Charities fear not balancing budgets under IR changes

The peak body for charities has warned there is a greater risk of community organisations ‘not being able to balance their budgets’ because of Labor’s fixed-term contract shake-up.

The independent peak body representing charities has raised the prospect of increased costs for community organisations and broken budgets as a result of new fixed-term contract changes. Picture: Glenn Campbell

The independent peak body representing charities has raised the prospect of increased costs for community organisations and broken budgets as a result of the introduction of new fixed-term contract changes that went into force last month.

The nation’s medical research institutes sounded the alarm on Friday, warning they could lose the ability to ­conduct “high-quality, lifesaving research” because of Labor’s industrial relations changes and that some bodies could be saddled with extra costs of up to $3m a year.

David Crosbie, the chief executive of the peak body the Community Council for Australia said there were implications for charities from the fixed-term contract changes.

For some charities, these included a “greater risk of not being able to balance their budgets, ­depending on their income streams and how certain they are”.

The government’s new rules mean staff can no longer be employed on a fixed-term contract that is longer than two years, that has more than one extension ­option, or where the employee will be ­employed under consecutive contracts.

Jessica Tinsley, director of workplace relations at the Australian Chamber of Commerce and Industry, told Sky News on Friday that to qualify for an exemption from the new rules organisations would need to prove there were “no reasonable prospects” of their funding continuing.

But she said this was an “impossibly high bar to meet” for medical research institutes and charities that often had know way of knowing whether their funding streams would be extended.

Mr Crosbie said there was “still a level of uncertainty about the way charities and community ­organisations might apply the new requirements particularly in relation to repeat fixed-term contracts and specifically how to interpret the issue of ‘reasonable expectation’ in relation to future funding”.

“Different organisations have adopted different approaches,” he said. “There has been some analysis suggesting that the average length of funding contracts currently in place in charities and NFPs is less than two years, which is why many use repeated fixed-term employment contracts.

“For some charities, the new requirements may mean they have to have more employees on full time permanent contracts, and for some that requires additional costs (to cover redundancy and other entitlements).”

He said the risk of a charity trading insolvent would be “clearly reduced if staff can be employed on fixed-term contracts that match the terms of their funding streams”. But Mr Crosbie also said that charities had “no issue with permanently employing people to undertake the valuable work they do in our communities”.