Employment In Not-For-Profits: Essential Australian Legal Guide

Hiring your first employee or growing a team in a charity or not-for-profit (NFP) is a big milestone. It means your mission is expanding - and so are your legal responsibilities as an employer in Australia.

NFPs must comply with the same employment laws as any other employer, with some added considerations around volunteers, funding conditions, screenings and governance. Getting this right protects your organisation, your people and your reputation.

In this guide, we’ll step through how employment works in an NFP: choosing the correct engagement model, Fair Work compliance, pay and super, privacy and safety, and how to end employment fairly when the time comes.

What Counts As Employment In A Not-For-Profit?

The rules you need to follow depend on how a person is engaged by your NFP. It’s important to get the model right from day one to avoid misclassification risk, underpayments or tax issues.

Employees

Employees work under your direction and control and are part of your organisation’s structure. They’re entitled to minimum rights under the National Employment Standards (NES) and any applicable modern award or enterprise agreement.

Employees may be full-time, part-time or casual. Set out the key terms (role, hours, pay, classification, leave, confidentiality and termination) in a written Employment Contract. Clear contracts reduce disputes and help you meet Fair Work obligations.

Independent Contractors

Contractors run their own business, generally control how the work is performed, can often delegate, and invoice you for services. If you treat someone like an employee in practice (fixed hours, close supervision, ongoing integration into your operations), you may actually have an employment relationship regardless of the label.

Where you’re genuinely engaging a contractor, use a clear written agreement and consider getting employee vs contractor advice for edge cases. Also note that superannuation obligations can extend to some contractors who are engaged principally for their labour.

Volunteers

Volunteers donate their time and must not receive payments that look like wages (other than genuine expense reimbursements). Set expectations, training and safety obligations in a written Volunteer Agreement, and make it clear the role is not paid employment.

Interns And Students On Placement

Unpaid internships are tightly regulated. Outside of genuine vocational placements arranged through an education provider, most “internships” should be paid and treated as employment. If you host student placements, document scope, supervision and safety requirements clearly.

Do NFPs Have To Follow Fair Work Laws In Australia?

Yes. NFPs and charities are employers under the Fair Work Act 2009 (Cth). Your obligations generally flow from three layers of rules:

• National Employment Standards (NES) - the universal baseline entitlements (maximum weekly hours, flexible work requests, annual leave, personal/carer’s leave, parental leave, and notice/redundancy, where applicable).
• Modern awards or enterprise agreements - industry or occupation-based instruments that set minimum pay rates, classifications, allowances, overtime, penalties, breaks and rostering rules.
• Contracts and policies - the terms you agree with your people and the procedures you apply day to day.

Which Award Applies To NFP Roles?

Coverage depends on the actual duties. Many NFP positions sit under instruments such as the Social, Community, Home Care and Disability Services Industry Award (SCHADS), the Clerks – Private Sector Award, the Health Professionals and Support Services Award, or others aligned to your services.

Review the role and classification carefully, and keep classification decisions on file. If you’re unsure about coverage or levels, start by reviewing Modern Awards and seek advice to avoid underpayments.

Minimum Pay, Hours And Leave

The relevant award or agreement sets minimum pay, loadings, overtime, allowances and rest breaks. The NES adds universal protections (e.g. annual leave for permanent staff, personal/carer’s leave, parental leave entitlements and notice of termination). Make sure your budget and rosters reflect these entitlements.

Work Health And Safety (WHS)

As a person conducting a business or undertaking (PCBU), your NFP must provide a safe work environment for workers and volunteers. This includes risk assessments, training, supervision, incident reporting and safe systems of work tailored to your activities (for example, outreach, events, or client-facing services).

Privacy And The Employee Records Exemption

Most NFPs handle personal information about employees, volunteers, donors and beneficiaries. In Australia, many organisations with annual turnover of $3 million or more are “APP entities” under the Privacy Act 1988 (Cth). Some smaller NFPs are also APP entities because of what they do (for example, health service providers or organisations trading in personal information).

