The High Court has unanimously determined that reforms made by the former Queensland Government to bring Queensland Rail employees within the State industrial relations system were constitutionally invalid.

Queensland Rail was held to be a “trading or financial corporation”, and therefore subject to federal industrial relations laws, despite the Queensland Rail Transit Authority Act 2013 specifying it not to be a body corporate.

Background

The Newman Government established the Queensland Rail Transit Authority, later named Queensland Rail, through the Queensland Rail Transit Authority Act 2013 (Qld) (QRTA Act). Queensland Rail operates as a labour hire company supplying labour to Queensland Rail Limited, an entity with Queensland Rail as its only shareholder and which is governed by the Corporations Act 2001 (Cth)

The QRTA Act provides Queensland Rail with a separate legal personality from the body politic of the State of Queensland, allowing it to have the power to create and be subject to legal rights and duties. Most notably, it explicitly states that Queensland Rail will be an employer for the purposes of the Industrial Relations Act 1999 (Qld) (IR Act). This had the practical effect of ensuring employees of Queensland Rail were governed by Queensland industrial relations laws, instead of federal industrial relations laws.

Proceedings were commenced in the High Court by various state and federal employee organisations and associations to establish that Queensland Rail should instead be governed by the federal industrial relations system. This was on the basis that Queensland Rail was, in actual fact, a “trading or financial corporation” within the corporations power under the Australian Constitution. Therefore, the QRTA Act and the IR Act could not apply to its industrial relations activity.

The High Court Decision

The High Court found that for bodies which are not a “body politic”, there was no distinction between being categorised as either a corporation within the Australian Constitution, or some other type of artificial legal entity (as Queensland Rail was argued to be).

Instead, the High Court considered whether Queensland Rail was a “trading or financial corporation” under the Australian Constitution. In concluding that it was, the High Court took a broad approach, which focused on the substance of Queensland Rail, not its label, including that:

  • the QRTA Act expressly describes  that Queensland Rail will “carry out its functions as a commercial enterprise”;
  • it paid dividends to the State Government;
  • it provided responsible ministers with an estimate of its profits for each financial year;
  •  it paid amounts to a consolidated fund akin to taxation; and
  •  it provided various rail transport services as well as managing railways and controlling rolling stock.

It did not matter that Queensland Rail provided labour hire exclusively to Queensland Rail Limited, nor whether it made a profit.

Bottom line for employers

The High Court took an expansive approach to the sorts of entities which are considered to be a “trading or financial corporation” under the Australian Constitution, and this decision raises the possibility that other State entities may also be covered by the national industrial relations system.

It also suggests that there is little to no middle ground between a body politic and an entity for the purposes of the Australian Constitution. It seems the focus will be on the substance of an entity’s activities as a whole, rather than any one factor.