In Western Australia, there are two jurisdictions for industrial relations, Federal and State.  The Fair Work Act 2009 (Cth) (FW Act) governs those employers and employees who fall within the former and the Industrial Relations Act 1979 (WA) covers those in the latter.

Section 51(xx) of the Commonwealth Constitution refers to the power of the Commonwealth Government to legislate with respect to foreign, trading OR financial corporations (constitutional corporations) formed within the limits of the Commonwealth.

If an employer falls within the definition of a constitutional corporation it will be covered by the FW Act.

The first step in determining whether a business is a constitutional corporation is to establish whether it is:

• incorporated; and
• a foreign, trading or financial corporation.

Even if a business, prima facie, falls within the above definition, there are some cases where it is difficult to categorically determine such status without reference to the specifics of the business and a consideration of complex case law.

The most common type of constitutional corporation is a trading corporation.

Incorporation

Incorporation can occur in several ways, including through:

• the Corporations Legislation (Cth) as either a private or public company.
• a separate statute - some organisations have their own statutes which provide that they are incorporated.
• the operation of the Associations Incorporations Act 2015 (W.A.), for example: a “not for profit” body may be incorporated pursuant to this Act.

It is important to note that partnerships and sole traders are not incorporated.

Trading corporation

Once incorporated, a business generally will be a constitutional trading corporation if they can meet the test of being a “trading” corporation.

To ascertain whether a corporation is a trading corporation, it is necessary to consider in detail, the financial affairs of that corporation.

A constitutional corporation may not maintain its status if it moves out of trading activities, for example, which is more likely to occur for a corporation registered under the Associations Incorporation Act 2015 (WA).

If you are unsure whether your organisation is a constitutional corporation, you may need to seek legal advice.  CCI can assist in providing an assessment as to whether your business is a Constitutional Trading Corporation.

For more information on this service and for any other queries please contact CCI’s Employee Relations Advice Centre on (08) 9365 7660 or email [email protected].