If you’re an APP entity, publish and follow a clear Privacy Policy and implement appropriate security practices. Note that the Privacy Act has an “employee records exemption” - but it only applies to employee records in the context of current and former employees and doesn’t cover applicants, contractors, volunteers or donors. Privacy obligations can still apply broadly to your NFP’s other data.

Step-By-Step: Hiring And Onboarding In An NFP

Bringing in the right people is more than posting a job ad. Here’s a simple roadmap to stay compliant and set your team up for success.

1) Clarify The Role And Engagement Type

• Decide if the role is an employee (full-time/part-time/casual), a contractor, or a volunteer. Document your reasoning for award coverage and classification where relevant.
• Map duties, supervision, essential qualifications, and any screening required (e.g. Working With Children Checks, NDIS Worker Screening, police checks) before someone starts.

2) Recruit Fairly And Screen Appropriately

• Use objective selection criteria and avoid unlawful discrimination in ads, interviews and decisions.
• Confirm mandatory checks early for roles involving children or vulnerable people. Build screening and safeguarding into your timeline.

3) Make The Offer And Put It In Writing

• Issue a letter of offer and a tailored Employment Contract setting out pay, hours, classification, location, duties, confidentiality and termination clauses.
• For volunteers, use a written Volunteer Agreement that outlines responsibilities, training and safety - and confirms the unpaid nature of the role.
• For contractors, ensure the agreement reflects a genuine independent contracting arrangement and consider employee-contractor advice if the role is integrated into daily operations.

4) Roll Out Policies And Induct Your People

• Introduce a practical policy suite covering code of conduct, equal opportunity, bullying and harassment, WHS, leave, social media and safeguarding. Housing these in a consolidated Staff Handbook can make training and tracking acknowledgements much easier.
• If relevant to your operations or funding, add a Whistleblower framework, conflicts of interest protocols and incident reporting procedures.
• Explain who to contact for HR and WHS questions, outline probation expectations and schedule regular check-ins.

5) Set Up Payroll And Keep Accurate Records

• Collect TFN declarations and super choice forms, set up payroll and timekeeping, and confirm award classifications in your system.
• Maintain accurate records of hours worked, breaks, leave balances, pay slips, reimbursements, training and performance reviews. Keep records for the required periods.

6) Train, Supervise And Review

• Provide role-specific training and a safe system of work for employees and volunteers. Make sure supervisors know your award obligations for breaks, overtime and rostering.
• Use probation to set clear expectations, support performance and address issues early.

Paying People In NFPs: Wages, Super And Salary Packaging

Your mission might be non-profit, but pay compliance still needs to be airtight. Funders, regulators and your community expect it - and your people deserve it.

Pay Rates And Classifications

• Confirm the correct award coverage and classification level for each role. This determines minimum rates, penalties, overtime and allowances.
• Update pay rates annually following the Fair Work Commission’s wage review (usually effective each July) and when classifications change.

Superannuation

Pay superannuation at the legislated rate for eligible employees. The former $450 per month threshold no longer applies - so don’t rely on thresholds that have been removed. Super can also be payable to certain contractors engaged wholly or principally for their labour. Build super into your budgets and pay on time.

Tax And Payroll

Ensure PAYG withholding is set up and lodged on time and that your payslips and payroll records meet Fair Work and taxation requirements. Keep payroll records for the required periods and reconcile regularly to avoid surprises.

Salary Packaging For Charities And NFPs

Many registered charities and some other NFPs can offer salary packaging within Fringe Benefits Tax (FBT) caps, which can increase take-home pay without lifting salaries. This is a specialist tax area - confirm eligibility, caps and processes with your accountant or tax adviser and reflect any packaging rules in your contracts and policies.

To be clear, FBT and packaging are tax matters. We focus on employment law; your accountant can advise on the tax mechanics and reporting.

