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General protections benchbook

An overview of legal procedure & case law

What is a constitutionally-covered entity?

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Table of contents

On this page

  • Introduction
  • What is a constitutional corporation?
  • Foreign corporations
  • Case examples
  • Trading or financial corporation formed within the limits of the Commonwealth
  • Case examples
  • What is the Commonwealth?
  • What is a Commonwealth authority?
  • What is a body corporate incorporated in a Territory?
  • What is an organisation?
  • References

 

Introduction

Each of the following is a constitutionally-covered entity:

  • a constitutional corporation
  • the Commonwealth
  • a Commonwealth authority
  • a body corporate incorporated in a territory, or
  • an organisation.[1]

What is a constitutional corporation?

The Fair Work Act defines constitutional corporations as ‘a corporation to which paragraph 51(xx) of the Constitution applies’.[2]

The Australian Constitution defines constitutional corporations as ‘Foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth’.[3]

This definition has two limbs that are ‘comprehensive alternatives’.[4] This means that constitutional corporations are either ‘foreign corporations’ or ‘trading or financial corporations formed within the limits of the Commonwealth’. Therefore, a foreign corporation does not need to be formed within the limits of the Commonwealth or be a trading or financial corporation to be classified as a constitutional corporation.[5]

Many incorporated employers in the private sector who sell goods or provide services for a fee will easily satisfy the criteria of a trading or financial corporation.[6]

The issue of whether an employer is a constitutional corporation usually arises where the employer is a not-for-profit organisation in industries such as health, education, local government and community services.[7]

Foreign corporations

A foreign corporation is a corporation that has been formed outside of Australia.[8]

A corporation which is formed outside of Australia, which employs an employee to work in its business in Australia, is likely to be a constitutional corporation and therefore fall within the jurisdiction of the Fair Work Commission.[9]

Case examples

Foreign corporation

Employer company formed in New Zealand but applicant worked in Australia

Gardner v Milka-Ware International Ltd [2010] FWA 1589 (Gooley C, 25 February 2010).

The Fair Work Act applied to the dismissal, in Australia, of an employee who performed work in Australia under a contract of employment with a foreign corporation.

Foreign corporation is NOT a constitutional corporation

Company formed in Britain but does not employ persons within Australia

Jones v QinetiQ Pty Ltd T/A QinetiQ Australia [2013] FWC 3302 (Asbury DP, 14 June 2013).

QinetiQ Limited can only be a national system employer, to the extent that it employs persons within Australia. QinetiQ Limited does not employ any person in Australia. Accordingly, QinetiQ Limited is not a national system employer.

Trading or financial corporation formed within the limits of the Commonwealth

Trading denotes the activity of providing goods or services for reward (such as payment).[10]

The Commission will consider the nature of a corporation with reference to its activities, rather than the purpose for which it was formed.[11]

A corporation will be a trading corporation if the trading engaged in is ‘a sufficiently significant proportion of its overall activities’.[12]

It does not matter if trading activities are a corporation’s ‘dominant’ activity or whether they are merely an ‘incidental’ activity, or entered into in the course of pursuing other activities.[13]

A corporation can be a trading corporation even if it was not originally formed to trade.[14]

One factor that may be considered is the commercial nature of the activity.[15] When considering the commercial nature of a corporation’s activity, the Commission will look at a number of factors, including:

  • whether it is involved in a commercial enterprise; that is, business activities carried on with a view to 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.[16]

A financial corporation is one ‘which borrows and lends or otherwise deals in finance as its principal or characteristic activity...’[17]

The approach taken in deciding whether the activities of a corporation are such that the corporation should be considered to be a financial corporation is the same as the approach taken in deciding whether a corporation is a trading corporation.[18]

Case examples

Trading corporations

Professional sporting organisation and club

R v Federal Court of Australia; Ex parte WA National Football League [1979] HCA 6 (27 February 1979), [(1979) 143 CLR 190].

The High Court, by majority, held that a football club and the league to which it belonged in Western Australia were trading corporations.

Their central activity was the organisation and presentation of football matches in which players were paid to play and spectators charged for admission, and television, advertising and other rights were sold in connection with such matches.

