Who is in the WA industrial relations system?
State system employers and employees are those who are covered by the WA industrial relations system.
Two different industrial relations systems operate in WA, the state system and the national system. Which system applies to you or your business depends on the type of business arrangement that applies.
Are you in the state or national industrial relations system?
Generally, the state system includes businesses (and their employees) that are sole traders (eg Bob Smith trading as Bob’s Deli), unincorporated partnerships (eg Bob and Mary Smith trading as Bob’s Deli) and some trust arrangements.
Businesses that are constitutional corporations (eg Smith Nominees Pty Ltd trading as Bob’s Deli) and their employees are in the national system.
There are some areas of overlap between the state and national systems. Some provisions of the national Fair Work Act apply to employers and employees in the state industrial relations system. Information on these provisions is explained on this site where relevant, for example, the requirements relating to termination notice and parental leave. Some state laws may also apply to national system employers and employees. These include the laws governing when children can work and long service leave.
The Key features of the WA industrial relations system page has information about the state system.
The State Industrial Relations Coverage in WA publication uses a range of data sources to provide an estimate of how many employees are within the state industrial relations system.
Which businesses are constitutional corporations?
There is no absolute rule that determines whether a particular corporation is covered by the national industrial relations system. Broadly speaking, Proprietary Limited [Pty Ltd] or Limited [Ltd] companies tend to be in the national system by virtue of their trading or financial activities, as discussed below.
A constitutional corporation is incorporated. Incorporation can be done under the federal Corporations Act 2001 or under other legislation, such as the WA Associations Incorporation Act 1987.
A constitutional corporation engages in trading or financial activities. Trading activities typically involve buying or selling, and produce revenue for the corporation. Financial activities involve the borrowing of money and the provision of finance. A corporation that trades or engages in financial activities is not automatically a constitutional corporation. Rather, the corporation must engage in sufficiently substantial trading or financial activities. This will vary from corporation to corporation. The key test to determining whether a corporation is a constitutional corporation is to assess the activities of the corporation, not its purpose.
Foreign corporations that are incorporated overseas are automatically constitutional corporations in Australia.
Organisations incorporated under the Associations Incorporation Act are not-for-profit associations. This means that any profits they make can only be used to further the association’s objects and not to provide personal gain for members.
Not-for-profit associations – for example, sporting clubs – are not automatically excluded from the national industrial relations system. They may be constitutional corporations if they have sufficiently substantial trading or financial activities, even if the purpose of the organisation is something other than trading or finance.
Corporations or incorporated associations that provide public services – for example, public universities or non-government organisations (NGOs) – may also be constitutional corporations if they engage in sufficiently substantial trading or financial activities. This is despite the fact that the organisation has not been created for the purpose of trading or finance, and trading or finance is not the organisation’s predominant activity.
The fact an organisation receives government funding does not prevent it from being a constitutional corporation. Again, the test for this will be the organisation’s level of trading or financial activities.
Situations involving trusts are not clear cut. Legal advice should be sought where a trust is involved in an employment situation, particularly regarding whether the trustee or the beneficiary is the employer. Issues can arise because the trust itself cannot be an employer as it is not a legal “person”. A trust is simply a legal relationship where one person – the trustee – holds property or rights on behalf of another person – the beneficiary.
In very general terms, if the trustee is the employer (of a third person/s), it is incorporated and if it engages in sufficiently substantial trading or financial activities, the business may be covered by the national system. There is the potential that the beneficiary may be the employer (of a third person/s), not the trustee. In such a situation, the incorporation of the beneficiary and the nature of its trading or financial activities would be the deciding factor regarding national system coverage.
Need some assistance?
Contact Wageline for help with determining which industrial relations system covers you or your business.
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