Catch 22; choosing a venue for unfair dismissal

The pesky question of what jurisdiction to bring an unfair dismissal application for a Western Australian dismissal is as problematic as it has always been. The foundation of the issue is whether the employer is a national system employer (which requires that it be a trading corporation) in which event the proper forum is the Fair Work Commission. If it is a State government entity, or a partnership of real persons, or an incorporated association which is not a trading corporation, then the correct venue is the Western Australian Industrial relations Commission.
The main dilemma occurs when the employer is an incorporated association with a non-trading focus, for example a charitable body, but which supplements its benevolent revenue by revenue raising activities which involve an element of “trading”, whether that be renting out space or seeking to compete with other entities for government funding.
The leading Western Australian case is Aboriginal Legal Service of WA Inc v Lawrence (No 2) (2008) WASCA 254, in which the Industrial Appeal Court of Western Australia concluded that the ALS was not a trading corporation because of a finding that the funding it received from the Commonwealth Government under contract for the provision of (mostly) free of charge legal services to indigenous Australians was removed from the ordinary concepts of trade or trading.
In Phillip Digney -v- The Black Cockatoo Preservation Society of Australia (2014) WAIRC 01285 Commissioner Kenner C applied the principles in the ALS case and concluded that
“Having regard to all of this evidence, and having regard to the aims of the Society as set out in its constitution, it cannot be said that the bulk of the Society’s income results from trading activities of any kind. In my view, there is a distinct lack of “commerciality” in any of these grant and funding arrangements. The only activities that could be considered trading activities are those in the category of “fundraising” in the statements of account. For 2012-13, these activities generated some $28,996.95 in revenue. If one generously added to this about $5,000 for “Presentations/Training” and “Sales – Shirts”, this totals $34,000 approximately. This represents about 5.6% of the Society’s total revenue for that year. In my opinion, on the authorities, this cannot be regarded as “significant or substantial” trading activity, in the context of the overall activities of the Society. For the 2013-14 year, about 4.7% of income could be regarded as from trading activities, of this kind.Therefore I am far from persuaded that the Society is a trading corporation for the purposes of s 51(xx) of the Commonwealth Constitution and therefore the Society is not a national system employer for the purposes of the FW Act.”
On the other side of the country in Bankstown Handicapped Children’s Center Association Inc v Hillman (2010) FCAFC 11 a Full Federal Court (which is not binding upon the senior courts in Western Australia but which is highly influential and persuasive) held that the above charitable association was a trading corporation and thus not exposed to the New South Wales workplace relations system (as it then was).
The ratio decidendi of the case (ie the primary legal principle established by it) was that the fact that the Association provided public welfare services, effectively on a cost-recovery (rather than a profit-making) basis, did not detract from the essentially commercial nature of its relationship with government.
Most recently, in Re Marie Pasalskyj (2015) FWC 7309 Commissioner Hampton of the Fair Work Commission was again required to review this issue, but did so when determining whether the Commission had jurisdiction to deal with an application for an anti-bullying order.
The Commissioner referred to all of the leading authorities and (at least so it appears to me) focussed his deliberations upon an assessment of whether the employer’s trading activities were substantial and not merely peripheral.
“This combined level of trading activities is in my view substantial in the sense contemplated by the authorities. Further, (the respondent employer’s) trading activities are not insubstantial, not trivial, insignificant, marginal, minor or incidental.”
The Commissioner also concluded that most of the respondent’s revenue was not derived from being a trading corporation “that is, they do not generally have the character of commercial trade in services or elements of exchange or other commercial indicia in the payment so as to be considered as trading activities for present purposes. The activities resulting from these arrangements are also generally provided to the community without charge. They are more akin to the non-trading services described by Wilcox J in E v Red Cross.”
He held that part of the respondent’s revenue raising activities were that of a trading corporation, notwithstanding that they were intended for an “altruistic” purposes because the undertaking involved gaining funds by invoicing the State government for the same.
“Despite this, it is reasonable to deal with this matter on the basis that the total of the trading activities would be something well beyond $2.5m per annum and what would have to be in excess of 15% of the income of (the respondent). This is based upon a conservative estimate of the additional value of the accommodation trading activities. This combined level of trading activities is in my view substantial in the sense contemplated by the authorities. Further, (the respondent’s) trading activities are not insubstantial, not trivial, insignificant, marginal, minor or incidental.”
The bottom line appears to be that the test, at least from the perspective of the Fair Work Commission, is that the question is whether the “trading” operations are “substantial” which means “not trivial, marginal, minor, or incidental”.
However this begs the question. What is the relevance of the objects of the entity under review?
My conclusion is that the approach of the Fair Work Commission (if the Pasalskyj case is correctly decided) is to focus on the nature of the activities undertaken to raise revenue. The approach in Western Australia appears to require a balancing between the objects of the association and its activities.