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NEW BULLYING LAWS

What does this mean for NPFs?

Senior Lawyer Catherine Brooks and Lawyer Chris Charalambous of Moores provide insights
 into 
the new bullying legislation and what this means for not-for-profit organisations.

As of 1 January 2014, bullying claims can be made to the Fair Work Commission (FWC) by workers who work for a constitutionally covered organisation. The purpose of the new laws is to prevent, and stop bullying in Australian workplaces.

DEFINITION OF BULLYING AT WORK

A worker is considered to be bullied at work if an individual, or a group of individuals repeatedly behave unreasonably towards the worker and that behaviour creates a risk to health and safety.

Case law has held that bullying can include conduct that is domineering, disrespectful, dismissive, and confrontational behaviour designed to undermine and belittle.

It must be noted, that where the conduct has occurred only once it will generally not be considered bullying within the Act - it could, however, be deemed as harassment, discrimination or inappropriate conduct.

Reasonable performance management will not be deemed bullying, although the process needs to have been carried out in a reasonable manner. There is no definition of what constitutes 'reasonable performance management' - this will be dependent on each scenario.

CLAIMS

If a claim is made, the FWC must begin dealing with an application within 14 days after the application is made.

If bullying has occurred and there is a risk that it will continue, the FWC can make an order to prevent the worker from being bullied. Importantly, this jurisdiction is not about paying 'go away money' or the applicant receiving financial compensation.

This jurisdiction is about preventing or stopping the bullying.

The FWC will hold a meeting to review the case (where appropriate) and then make any orders it views necessary (to stop or prevent the bullying), including;

  • Ordering the individuals/group in question stop the behaviour; 
  • Regular monitoring of behaviours by an employer take place;
  • Compliance of a workplace bullying procedure;
  • Provision of information, support and training to workers; and,
  • Review of the workplace bullying policy in place, particularly if it's not up-to-date with the new laws. If the FWC makes an order and the employer does not comply with it, then the worker may apply to the Federal Circuit Court to have the order enforced.

CONSTITUTIONALLY COVERED ORGANISATIONS AND NFP APPLICATION

For a worker to be able to bring a bullying claim in this jurisdiction they must work for a 'constitutional corporation'. This is defined in the Australian Constitution and includes 'trading, financial and/or foreign corporations'.

It's not always clear if a not-for-profit (NFP) falls within the definition of a 'constitutional corporation'. If a NFP does, it is generally under the definition of a 'trading corporation'.

A trading corporation denotes the activity of providing goods or services for payment. To this end, the FWC will consider the nature of a corporation with reference to its activities, rather than the purpose for which it was formed.

The FWC will consider a number of factors: »   Whether the organisation is involved

in a commercial enterprise - that is, business activities undertaken with the

purpose of earning revenue;

  • What proportion of its income the corporation earns from its commercial enterprises;
  • Whether the commercial enterprises are substantial or peripheral; and,
  • Whether the activities of the corporation advance the trading interests of its members.

CASE STUDY 1: NFP - A TRADING CORPORATION

In one case, which was not a bullying case but nevertheless addressed the 'trading corporation' issue, the organisation was an incorporated association.

Its objective was to promote the welfare of animals, and prevent cruelty to them. It operated on a non-profit basis; however, as part of its activities it sold various products for animals. It also conducted training courses for their care.

The organisation argued that an organisation is considered a trading corporation only if trading represents a substantial aspect of its corporate activities. Trading which is merely a peripheral aspect of those activities will not be sufficient to render it a trading corporation. While it acknowledged that a portion of its operations were 'trading' it argued that the portion was not significant enough to make it a trading corporation. Its main activities included political campaigning and lobbying.

Income streams for the organisation included: donations, general subscriptions, interest and dividends earned on investments and shareholdings, income earned by rent received, royalties received, profit on the sale of fixed assets, income derived from capital investments and some sundry items.

However, the Court found that the trading activities of the organisation were not peripheral to the operation of the organisation, and it was deemed a trading corporation.

CASE STUDY 2: NFP - NOT A TRADING CORPORATION

In this case the NFP organisation was a provider of free services to vulnerable individuals (primarily those with psychiatric disabilities) through government-funded programs. The NFP also generated income from the sale of assets and bank account

interest, however any income it generated was minimal and too minor, it said, to be considered 'trading income'.

However, the employee who lodged the bullying claim argued that the employer was a trading organisation because it competed with other service providers for funding, delivered services in exchange for grant monies, and operated on a surplus.

The FWC confirmed that these services lacked the character of buying and selling between the organisation and the funding agency, and were often provided gratuitously to the public. That is, the purpose of the service was not to generate income (which was very minimal) but rather, to provide the service itself.

“Case law has held that bullying can include conduct that is domineering, disrespectful, dismissive, and confrontational behaviour designed to undermine and belittle" - Catherine Brooks, Senor Lawyer and Christopher Charalambous, Lawyer, Moores

The FWC confirmed that activities of this nature are not considered to be trading activities and that any other activities that were carried out by the organisation were insignificant in the context of the organisation's operation.

ADVICE FOR NFPS

  • NFPs should seek advice as to whether they fall into the definition of a trading corporation, and have an action plan in place (a management guide is a great tool) in case a bullying claim is made.
  • NFPs should keep in mind that a bullying claim can cause reputational damage, and in the best interest of all parties to treat the complainant with kindness, respect and integrity.
  • Training should be provided to the management level on how to deal with bullying claims within the workplace, to prevent the risk of a claim going to FWC.
  • NFPs should update their policy and procedures in line with the new legislation and then train all workers on the serious ramification of bullying in the workplace.

Catherine Brooks is a Senior Lawyer and Workgroup Leader in the Workplace Relations team at Moores. She has had significant private and public sector experience representing employers in multiple industries, not-for-profit organisations and government/local councils.

She has also assisted employers negotiate over 100 Enterprise Agreements and has defended dozens of industrial action ballot order applications, regularly appearing in Fair Work Australia.

Christopher Charalambous is a Lawyer in the Workplace Relations team at Moores. He advises and represent clients in industrial relations and employment law in multiple sector and industries.

LISA Note:  Article reprinted with the kind permission of Great Southern Press, and appeared in the July 2014 edition of  ‘Third Sector’ magazine.

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