Who is a ‘volunteer’?
There is no accepted legal definition of who is a volunteer, but we can take guidance from:
- Fair Work Act 2009 (Cth) – (emergency management) “A person is a volunteer of a designated emergency management body if the person engages in activities with the body on a voluntary basis (whether or not the person directly or indirectly takes or agrees to take an honorarium, gratuity or similar payment wholly or partly for engaging in the activity)…”.
- Fair Work Commission – A volunteer is ‘someone who enters into any service of their own free will, or who offers to perform a service or undertaking for no financial gain’.
- Fair Work Ombudsman – to volunteer time and effort to a not-for-profit organisation.
- Volunteering Australia – volunteering is time willingly given for the common good and without financial gain.
- Case law
Further, the FWC considers volunteerism as an arrangement generally motivated by altruism, rather than for remuneration or private gain. The commitments shared between the parties are usually considered moral in nature, rather than legal. Payment unrelated to hours of work or the actual performance of work does not of itself imply that a worker is an employee. In these circumstances, the payment can more aptly be described as an ‘honorarium’ or gift.
Volunteers should receive reimbursement of out of pocket expenses.
Volunteers can be rewarded and recognised as part of good practice. While this process may introduce an element of financial or material benefit to the volunteer it does not exclude the activity from being considered volunteering.
It is important to understand that you should distinguish volunteering from the employment or independent contractor relationship, but the activities of volunteers must be managed to ensure compliance with the organisations various legal obligations.
A NFP is required at law to ensure they provide a safe working environment. They are bound by:
- work health and safety legislation;
- common law of negligence; and
- State negligence legislation.
There are two sides to safety relating to volunteers:
- safety of the volunteer; and
- safety to others because of the volunteer.
Safety to the volunteer: negligence laws
If your NFP:
- owes a duty of care to the volunteer;
- breaches that duty; and
- the breach is the cause of the damage to the volunteer,
the NFP may be found liable for the damage caused.
Geoff, a regular employee of the NFP cleans the stairs of the NFP premises and, contrary
to policy, forgot to display the sign to caution people that the stairs were slippery.
Andrew, a volunteer at the NFP unaware of the slippery stairs tripped and broke his leg.
If Andrew can establish that had the sign been displayed, he would have not walked down
the stairs, tripping and breaking his leg, the NFP will be liable to the volunteer.
Safety to the volunteer
Your NFP should maintain adequate insurance to cover the liability to compensate a volunteer for their loss in the instance of illness or injury arising at the fault of the organisation (i.e. indemnify).
Safety to others because of the volunteer
The various States may have legislation that protects volunteers against personal liability for an act or omission they have done in the course of the proper execution of their volunteer duties. As an example:
the Civil Liability Act 2003 (Qld) sets out a special protection for volunteers against personal
liability for civil liability which arises as a result of an act or omission they have done, provided:
NFP’s non-delegable duty of care is to provide adequate training to volunteers.
If someone is injured by a volunteer because the NFP failed to give the volunteer appropriate
safety training, the NFP could be liable to pay compensation to the injured person.
The NFP may be liable for damage caused by a volunteer who was acting in good faith if the NFP was in breach of a ‘non-delegable duty of care’. The common law ‘duty of care’ owed by the NFP itself to the person who suffered damage could be relied on rather than any relationships between the volunteer and the person harmed.
Safety to the volunteer: work health and safety laws
Work Health and Safety Act 2011 (QLD)
- Applies to “persons conducting a business or undertaken” (a PCBU); but
- Does not apply to volunteer associations
A volunteer association is “a group of volunteers working together for one or more community
purposes where none of the volunteers, whether alone or jointly with any other volunteers,
employs any person to vary out work for the volunteer association.”
Volunteers who carry out work for PCBUs are required to take reasonable care of their own health and safety and not create risks to others. Volunteer workers can be prosecuted for failing to comply with their duties, but prosecutions against workers in the past have been rare and would likely only occur in relation to serious incidents where there is a high degree of recklessness or negligence on the part of the volunteer.
