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Unfair Dismissal: Nangle v Kimberley Division of General Practice T/A Boab Health Services

Public health service not subject to the Fair Work Act - Nangle v Kimberley Division of General Practice T/A Boab Health Services [2012] FWA 6880 (16 August 2012)

A recent decision of Fair Work Australia has highlighted the limits of the Commonwealth’s legislative powers in relation to workplace laws. The previous Coalition government extended the scope of workplace laws by utilizing the corporations power to legislate workplace laws in relation to corporations falling within the scope of the constitutional corporations power (so called ‘Constitutional Corporations’). This extension survived a High Court challenge and continues in the Fair Work Act, where national system employers include constitutional corporations. National system employers are subject to unfair dismissal laws and obligations.

However, although the constitutional power is wide, it is not without limits. Jaclyn Nangle brought unfair dismissal proceedings in Fair Work Australia, alleging that she had been unfairly dismissed from the Kimberley Division of General Practice (trading as Boab Health Services). The Respondent argued, in seeking to have the matter dismissed, that it was not in fact a constitutional corporation and that the application had been filed out of time.

The Respondent’s case was not disputed by the Applicant and, accordingly, the Tribunal found that:

  1. The Respondent provided 99% of its services free of charge;
  2. The Respondent is funded by State and Commonwealth grants, rather than from trading or income revenue;
  3. The Respondent was funded to provide allied health outreach services to the rural and remote regions in the Kimberley district of Western Australia; and
  4. Accordingly, the Respondent’s services are of a public, welfare character.

 Having made these findings, Commissioner Williams considered the recent decision of the Western Australian Court of Appeal in Aboriginal Legal Service of Western Australia (Inc) v Lawrence (No. 2) [2008] WASCA 254, in which the Court of Appeal considered the scope of the constitutional power in relation to the Aboriginal Legal Service. Importantly the court noted the breadth of the constitutional power in relation to trading and financial corporations:

  • Trading does not need to be the predominant activity of the corporation, but must be a substantial part (rather than peripheral) of the corporation’s activities;
  • Trading does not require buying and selling activities nor the conduct of activities with a view to a profit (although these will, of course, be strong if not conclusive indicia);
  • A corporation that exists for a public or charitable purpose may still be a trading corporation;

 Accordingly, the question of whether or not a corporation is a constitutional corporation is one of fact and degree, determined by focusing on the extent and relevance of trading activities to the corporation.

 In that case, the Industrial Appeal Court and the Court of Appeal held that the Aboriginal Legal Service was not a constitutional corporation as it did not derive income and the nature of its services was such that it was closer to a ‘public welfare activity’ than a trading corporation.

 Similarly, Commissioner Williams held that, taken as a whole, the activities of the Respondent did not fall within the scope of a trading or financial corporation (and therefore a constitutional corporation). As such, the Respondent was not subject to unfair dismissal obligations under the Fair Work Act.

 Whilst most corporations will fall within the scope of the Fair Work Act, it is important that those whose activities do not fall easily within the legal definition of ‘trading’ or ‘financial’ examine their position carefully. State based obligations differ significantly (and some states have referred their powers to the Commonwealth in any event) and corporations risk significant non-compliance if they do not address this fundamental question.

* PCC Lawyers are a team of employment practitioners based in Sydney, with many years of combined knowledge and experience in workplace law, industrial relations, workplace investigations and training.  They provide a high standard of excellence and an exceptional level of personal service to a variety of clients in the Sydney metropolitan area, Central Coast, regional NSW and interstate.

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