publications monitor Archive Failure of the High Court to discuss constitutional corporations | Failure of the High Court to discuss constitutional corporations |
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Many observers had hoped that in handing down its decision on the constitutional validity of the Federal Government's WorkChoices legislation, the High Court would revisit the issue of what is a trading corporation. Given that the majority of companies fall under the provisions of WorkChoices because they are "trading corporations" (together with all employers in Victoria, the ACT and the Northern Territory), there was a general view that the High Court could have used this opportunity to clarify what proportion of trading activities is required to be undertaken by a company for it to fall within this class of corporation. The High Court held that the relevant test was not in issue before it, and accordingly did not rule on the appropriateness of the accepted test that a trading corporation is a corporation which undertakes trading activities as a significant or substantial part of its overall activities. Indeed, Justice Callinan specifically held that the case left unanswered the question of which corporations may be characterised as financial and trading corporations. He described this unanswered question as a "very big question indeed". A number of corporations have struggled in applying this test to their own circumstances. The uncertainty arises when trading activities make up less than 10% of a company's overall activities and do not raise a significant monetary sum. It would appear that until the courts provide greater clarity on this issue, corporations that sit on the line of uncertainty will need to put in place industrial relations strategies which take into account that a state industrial system may apply. Article by Justin Zeeman, Partner at Hunt & Hunt's Hobart office To read other Monitor articles please click here. |