If your NFP does not fit into either PCBU or volunteer association categories, common law negligence law still applies to impose obligations on your NFP to ensure, so far as reasonably practicable, the safety of volunteers in the workplace.
Key issues to be aware of
- unlawful workplace behaviours, e.g. discrimination, sexual harassment, bullying and victimisation;
- unsafe work environment, e.g. operating machinery, using equipment inappropriately or person not trained for.
Office Holders – WHS
A volunteer director or officer is expected to comply with the duties that arise under work health and safety (WHS) Law, but they cannot be personally prosecuted for failing to comply with those duties.
However, volunteers have a duty to take reasonable care for their health and safety, and of others, to ensure they are not adversely affected by their actions at work and can be prosecuted for a breach of that duty.
A director may be found personally liable for a breach of WHS Law if:
- they receive payment for their position as a director in the NFP (i.e. they are not a volunteer director); and
- they fail to exercise due diligence to ensure that the organisation complies with its duties or obligations under WHS Laws.
When you are recruiting volunteers:
- Develop a position description to ensure that the volunteers have the appropriate skills and experience for the duties they will perform for the NFP;
- Ensure there is an induction process before commencing the volunteer role, so they understand their obligations under the volunteering arrangement;
- Ensure your volunteers are kept up to date with the NFP’s work health and safety policies and procedures;
- Undertake regular training of volunteers to ensure they continue to understand what the organisation requires to comply with its obligations; and
- Adopt a risk management strategy aimed at eliminating, managing or mitigating the effects of those risks associated with the safety of volunteers.
Volunteers doing work for a volunteer association are not workers and so are covered by workers’ compensation insurance. Your organisation should ensure that it is covered for injury caused to volunteers where they are not covered by worker’s compensation.
Personal accident insurance – covers your volunteers for out of pocket medical expenses if injured whilst performing work for the NFP
Public liability, product liability and professional indemnity – covers activities (acts or omissions) or your volunteers.
It is good practice to speak with a reputable mortgage broker about what insurance is specifically relevant to your NFP.
Protecting the Officers in a NFP against liability
The primary ways to protect officers:
- Indemnities contained in the NFP’s constitution;
- Deeds of indemnity, access and insurance; and
- Directors and Officers insurance (D&O Insurance)
Indemnities in Constitution
Often NFP Constitutions contain a provision which provides an indemnity for the officers.
The wording of the indemnity always needs to be assessed to determine whether the NFP is obligated (ie must) to indemnify its officers or it has the discretion to indemnify its officers (ie may).
Volunteers should review the indemnity provisions in a NFP’s constitution to ensure they understand if and how they are indemnified in the execution of their duties.
Limitations of constitutional indemnities are:
- The constitution may be amended by the members;
- Constitution arguably is only enforceable by current officers, and not former ones;
- The indemnities may be out of scope or lack sufficient scope to be effective.
Deed of indemnity, access and insurance
A NFP may enter into a deed with the officers. A deed sets out the basis for the indemnity:
- personal liabilities;
- associated legal costs; and
- resulting from role as an officer,
building on the indemnity contained in the NFP’s constitution.
Indemnity: is generally limited by law, e.g. cannot indemnify officer for breach of duty or unlawful act or omission
Access: provides a right to an officer to access books and records of the NFP even after resigned or retired, for purposes of defending allegations of breach of duties
D&O Insurance: is the direct cover to directors in respect of liabilities and legal costs of defending claims against them made by the organisation or third parties for wrongful acts committed in their capacity as directors or officers.
Deed of indemnity, access and insurance: places an obligation on the NFP to take out, maintain and pay for D&O Insurance, even after the officer has left the NFP
- Side A provides the indemnity for officers
- Side B provides reimbursement to the NFP for its indemnity of officers
- Side C provides cover to the NFP directly for securities transactions
Affordable D&O Insurance for NFPs, may be available as part of insurance package and is commonly available to community organisations.