This constituted trading activity.

Charitable organisation

Orion Pet Products Pty Ltd v Royal Society for the Prevention of Cruelty to Animals (VIC) [2002] FCA 860 (5 July 2002), [(2002) 120 FCR 191].

The RSPCA, a charitable organisation, was found to be a trading corporation on the basis that it earned substantial income from trading activities. It did not matter that this income was used for charitable purposes rather than to create a profit.

Not-for-profit organisation and hospital

Re E v Australian Red Cross Society; Australian Red Cross Society New South Wales Division and Central Sydney Area Health Service [1991] FCA 20 (8 February 1991), [(1991) 27 FCR 310].

The Australian Red Cross Society and the Royal Prince Alfred Hospital were held to be trading corporations, on the basis that they both generated substantial income from trading activities, even though that income was only a minority proportion of total income. The motive for which that trading income was earned was not relevant.

Metropolitan Fire and Emergency Services Board

United Firefighters’ Union of Australia & Ors v Metropolitan Fire and Emergency Services Board [1998] FCA 551 (20 May 1988), [(1988) 83 FCR 346].

The Court found that the trading activities of the Metropolitan Fire and Emergency Services Board (the Board) generated substantial income and were sufficient to constitute the Board as a trading corporation. The principal activity of the Board, established as a statutory corporation, was to respond to fire and other emergencies, an activity which it undertook without charge to the public. The Board’s Fire Equipment Services activities, which involved the commercial servicing of fire equipment for commerce, industry and the domestic market generated 5.11% of the Board’s revenue.

Financial corporation

Building Society

Re Ku-Ring-Gai Co-operative Building Society (No 12) Ltd [1978] FCA 50 (18 December 1978), [(1978) 36 FLR 134].

Two co-operative incorporated building societies were held to be financial corporations, on the basis that they lent money at interest and were therefore engaged in commercial dealing in finance. The fact that this activity was not for profit and involved the performance of an important social function was not determinative.

Trustee of Superannuation fund

State Superannuation Board v Trade Practices Commission [1982] HCA 72 (14 December 1982), [(1982) 150 CLR 282].

A statutory corporation formed to provide superannuation benefits for state public servants was determined to be a financial corporation, on the basis that it engaged in financial activities on a very substantial scale. The fact that this activity was engaged in for the purpose of providing superannuation benefits to contributors was no obstacle to the conclusion that it was a financial corporation.

NOT a trading or financial corporation

Partnership including Pty Ltd company

Williams v Goldendays Pty Ltd & D Kolichev & L Kolichev T/A Stirling Aluminium and Glass [2015] FWC 4200 (Bissett C, 24 June 2015).

The respondent was a partnership made up of two individuals and a Pty Ltd company. If the Pty Ltd company was a trading corporation then the partnership would take on the characteristic of a trading corporation and therefore be a national system employer.

The respondent submitted that the Pty Ltd company:

  • did not have an ABN
  • was not registered for GST
  • did not have a bank account
  • had not been involved in any form of trade, and
  • had no income except that received as a partner pursuant to the partnership distribution arrangement.

The Commission found there was nothing in the tax returns to indicate that the Pty Ltd company was engaged in any buying or selling of goods or services or that it generated any revenue. The Commission was satisfied that the Pty Ltd company was not a trading corporation.

District or amateur sporting organisation

Hughes v Western Australian Cricket Association (Inc) [1986] FCA 357 (27 October 1986), [(1986) 19 FCR 10].

Incorporated cricket clubs were found not to be trading corporations (although the Western Australian Cricket Association with which they were associated was found to be a trading corporation). The clubs were basically amateur bodies which did not charge for admission to matches and generally did not pay players. Although they engaged in some trading activities, this was not of sufficient significance to allow them to be characterised as trading corporations.

Charitable organisation

Hardeman v Children’s Medical Research Institute [2007] NSWIRComm 189 (24 September 2007), [(2007) 166 IR 196].

The respondent was found not to be a trading corporation. The trading activities it did engage in were insubstantial and peripheral to the central activity of medical research.

What is the Commonwealth?

