The label doesn’t stick - it's still a trading corporation

A recent High Court decision confirms that a state government legal entity cannot be removed from the reach of the Fair Work Act simply by declaring that it is not a body corporate.

Background

The Queensland Rail Transit Authority (the Authority) whose primary purpose is to supply labour to a related entity, Queensland Rail Limited (QRL) was established under the Queensland Rail Transit Authority Act 2013 (Qld) (the QRTA Act). The QRTA Act provides that the Authority is not a corporation. The intention of Queensland Parliament when drafting the QRTA Act was to remove Queensland rail employees from the operation of the Fair Work Act 2009 (Cth) (the FW Act).

Proceedings

The CEPU commenced proceedings seeking a determination that the Authority is a trading corporation within the meaning of section 51(xx) of the Australian Constitution (the Constitution) and a "constitutional corporation" as defined by the FW Act and therefore, the employment conditions of the Authority's employees  were regulated by the FW Act.

The High Court had to determine whether the Authority is:

• corporation even though the QRTA Act provided it was not a body corporate; and
• a trading corporation when it operates as a labour hire company to QRL on a non profit basis,

within the meaning of the Constitution.

Finding

Is the Authority a corporation?

The High Court found that:

• the fact that the QRTA Act provided the Authority is not a body corporate, it was a mere "label" and that of itself does not determine whether or not it is a corporation within the meaning of the Constitution;
• whether or not an entity is a corporation within the meaning of the Constitution is "an issue of substance, not mere form or label";
• no criteria existed that identified the Authority as an artificial legal entity that is neither a body corporate nor a corporation as that term appears in the Constitution;
• even if the intention of the legislation which created the Authority was to take it outside the reach of section 51(xx) of the Constitution and the FW Act, State Parliaments  cannot determine the limits of federal legislative power; and
• the Authority is "created as a separate and duty bearing entity" with "the full character of a corporation".

Is the Authority a trading corporation?

The High Court found the Authority is a trading corporation within the meaning of the Constitution and a constitutional corporation that is a national system employer within the meaning of the FW Act. The Authority engages in a trading activity when it is supplying labour to another entity, even if "the prices for supply are struck at level which yields no profit to the supplier".

Lessons

While most employers are covered by the FW Act, employees such as state public servants, teachers, fire-fighters and others who are employed in the administrative services of a state are, in general,  regulated by the state industrial laws.

However, once an activity is already regulated by the FW Act, simply by giving it a different label won't take the employment outside the scope of the FW Act.

If you would like more information, please contact National Workplace Lawyers on  +61 2 9233 3989.

National Workplace Lawyers

Note — this is for information purposes only and does not purport to be comprehensive or to render legal advice.