Leave, Breaks And Rostering

• Apply NES leave entitlements to permanent staff and follow award rules for meal and rest breaks, overtime, penalties and rostering.
• Document how ordinary hours and overtime are calculated for variable rosters, and ensure managers understand entitlements for part-time and casual staff.

Reimbursements And Expenses

If you reimburse expenses for employees or volunteers, set out what’s covered, how to claim, approval limits and record-keeping requirements. Clear processes protect your funds and reduce confusion.

Privacy And Data Security Around Payroll

Keep personnel files secure and access-controlled. If your NFP is an APP entity, your Privacy Policy should explain how you handle personal information generally. Remember, the employee records exemption does not cover applicants, contractors, volunteers or donors, and data security obligations still apply.

Common Risk Areas: Volunteers, Contractors And Interns

Misclassification is a common issue for NFPs. Here’s how to reduce risk when you engage people outside standard employment.

Volunteers

• Don’t roster volunteers like employees or pay “honorariums” that resemble wages. Use reimbursements for actual out-of-pocket expenses only.
• Provide training, supervision and appropriate insurance. Put expectations and safety in a written Volunteer Agreement.

Contractors

• Contractors typically set their own hours, supply their own equipment, can delegate, and bear a risk of profit or loss. If you require fixed hours, line management and ongoing duties integrated into your operations, employment may be more appropriate.
• Use written contracts and seek employee-contractor advice where the role is borderline.

Interns And Students

• Unpaid work must be a genuine vocational placement or a short observational experience. If the intern does productive work for your benefit, treat and pay them as an employee under the relevant award.
• For student placements, agree supervision, safety, confidentiality and privacy in writing with the education provider and the student.

Managing Performance And Ending Employment Fairly

Even in purpose-driven organisations, people management issues arise. A fair and compliant process protects both your NFP and your team.

Policies, Training And Early Intervention

Strong policies and early coaching often resolve issues before they escalate. Keep your managers trained on performance expectations, leave approvals, flexible work requests and complaint handling. A well-structured Staff Handbook helps everyone understand the rules.

Performance Management

• Provide clear feedback, set measurable goals and support improvement. Keep notes of meetings and agreed actions.
• Apply award or agreement procedures where they exist (for example, consultation requirements for major changes).

Ending Employment

• Comply with notice periods (and pay in lieu where applicable), ensure final pay is correct, and issue required documents. Consider redundancy entitlements if the role is genuinely no longer required and the NES applies.
• For dismissals, follow a procedurally fair process, consider warnings where appropriate and ensure you have a valid reason related to capacity, conduct or operational needs.
• Use a tailored set of documents for termination processes, such as letters and checklists. Many NFPs streamline this with an Employee Termination Documents Suite.

After Employment

Protect confidential information and client data, retrieve equipment, and confirm any ongoing obligations (for example, confidentiality). Where appropriate, remind former employees of post-employment obligations in their contract.

Key Takeaways

• Choose the right engagement model for each role - employee, contractor or volunteer - and document it clearly in an Employment Contract or Volunteer Agreement.
• NFPs must comply with the Fair Work Act, NES and applicable awards - check coverage and classification against Modern Awards to avoid underpayments.
• Pay and super must be accurate and on time. The $450 super threshold no longer applies, and super can extend to some contractors engaged for their labour.
• Build a practical policy framework (for example, a Staff Handbook) and ensure WHS, privacy and safeguarding responsibilities are embedded in onboarding and daily practice.
• If your NFP is an APP entity, maintain a clear Privacy Policy; remember the employee records exemption is limited and doesn’t cover applicants, volunteers, contractors or donors.
• Salary packaging and FBT are tax matters - work with your accountant to confirm eligibility and caps, and reflect arrangements in your employment documents.
• When hiring, classifying roles or ending employment, getting advice early can prevent costly mistakes and protect your mission.

If you’d like a consultation on employment for your not-for-profit or charity, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.