The Commonwealth of Australia – the official title of the Australian nation, established when the six states representing the 6 British colonies joined together at Federation in 1901.

A Commonwealth employee is a person who holds an office or appointment in the Australian Public Service, or holds an administrative office, or is employed by a public authority of the Commonwealth.[19]

What is a Commonwealth authority?

A Commonwealth authority is a statutory authority, created by legislation, that is a separate legal entity from the Commonwealth and which has the power to hold money on its own account.

There are approximately 150 Commonwealth statutory authorities.

Examples of Commonwealth statutory authorities include:

  • the Australian Tax Office (ATO)
  • the Australian Postal Corporation (Australia Post)
  • the Commonwealth Scientific and Industrial Research Organisation (CSIRO)
  • the Australian Broadcasting Corporation (ABC)
  • the Australian Competition and Consumer Commission (ACCC)

There is a Register of Australian Government Organisations on the Department of Finance's website.

What is a body corporate incorporated in a Territory?

The term body corporate covers any artificial legal entity having a separate legal personality. These entities have perpetual succession; they also have the power to act, hold property, enter into legal contracts and sue and be sued in their own name.

Perpetual succession is the characteristic of a company which makes it a continuing entity in law with its own identity regardless of changes in its membership.[20]

The types of entities falling into these categories are broad, and include:

  • trading and non-trading entities
  • profit and non-profit making organisations
  • government-controlled entities, or
  • other entities with less or no government control or involvement.

Included in the definition of body corporate are entities created by:

  • common law (such as a corporation sole and corporation aggregate)
  • statute (such as the Australian Securities & Investments Commission), and
  • registration pursuant to statute (such as a company, building society, credit union, trade union, and incorporated association).

If an entity is not established under an Act of Parliament, or under a statutory procedure of registration, such as the Corporations Law or an Incorporation Act, it is generally not a body corporate.

Each state and territory has legislation that allows various kinds of non-profit bodies to become bodies corporate. Bodies incorporated under these Acts are normally community, cultural, educational or charitable organisations. Bodies of this nature that are incorporated in the Northern Territory or the Australian Capital Territory are included in the general protections provisions even if they are not a trading corporation or a financial corporation.

Related information

  • What is a Territory?

What is an organisation?

An organisation is an organisation registered under the Fair Work (Registered Organisations) Act 2009 (Cth).[21] 

Registered organisations include unions and employer organisations.

References

[1] Fair Work Act s.338(2).

[2] Fair Work Act s.12.

[3] Australian Constitution s.51(xx).

[4] The State of New South Wales v The Commonwealth of Australia (1990) 169 CLR 482, 504 (Deane J).

[5] ibid.

[6] A Stewart, Stewart’s Guide to Employment Law (4th ed, 2013) 36.

[7] ibid., 34.

[8] The State of New South Wales v The Commonwealth of Australia (1990) 169 CLR 482, 504 (Deane J).

[9] Gardner v Milka-Ware International Ltd [2010] FWA 1589 (unreported, Gooley C, 25 February 2010) [24].

[10] Re Ku-Ring-Gai Co-operative Building Society (No.12) Ltd (1978) 36 FLR 134, 139.

[11] Federal Court of Australia; Ex parte Western Australian National Football League (1979) 143 CLR 190, 208 (Mason J).

[12] ibid., 233.

[13] ibid., 239.

[14] Garvey v Institute of General Practice Education Incorporated (2007) 165 IR 62 [30].

[15] University of Western Australia v National Tertiary Education Industry Union (unreported, AIRC, O’Connor C, 20 June 1997) Print P1962 3; citing R v Judges of the Federal Court of Australia; Ex parte Western Australian National Football League (1979) 143 CLR 190, 209.

[16] University of Western Australia v National Tertiary Education Industry Union (unreported, AIRC, O’Connor C, 20 June 1997) Print P1962 3; citing The Australian Beauty Trades Suppliers Ltd (1991) 29 FCR 68, 72.

[17] Re Ku-Ring-Gai Co-operative Building Society (No.12) Ltd (1978) 36 FLR 134, 138.

[18] State Superannuation Board v Trade Practices Commission (1982) 150 CLR 282, 303.