Protections for directors under the ACNC Governance Standard 5
There are situations where a director could possibly be in breach of a duty even though he or she acted in good faith and took all reasonable steps to comply with their duties.
The ACNC “Governance Standard 5” operates as a defence to a possible breach of duty.
To be available, a director will have complied with the duties set out in the Governance Standards where:
- Advice: advice was provided by an employee, professional adviser or expert you reasonably believed to be competent in the subject matter, or by another director/ a committee if the subject matter was within their authority.
- Duty to act with reasonable care and diligence: where the director:
- made a decision in good faith for a proper purpose;
- did not have a material personal interest in the matter;
- informed himself/herself about the subject matter of the decision to the extent he or she reasonably believed to be appropriate; and
- rationally believed that the decision was in the best interests of the NFP.
* This is referred to as the “business judgment rule”
- Duty not to operate whilst insolvent: at the time the debt was incurred the director had reasonable grounds to expect, and did expect, that the NFP was solvent and would still
Certain payments or other benefits are acceptable:
- cash, non-cash or a combination; and
- termed as honoraria, reimbursements or allowances.
If a volunteer’s activities are a pastime or hobby, then any money or benefits received would not be considered assessable income.
Paying your Directors – Check your constitution
Generally, directors may be paid reasonable compensation for bona fide services rendered to the NFP. However, for a director to be paid fees in his or her capacity as a director – it must be provided in the constitution.
Care must be taken to ensure that the private benefit of payment of a fee assists the NFP to achieve is purpose rather than simply be for private gain of the Director.
The amount of remuneration and the process for setting that remuneration will be relevant to determining the benefit to the organisation.
Before paying your Directors, you should check:
- Fundraising legislation: e.g. in NSW, the Charitable Fundraising Act 1991 prohibits member of a governing body from receiving remuneration for their role unless Ministerial approval is obtained.
- Funding agreement: some funding agreement restrict the use of funds and, accordingly, paying fees to directors would be outside the allowable use of funds, consequently a breach of contract;
- Work Health and safety: if a Director is paid for services in that capacity, he or she will lose immunity from prosecution
- Corporations law: if the company is a special purpose company, paying director fees will be an offence under the Corporations law
If your NFP is bound by privacy laws this means your NFP should only:
- collect a volunteer’s personal information with their express consent;
- use the volunteer’s personal information for the purpose for which it was collected; and
- store the volunteer’s personal information securely.
Volunteers should also be able to access their personal information with the same rights as others.
Volunteers have the right to be interviewed and engaged as a volunteer in accordance with equal opportunity and anti-discrimination legislation.
Discrimination occurs when a person (the discriminator) discriminates against another person (the aggrieved person) on the grounds of an attribute such as:
- sexual orientation;
- religious belief;
- political opinion;
- national extraction;
- social origin; or
- criminal record,
of the aggrieved person if, because of the attribute, the discriminator treats, or proposes to treat, the aggrieved person less favourably than the discriminator would treat a person without the attribute, in circumstances that are not materially different.
In certain circumstances, a person does not discriminate against another person by imposing, or proposing to impose, a condition, requirement or practice that has, or is likely to have, a disadvantaging effect if the condition, requirement or practice is reasonable in the circumstances. The relevant pieces of legislation also allow for limited exemptions for specific relationships. For example, religious exemptions exist in relation to acts and practices by ‘a body established for religious purposes.’
What is reasonable in the circumstances will be a matter of determining the genuine requirements of the activities relevant to the decision made against the person. Some of the issues to be considered are:
- the nature and extent of the disadvantage resulting from the imposition, or proposed imposition, of the condition, requirement of practice; and
- the feasibility of overcoming or mitigating the disadvantage; and
- whether the disadvantage is proportionate to the result sought by the person who imposes, or proposes to impose, the condition, requirement or practice.