In the decision of the Fair Work Commission – Kim Cowie [2016] FWC 7886 – an application for a stop bullying order filed by Kim Cowie, a volunteer umpire with Rowing Victoria Inc., was rejected on the basis that Rowing Victoria Inc. was not a ‘constitutional corporation’ and so the stop bullying provisions of the Fair Work Act 2009 (Cth) did not apply.
What is a ‘constitutional corporation’?
Rowing Victoria Inc. is an incorporated association established as the Victorian peak rowing body.
A ‘constitutional corporation’ under the Fair Work Act 2009 (Cth) is defined as one to which s51(xx) of the Australian Constitution applies – in other words, an incorporated entity that can be defined as a ‘trading corporation’.
‘Trading corporations’ are generally those that provide some form of goods or services in exchange for money. Generally, courts have read this broadly and it is certainly clear that any corporation undertaking business activities would be considered a trading corporation.
When it comes to not for profits, what is and is not a ‘trading corporation’ is far less clear. The simple fact of not making a profit or undertaking benevolent activities is not necessarily enough to be considered to be ‘not trading’. Rather it comes down to whether ‘trading’, or ‘sales type activities’ form a substantial part of the activities of the organisation and the degree to which the purposes of the organisation are commercial or are undertaken with a view to making a profit.
For example, in an earlier case of E v Australian Red Cross Society [1991] FCA 603, the Red Cross Blood Service was found to not be a ‘trading corporation’ because a majority of its income came from conducting the service of supplying blood, as well as from donations, with only a small minority coming from trading based activities. In the same case, the Royal Prince Alfred Hospital was found to be a ‘trading corporation’ because it made approximately $18 million per year from ‘trading activities’, which was found to be too great not to be considered ‘substantial’.
In the present case, the Fair Work Commission found that Rowing Victoria Inc. was not to a ‘trading corporation’. Whilst it did conduct some trading through the collection of entrance fees for races and for coaching, these activities were not ‘substantial’. In addition, the organisation’s primary activities were volunteer based.
As a result of the Fair Work Commission’s determination that Rowing Victoria Inc. was not a ‘trading corporation’, and thus not a ‘constitutional corporation’, Cowie’s stop bullying application was struck out as the Fair Work Commission lack the jurisdiction to hear the matter.
Word of Caution
It should be noted that non-trading corporations, such as Rowing Victoria Inc, are by no means exempt from all workplace protections under the Fair Work Act 2009 (Cth).
However, other parts of the Fair Work Act 2009 (Cth) do rest upon the requirement that the entity be a ‘constitutional corporation’. Accordingly, the impact of this recent decision may well extend beyond stop bullying applications.
How can JFM Law help?
JFM Law is experienced in all aspects of employment and not for profit law. If you are a not for profit concerned about liability under the Fair Work Act 2009 (Cth), or an employee of a not for profit with concerns about your employment rights, contact JFM Law on (02) 9199 8597 for a no obligation chat. If you would rather get in contact through email, send your question through or by email at wehelp@jfmlaw.com.au
The information contained in this post is current at the date of editing – 27 November 2023.