[19] Butterworths Australian Legal Dictionary, 1997, 224.

[20] Butterworths Australian Legal Dictionary, 1997, 870.

[21] Fair Work Act s.12.

Updated time

Last updated

15 June 2018

 

 

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        • When the Commission may suspend or terminate
        • When the Commission must suspend or terminate
          • Threats to persons or the economy
          • Suspending industrial action
        • Requirements relating to a period of suspension
      • Powers of the Minister
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  • JobKeeper benchbook
    • Glossary
    • Introduction
      • Provisions of the Fair Work Act
    • JobKeeper enabling directions – general
      • Service & entitlement accrual
      • When a JobKeeper enabling direction will have no effect
      • Stand downs that are not jobkeeper enabling stand downs
      • Employee requests
    • Jobkeeper enabling stand down directions – entitled employers
      • Directions about duties & location of work
    • Jobkeeper enabling directions – legacy employers
      • Jobkeeper enabling stand down directions – legacy employers
      • Directions about duties & location of work – legacy employers
      • Termination of a jobkeeper enabling direction – legacy employers
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  • Modern Awards Review 2012
    • Introduction
      • Modern Awards Review 2012
  • Sir Richard Kirby Archives
    • Home
    • Sir Richard Kirby
    • About the Archives
    • Cases
      • Case
      • The Honourable Justice Henry Bournes Higgins (1851–1929)
    • Centenary
    • Exhibitions
      • Exhibition launch: The history of the Australian minimum wage
      • Guide – Opening Exhibition
      • International Industrial Dispute Resolution Conference
        • Speaker – Justice Alan Boulton AO
        • Speaker – Mr Arthur F Rosenfeld
        • Speaker – Mr Craig Smith
        • Speaker – Mr James Wilson
        • Speaker – Mr Kieran Mulvey
        • Speaker – Mr Peter Anderson
        • Speaker – Ms Ginette Brazeau
        • Speaker – Ms Nerine Kahn
        • Speaker – Ms Rita Donaghy CBE
        • Speaker – Ms Sharan Burrow
        • Speaker – Senator Guy Barnett
        • Speaker – The Hon. Julia Gillard
      • The Journey
        • Court
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            • Profile of Justice O'Connor
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            • The dispute & appeals
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        • Fair Work Australia
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          • About Fair Work Australia
          • Transition
          • Fair Work timeline
      • The history of the Australian minimum wage
        • The Great Strikes
        • The first minimum wage: The Victorian minimum wage
        • The Harvester Decision
        • The impact of the Great Depression
        • Working it out: Cost of living versus capacity to pay
        • The removal of award rate discrimination
        • The wage explosion & economic crisis
        • The modern era: The development of a modern minimum wage
      • Treasures of the archives
        • Launch speech?Treasures of the Archives
        • 1. Professor Isaac
        • 2. Register of organisations
        • 3. Perlman letters
        • 4. Sir Richard Kirby photograph
        • 5. Oral history program
        • 6. AIRC sign
        • 7. Folder of wage decisions
        • 8. Centenary exhibition
        • 9. Women's exhibition poster
        • 10. Isaac letters
    • The modern era
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  • Unfair dismissals benchbook
    • Overview of unfair dismissal
    • Glossary & naming conventions
    • Coverage for unfair dismissal
      • Who is protected from unfair dismissal?
      • People excluded from national unfair dismissal laws
        • Independent contractors
        • Labour hire workers
        • Vocational placements & volunteers
        • Public sector employment
      • Constitutional corporations
      • High income threshold
      • Modern award coverage
      • Application of an enterprise agreement
      • What is the minimum period of employment?
        • How do you calculate the minimum period of employment?
        • What is continuous service?
        • What is an excluded period?
      • Bankruptcy
      • Insolvency
    • What is dismissal?
      • When does a dismissal take effect?
      • Terminated at the employer's initiative
      • Forced resignation
      • Demotion
      • Contract for a specified period of time
      • Contract for a specified task
      • Contract for a specified season
