Two different industrial relations systems operate in WA, the state system and the national fair work system. The two systems have different employment rights and obligations.
Which system applies to a particular business or organisation and its employees depends on the type of business arrangement under which the employer operates. In Western Australia, the national industrial relations system covers only employers who are constitutional corporations and their employees. This is different to the situation in other states of Australia.
Generally, the state system includes businesses (and their employees) that operate as:
- sole traders (e.g. Jane Smith trading as Jane’s Café)
- unincorporated partnerships (e.g. Jane and Bob Smith trading as Jane’s Café)
- unincorporated trust arrangements (Jane and Bob Smith as trustees for the Smith Family Trust trading as Jane’s Café)
- incorporated associations that are not trading or financial corporations and other not-for-profit organisations that are not trading or financial corporations
The national system covers Western Australian businesses and organisations that are constitutional corporations. This includes:
- Pty Ltd businesses that are trading or financial corporations (e.g. Smith Pty Ltd trading as Jane’s Café)
- incorporated partnerships (e.g. Smith Pty Ltd and Bob Smith trading as Jane's Café)
- incorporated trust arrangements (e.g. Smith Pty Ltd as trustee for the Smith Family Trust trading as Jane's Café)
- incorporated associations that are trading or financial corporations and other not-for-profit organisations that are trading or financial corporations.
More detail is provided on constitutional corporations / national system employers below.
How to determine which system covers a business or organisation
Business owners who are unsure whether their business is in the state or national industrial relations system can contact Wageline* or their business adviser.
If the employer is an incorporated association or other not-for-profit organisation, (including sporting clubs and school P&C's), there is no definitive rule on whether or not such an organisation is a constitutional corporation (and therefore covered by the national industrial relations system). This will depend on whether it engages in ‘sufficiently substantial’ trading activities. More information on not for profit organisations is provided below. Wageline is not in a position to advise on this matter, and the organisation would need to seek its own legal advice to determine this question.
Employees who are unsure if their employer is a state system or national system employer may wish to:
- Ask the employer or manager
- Check the business entity name of the employer on a payslip or annual payment summary (group certificate), or on a contract or letter of appointment. The business entity name may be different from the trading name e.g. you may work at Perth Café (the trading name) but Café Pty Ltd is the employer.
- Look up the business on the Australian Government’s ABN lookup website – www.abr.business.gov.au. A free search of the trading name on this website will often provide the entity name. If the business entity name is a trust, employees will need to contact Wageline and Wageline can undertake a more detailed search.*
- Call Wageline* on 1300 655 266.
* Please note: Identifying whether a particular employer falls within the state or national industrial relations system can be a complex issue and Wageline cannot provide an employer or employee with a definitive answer. Some business structures are complex in nature and relevant information can change at any time. Wageline conducts searches of business names using information maintained by external sources, and cannot guarantee the accuracy of it. You will need to make your own enquiries to confirm the industrial relations jurisdiction that is applicable.
Which businesses or organisations are constitutional corporations?
In Western Australia, the national industrial relations system covers only employers who are constitutional corporations and their employees. This is different to the situation in other states of Australia.
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 2015.
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.
State employment laws which apply to national system employers and employees
State laws on when children can work apply to all national system employers and employees in Western Australia, and the state Long Service Leave Act 1958 also covers many national system employers and employees.
National employment laws which apply to state system employers and employees
The provisions of the national Fair Work Act 2009 on notice of termination and parental leave apply to employers and employees in the state system and information on these requirements is included on this website.