The Fair Work Act defines a constitutional corporation as ‘a corporation to which paragraph 51(xx) of the Constitution applies’.[1]
The Australian Constitution defines constitutional corporations as ‘Foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth’.[2]
This definition has two limbs that are ‘comprehensive alternatives’.[3] 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.[4]
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.[5]
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.[6]
A foreign corporation is a corporation that has been formed outside of Australia.[7]
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.[8]
Trading denotes the activity of providing goods or services for 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]
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.[12]
A corporation will be a trading corporation if the trading engaged in is ‘a sufficiently significant proportion of its overall 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:
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]
[1] Fair Work Act s.12.
[2] Australian Constitution s.51(xx).
[3] The State of New South Wales v the Commonwealth of Australia [1990] HCA 2 (8 February 1990) at para. 3 (Deane J), [(1990) 169 CLR 482 at p.504].
[4] ibid.
[5] A Stewart, Stewart’s Guide to Employment Law (4th ed, 2013), at p.36.
[6] ibid., at p.34.
[7] The State of New South Wales v the Commonwealth of Australia [1990] HCA 2 (8 February 1990) at para. 3 (Deane J), [(1990) 169 CLR 482 at p.504].
[8] See also Gardner v Milka-Ware International Ltd [2010] FWA 1589 (Gooley C, 25 February 2010) at para. 24.
[9] See, however, Fair Work Ombudsman v Valuair Limited (No 2) [2014] FCA 759 (24 July 2014) (Buchanan J) in relation to the employment of foreign-based cabin crew by foreign corporations where those crew spend a small and transient proportion of overall time on duty in Australia.
[10] Re Ku-Ring-Gai Co-operative Building Society (No 12) Ltd [1978] FCA 50 (18 December 1978) at para. 8 (Bowen CJ), [(1978) 36 FLR 134 at p.139].
[11] R v Federal Court of Australia; Ex parte WA National Football League [1979] HCA 6 (27 February 1979) at para. 53 (Barwick CJ), [(1979) 143 CLR 190 at p.208].
[12] ibid., at para. 10 (Murphy J), [(1979) 143 CLR 190 at p.239].
[13] ibid., at para. 31 (Mason J), [(1979) 143 CLR 190 at p.233].
[14] Garvey v Institute of General Practice Education Incorporated [2007] NSWIRComm 159 (28 June 2007) at para. 30, [(2007) 165 IR 62].
[15] University of Western Australia v National Tertiary Education Industry Union Print P1962 (AIRC, O’Connor C, 20 June 1997) at para. 11; citing R v Federal Court of Australia; Ex parte WA National Football League [1979] HCA 6 (27 February 1979) at para. 57 (Barwick CJ), [(1979) 143 CLR 190 at p. 209].
[16] University of Western Australia v National Tertiary Education Industry Union Print P1962 (AIRC, O’Connor C, 20 June 1997) at para. 12; citing Re Australian Beauty Trade Suppliers Limited v Conference and Exhibition Organisers Pty Limited [1991] FCA 154 (18 April 1991) at para. 11, [(1991) 29 FCR 68 at p. 72].
[17] Re Ku-Ring-Gai Co-operative Building Society (No.12) Ltd [1978] FCA 50 (18 December 1978) at para. 4 (Bowen CJ), [(1978) 36 FLR 134 at p.138].
[18] State Superannuation Board v Trade Practices Commission (1982) HCA 72 (14 December 1982) at para. 19 (Mason, Murphy and Deane JJ), [(1982) 150 CLR 282 at p.303].