On 18 December 2018, the Fair Work Commission determined that the City of Port Phillip is a constitutional corporation, with the result that it is covered by the Commission’s anti-bullying jurisdiction.
This decision may have ramifications for other municipal councils both in Victoria and across Australia.
Ms Bastakos made an application to the Commission for an order to stop bullying. While the Council denied that bullying had occurred, it also raised a jurisdictional objection: that the Council is not a “constitutionally-covered business”, meaning that it falls outside the scope of the anti-bullying jurisdiction. The Commission’s decision focused on this jurisdictional question.
The Fair Work Act 2009 provides that a person can only make an application for a stop bullying order if they are at work in a constitutionally-covered business, which includes:
(a) a constitutional corporation;
(b) the Commonwealth or a Commonwealth authority; and
(c) any body corporate incorporated in a Territory.
A constitutional corporation is a corporation that falls within the Federal Government’s constitutional power to make laws with respect to foreign corporations, and, importantly, trading or financial corporations.
Since the anti-bullying jurisdiction commenced in 2014, there has been some uncertainty as to whether a municipal council could fall within that definition, as councils generally engage in trading activities to some degree while fulfilling their statutory functions.
In this week’s decision, the Commission considered the role and functions of council, and considered the various sources of revenue available to the Council. Ultimately, it determined that just over 25% of the Council’s revenue derived from trading activities (such as property lease and rental arrangements, parking services, childcare and health services, and running operations such as the South Melbourne Market and the Albert Park Hockey and Tennis Centre).
The Commission concluded that the trading activities were not peripheral or incidental to the Council’s functions, and had to be considered to be a substantial activity of the Council. On that basis, the Council was found to be a trading corporation, performing its regulatory functions in conjunction with its trading activities. For this reason, the Council’s jurisdictional objection was dismissed.
What does this mean for local government?
The immediate impact of the decision is that Ms Bastakos may continue with her stop bullying application against the City of Port Phillip. However, it does not necessarily mean that all municipal councils are now covered by the anti-bullying jurisdiction.
The Commission undertook similar analyses in the 2016 case of Boyd and Theedom v Shire of Yalgoo, and the 2017 case of Cooper v Bagster. However, in both of those cases, the trading activities of the councils were far less significant (2.3% and 5.66% of total revenue respectively), and the Commission concluded that the trading activities were peripheral to the councils’ main functions. A similar conclusion was reached by the Federal Court in the 2008 decision of AWU Queensland v Etheridge Shire Council.
These decisions all depend on the activities conducted by the council in question (and the relative scales of those activities). Importantly, none of the decisions considered receiving rates or statutory charges to be a trading activity, so while this case may serve as a reminder that some councils may be covered by the anti-bullying system, this week’s outcome may not apply across the board.
Finally, as many Victorian councils are covered by enterprise agreements which allow an employee to commence a dispute resolution process at the Commission on any matter relating to their employment, many local government employees are already in a position to have their concerns heard by the Commission in some capacity.