rates, and where payment is made for the actual services provided. That is, the "state" effectively purchases the services. In most cases, these activities are either undertaken for profit, or at least to generate revenue to support other activities of the organisation as a whole....activities of this nature are considered to be trading activities for present purposes"4. (emphasis added).

At the other end of the spectrum, the Commissioner identified the situation where activities are undertaken by organisations pursuant to government grants and subsidies to provide services to the public. The Commissioner said that:-

"Typically, these involve the provision of bulk grants that might be linked to performance requirements and bench marks, but do not involve fee for service in the conventional sense. These services lack the character of buying and selling between the organisation and the funding agency, and are often provided to the public and are considered to be an end in themselves. That is, the purpose of the service is not to generate income but rather, to provide the service itself. The provision of blood products by the Red Cross in E v Red Cross is an example of this form of non-trading activity. Activities of this nature are not considered to be trading activities for present purposes5". (emphasis added).

Apportioning Trading activities

Despite the fact that PSS received some of its funding from activities that fell within the first category, those activities amounted to only $82,000 in the context of a budget for PSS of over $2,800,000. Those activities were therefore regarded as "insignificant, peripheral and incidental"[6] to the non-trading activities of PSS and, accordingly, the Commissioner held that PSS was not a trading corporation.

The answer to the question as to whether a Not-for-profit organisation is covered by the Federal anti-bullying laws is a particularly complex question. The answer depends on the nature of the entity as well as its activities and the basis upon which its activities are funded.

The bottom line is that bullying can significantly impact upon workplace morale and productivity and potentially be devastating to the person who is the subject of inappropriate conduct. In those circumstances perhaps the default point should be for all organisations - Not-for-profit and otherwise - to proactively work at developing effective dispute resolution practices and having appropriate anti-bullying polices and procedures in place to protect the rights of employees while recognising the right of employers to take legitimate management action in a reasonable manner.


1 Ms Kathleen McInnes [2014] FWCFB 1440 (6 March 2014)

2 [2014] FWC 1395

3 At paragraph [19]

4 At paragraph [44]

5 At paragraph [45]

6 At paragraph [58]

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Kim Leontiev
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