It has come to the attention of Local Government Workplace Solutions that a recent letter has been forwarded to Local Governments in WA claiming that most if not all of Local Governments in the State are not constitutional corporations and are as a result not covered by the recently introduced Fair Work Act 2009 and the Local Government Industry Award 2010.

Although the issue still remains contentious our advice has not changed.  Our position is that most Local Governments would be deemed to be Constitutional Corporations if assessed because they engage in trading activities of significant enough levels to be deemed so.  The recent full court Federal Court decision in Bankstown Handicapped Children's Centre Association Inc v Hillman [2010] FCAFC 11 (25 February 2010)  overrides the reasoning applied previously in the lower Federal Court decision of AWU v Shire of Etheridge [2008] FCA 1268 and John Galea v Shire of Ravensthorpe (2009) in the WA Industrial Relations Commission.

Local Governments are advised to apply the Local Government Industry Award 2010 and any enterprise or workplace agreements they may have.  To do otherwise may result in employees being underpaid.

Our email alert "There is no bright light delineating what is or is not a trading corporation" (7/2010) can be reviewed on the Local Government Workplace Solutions website if further detail of these cases is required.

We advise that it is simplistic too state that Local Governments are not trading entities.  Local Governments not only meet their statutory functions but also engage in a range of trading activities to generate revenue which is used to supplement rates and provide improved services to the communities they serve.

The Western Australian Local Government Association has made representations to Minister Buswell, along with the Australian Services Union and the Chamber of Commerce and Industry who agree with our position that Local Governments fall in the Federal Industrial Relations system.  We are hopeful that a legislative remedy to the situation will be forthcoming in the near future considering bipartisan support for this position exists.

If a Local Government chooses to not implement the Local Government Industry Award 2010 and revert to the previous awards we believe they are placing themselves, and their employees through unnecessary turmoil, and possibly placing themselves in a position of increased liability.  Within the next few weeks a number of jurisdictional contests will be argued by Local Government Workplace Solutions in the Western Australian Industrial Relations Commission with this new Federal Court of Australia (Full Court) decision as precedent.  If the Commission deems it does not have jurisdiction to hear the unfair dismissal cases than this will be a very strong indicator that Local Governments are in the Federal Industrial Relations System and need to apply the Fair Work Act 2009 and the Local Government Industry Award 2010.

Our advice to Local Governments is they do not need to respond to the letter that has been sent to them asking for them to signify their intention to be party to the creation of a new State award.  A State award is unable to override the Local Government Industry Award 2010.

If any clients wish to seek further clarification or have any concerns they wish addressed please contact the Local Government Workplace Solutions team.