While it has been over a year now since WorkChoices was introduced, many organisations still harbour some uncertainty about whether the federal workplace relations system applies to them or not. From the recent case law that is emerging on this issue, it seems there are still areas of grey in which it may not be readily apparent whether or not an employer is a ‘constitutional corporation’ and therefore caught by WorkChoices.
Only last month the New South Wales Industrial Commission ruled that an incorporated employer was not a trading corporation and therefore did not fall within the scope of WorkChoices.
So who’s covered and who’s not? This article provides a brief overview of the WorkChoices coverage, with specific reference to two recent cases – the first of which considered the coverage of WorkChoices in the context of an incorporated association which was engaged in trading activities, and the second which examined the particular trust arrangements of the employer.
Workplace Relations Act 1996 (Cth) (“WR Act”)
The starting point in determining whether a particular employer is covered by the WR Act, is the definition of “employer” under that Act. The WR Act defines “employer” as any of the following entities (so far as they employ an individual):
- a constitutional corporation
- the Commonwealth
- a Commonwealth authority
- those who employ flight crew officers, maritime employees or waterside workers in connection with interstate or overseas trade or commerce
- a body incorporated in a Territory, and
- any other person or entity that operates in a Territory.
In the case of Victoria, the definition is extended to cover all other employers in that State, other than in relation to certain types of public sector workers.
For most employers, whether they are covered by the federal system depends on whether they can be characterised as constitutional corporations. Under s 16(1) of the WR Act, State industrial relations laws are, largely but not entirely, excluded from applying to constitutional corporations.
A constitutional corporation is defined in the WR Act as being “a corporation to which paragraph 51xx of the Constitution applies”, i.e. a foreign, trading or financial corporation formed within the limits of the Commonwealth. Basically, in order to be considered a trading or financial corporation, the entity must be:
- incorporated; and
- engaged in “substantial or significant” trading or financial activities.
It should be noted that the term “corporation” does not just cover entities that are incorporated under the Corporations Act 2001 (Cth), but can also include those incorporated under other laws such as not-for-profit organisations incorporated under State or Territory incorporated associations legislation.
Employers who are not covered by WorkChoices are therefore those which are:
- unincorporated and operate outside Victoria and the Territories. For example, sole traders, partnerships, and State Governments;
- incorporated bodies formed within Australia that do not have significant trading or financial activities so as to be properly characterised as trading or financial corporations.