Have you carried out an assessment of your volunteer engagements recently?
Just because a ‘volunteer’ is working for altruistic purposes does not mean that they are volunteers by law.
To determine whether an employment relationship exists, as opposed to a volunteer relationship, you must consider whether:
- there is a document that sets out terms and conditions that are characteristic of an employment relationship;
- the parties intended to create a legal relationship; and
- there is or was an exchange of mutually binding promises for consideration.
The fundamental difference between a volunteer relationship and an employment relationship is the lack of an intention to create a legal relationship, which prevents a contract of employment from being created.
If a volunteer agrees to perform their role for any private gain or material advantage (as opposed to purely altruistic purposes), this will likely indicate an intention to create a legal relationship.
Your business can control the nature of an engagement by drafting appropriate documentation, such as a volunteer agreement, to reflect the desired type of engagement and ensure that the documentation reflects what is happening in practice.
If you fail to properly classify volunteers, you can expose yourself to various legal risks, such as prosecution by a court or the Fair Work Ombudsman for non-compliance.
In addition to a penalty, you may be faced with a back-pay order for unpaid leave entitlements and wages.
6 tips for employers engaging volunteers
- If you use volunteers, ensure that you document the nature of the relationship in a volunteer agreement that sets out the relationship is not an employment relationship.
- Make sure your documentation clearly reflects the true nature of the engagement. For example, if your documentation specifies that someone is a volunteer, but you pay them a wage or stipend and they are required to do something for you in return, it is likely that a court would deem the relationship to be an employment relationship.
- Be careful about putting certain requirements or obligations on volunteers, as this may change the nature of the relationship.
- If you want to change the nature of an engagement in accordance with your business needs, or you are uncertain about the nature of an engagement, it is a good idea to seek legal advice to assess any risks and possible liability.
- If an unpaid work experience arrangement is not a formal vocational placement, and the person is actually an employee working under a contract of employment, then the person is entitled to the conditions and entitlements under the Fair Work Act 2009 (Cth), including a minimum wage.
- An employment contract may exist even without any formal agreement. It is a question of determining whether the parties have entered into an arrangement that involves mutual commitments (e.g. an agreement to perform work in return for monetary consideration indicates an employment contract).
Checklist: Employee versus volunteer
The checklist below will help to ensure that you aren’t incorrectly classifying the engagement you have with your volunteer and that you are complying with your legal obligations.
The individual is more likely to legally be an employee if you tick more ‘Yes’ than ‘No’ boxes.
|Does the individual:||Yes||No|
|Perform ongoing work under the control, direction and supervision of the employer?|
|Perform all the duties of their position?|
|Provide their personal services and cannot delegate their work?|
|Have their hours of work set by the employer?|
|Have public recognition as being part of the employer’s business and/or presents themselves to the public as being part of that business (e.g. wearing a uniform or using a business card)?|
|Take commercial risks and can make a profit or loss from the work performed?|
|Get paid regularly and have income tax withheld from their salary by the employer?|
|Have superannuation contributions paid into a nominated superannuation fund by the employer?|
|Have tools and equipment provided by the employer to carry out the work?|
|Have a legally enforceable obligation to provide services to the employer?|
|Have an agreement with the employer containing evidence that the parties intended to enter into a legally binding contract?|
|Have a legally enforceable right to receive payments, such as an allowance?|
Remember that unpaid work can take on different forms, including vocational placements, unpaid internships, unpaid work experience and unpaid work trials.
Reasons for unpaid work include:
- giving a person experience in a job or industry;
- testing a person’s job skills; or
- allowing someone to volunteer time and effort to a not-for-profit organisation.
In any unpaid work arrangement, you will need to consider all the factors to determine the type of relationship you have entered into.