The problems of the application of Federal industrial legislation to non-profit non-trading organisations was highlighted in a recent decision of the WA Full Supreme Court.
If an employer is a non-trading association then its employment contracts will be regulated by the State Industrial legislation. This legislation provides a far more stringent unfair dismissal regime than the Federal legislation.
In the recent Supreme Court decision, the full Supreme Court reviewed the application of the State legislation to the Aboriginal Legal Service, an incorporated association which operates the provision of legal services to aboriginal clients and is primarily funded from the Commonwealth Government under a contract awarded by tender.
Although the service was a significant operation and received significant remuneration under the arrangements mentioned above, the Court on a split decision held that due to the public nature of the service and the fact that it was not run for a profit meant that it was a non-trading organisation for the purposes of determining which jurisdiction in which it fell. The decision reviewed at some length the definition of what is a trading corporation and shows the difficulty of ascertaining which corporations fall within the Federal jurisdiction and which corporations fall within the State jurisdiction.
If you are running a not for profit or unincorporated entity you need to be aware of the stricter rules for unfair dismissal which still apply.
Should you wish to discuss the matter further then please contact Andrew Lynn or Nick Marouchak of this office.
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