      • Training arrangement
      • What is a transfer of employment?
      • Periods of service as a casual employee
      • What is a genuine redundancy?
        • Job no longer required due to changes in operational requirements
        • Consultation obligations
        • Redeployment
      • What is the Small Business Fair Dismissal Code?
    • What makes a dismissal unfair?
      • Valid reason relating to capacity or conduct
        • Capacity
        • Conduct
      • Notification of reason for dismissal
      • Opportunity to respond
      • Unreasonable refusal of a support person
      • Warnings – unsatisfactory performance
      • Size of employer's enterprise and human resources specialists
      • Other relevant matters
    • Making an application
      • Application fee
      • Timeframe for lodgment
      • Extension of time for lodging an application
      • Who is the employer?
      • Multiple actions
      • Discontinuing an application
    • Objecting to an application
    • Commission process
      • Conciliation
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      • Bias
    • Remedies
      • Reinstatement
        • Order for reinstatement cannot be subject to conditions
        • Order to maintain continuity
        • Order to restore lost pay
      • Compensation
        • Calculating compensation
        • Mitigation
        • Remuneration
        • Other relevant matters
        • Compensation cap
        • Instalments
    • Dismissing an application
    • Evidence
    • Costs
      • Costs against representatives
      • Security for costs
    • Appeals
      • Staying decisions
    • Role of the Court
  • Waltzing Matilda and the Sunshine Harvester Factory
    • Introduction
    • The book
      • Book launch
    • The film
      • Film launch
    • Historical material
      • 38 Hour Week Wage Principle [1983]
      • 40 Hour Week Case [1947]
      • 44 Hour Week Case [1927]
      • Apprenticeship indentures
      • Australian Minimum Wage and fitter (trades) rate since 1906
      • Boot Trades Case
      • Careers in Bootmaking and Boot Repairing
      • Cattle Industry Case 1966
      • Commercial Printing Case [1936]
      • Commonwealth Conciliation and Arbitration Act 1904
      • Cost of living newspaper articles from the early 1900s
      • Debates
      • Equal Pay Case 1969
      • Equal Pay Case 1972
      • Fruit Pickers Case
      • Gas Employees Case
      • Graph of Australian Minimum Wage since 1906
      • Harvester Case
      • Historic case judgments on the Fair Work Commission's website
      • Kingston's evidence
      • Linesmen's Case
      • Maternity Leave Case [1979]
      • Metal trades base level minimum wages [1967–2015]
      • Methods of wage adjustment
        • Establishing an Australian Minimum Wage 1907?1922
          • The origins of the Australian minimum wage
          • The 'needs' principle and 'capacity to pay'
          • Women's wages
          • First indexation decision
        • Quarterly indexation 1922–1953
        • The Great Depression 1931
        • Prosperity loadings 1937
        • World War II 1939–1945
        • The post-war period: 1953–1965 basic wage inquiries
        • The total wage 1966–1967
        • Removal of discrimination in award rates
        • Reintroduction of quarterly wage indexation 1975–1978
        • Six monthly wage indexation 1978–1981
        • Wage explosion 1981–1982
        • Reforming awards and work and management practices 1987–1991
        • Six monthly wage indexation 1983–1987
        • Enterprise bargaining and a minimum wage safety net 1991–1996
        • Statutory adjustments
        • The minimum wage in real terms
      • Mrs Beeton's cookbook
      • Paternity Leave Case [1990]
      • Personal/Carer's Leave Test Case [1995]
      • Piddington report
      • Re Bagshaw [1907]
      • Significant cases on the Fair Work Commission's website
      • Statistics for the purpose of comparison with the Australian minimum wage
      • The Amalgamated Society of Engineers v. The Adelaide Steam-ship Company Limited and Others
      • The Australian minimum wage from 1906
      • The Federated Marine Stewards and Pantrymen's Association v. The Commonwealth Steamship Owners' Association and Others
      • The Victorian minimum wage 1896
        • Legislative Council Second Reading Speech to the Factories and Shops Bill 1896
      • The first Award: 1906 Steam-ship Crew
      • 100 years of the minimum wage—Statistical comparison
    • Mrs Beeton's cookbook
    • Glossary
    • Related sites
    • Educational materials
  • AWRS First Findings report

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