From 1 July 2019, the high income threshold in unfair dismissal cases will increase to $148,700 and the compensation limit will be $74,350 for dismissals occurring on or after 1 July 2019.

This means that those national system employees earning more than $148,700 p.a.from 1 July 2019, will not be eligible to take an unfair dismissal claim to Fair Work. However there may be other claim options available depending on the facts and circumstances.

​​​​NES means National Employment Standards, and these are set out in the Fair Work Act 2009.These are minimum standards that apply to the employment of national system employees, and cannot be excluded by modern awards or enterprise agreements. The parental leave and notice of termination provisions of the NES also apply to employees who are not national system employees.

All states except Western Australia have referred their industrial relations powers to the Commonwealth.The definition of national system employee gives the Fair Work Act 2009 the constitutional power to regulate national workplace relations.

The Fair Work Act 2009 defines a national system employee  as an employee employed or usually employed by a national system employer (see FAQ What is the definition of a national system employer?).

Basically, if you are working for a business that operates as a Pty Ltd business, or is a trading or financial corporation, you will be employed by a national system employer.

The definition of national system employer is set out in section 14 of the Fair Work Act 2009. Unfortunately it is not straight forward. Section 14 states:

A national system employer is:
                     (a)  a constitutional corporation, so far as it employs, or usually employs, an individual; or
                     (b)  the Commonwealth, so far as it employs, or usually employs, an individual; or
                     (c)  a Commonwealth authority, so far as it employs, or usually employs, an individual; or
                     (d)  a person so far as the person, in connection with constitutional trade or commerce, employs, or usually employs, an individual as:
                              (i)  a flight crew officer; or
                             (ii)  a maritime employee; or
                            (iii)  a waterside worker; or
                     (e)  a body corporate incorporated in a Territory, so far as the body employs, or usually employs, an individual; or
(f) a person who carries on an activity (whether of a commercial, governmental or other nature) in a Territory in Australia, so far as the person employs, or usually employs, an individual in connection with the activity carried on in the Territory.

Particular employers are declared NOT to be national system employers. This includes: 1) a body established for a public purpose; 2) a body established for a local government purpose, or a wholly owned subsidiary of (or controlled by) that body; 3) employers specifically declared by law not to be so, including by endorsement, revocation, or amendment of a Minister of a State or Territory (s.14(2) Fair Work Act).

This leads us to another question. What is a constitutional corporation? (see FAQ)
I wish this was an easy question to answer, but it is not! Consequently, there has been many a legal opinion written on this very question. Unhelpfully the term "constitutional corporation" is defined in the Fair Work Act to mean "a corporation to which paragraph 51(xx) of the Constitution applies." In other words, foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth

Not being an easy question to answer is why there are still cases brought in either the Fair Work or the State Commissions involving jurisdictional issues. In other words, legal arguments such as "this case should not have been filed under the Fair Work Act, which has no jurisdiction to hear it, but under the WA industrial relations system." The employer is not a "trading corporation" and is therefore not a national system employer." 

For example, many local governments consider themselves to be constitutional corporations and under the jurisdiction of Fair Work legislation. Some are trading corporations and some are not. That fact in itself often requires a legal finding based on specific evidence and cross examination. Also, trading changes from year to year, so the finding in favour of a trading corporation in one year may not be so, in a different year. There is legal and factual confusion about whether a particular LG is within the state system or the national system.

All local government employees can have access to the general jurisdiction of the WA Industrial Relations Commission (WAIRC), if they are employed by a non-constitutional corporation. That is the critical jurisdictional issue.

Working it all out is a bit like doing a jigsaw puzzle and trying to make the pieces fit. Some appear to fit but later it is clear that they are in the wrong place. Hopefully the confusion will disappear in the near future, once the WA Industrial Relations system is updated, following the 2018 Ministerial Review into our State Industrial Relations System. There is a recommendation by the Reviewer (not by many LG's however) for a declaration under state law, that a body established for a local government purpose is NOT a national system employer. Such a law and declaration needs to be endorsed by the Federal Minister. Watch this space!

Is your business in WA and are you in the WA industrial relations system?
i.e. Do you have award free employees? Are you a sole trader? Are you an unincorporated partnership? Do you have an unincorporated trust arrangement? Are you an incorporated association or not for profit body that is not a trading or financial association?

If so, this link is for you.2019 Award free employees minimum pay rates