State referred national system businesses

Some rules under the Fair Work Act apply differently to state referred national system businesses. 

Find out more about these businesses and how they are impacted.

On this page:

Our information is a guide

We are unable to tell you whether a business is a state referred business or a constitutionally covered business. If you are unsure, seek Legal help.

State referred national system businesses

Changes from 26 August 2024

There have been changes to the Fair Work Act as part of the ‘Closing Loopholes’ legislation.

Some of these changes apply differently to state referred national system businesses. For information about the changes, visit Closing Loopholes.

State referred national system businesses (state referred businesses) are in the national workplace relations system because the state they are based in referred their powers to make workplace laws to the Commonwealth.

This broadly includes:

  • employees in New South Wales, South Australia, Queensland, Tasmania and Victoria who are employed by:
    • sole traders
    • partnerships
    • other unincorporated entities
    • non-trading corporations
  • most of the Victorian state government
  • Tasmanian local government employees.

These businesses are different to constitutional national system businesses (constitutionally covered businesses).

If a business is a state referred business, some rules under the Fair Work Act apply differently. Read Exclusions for state referred national system businesses.

Constitutionally covered businesses

Constitutionally covered businesses are different from state referred businesses.

Constitutional covered businesses include:

  • proprietary limited companies (usually with ‘PTY’ and/or ‘LTD’ at the end of the company name)
  • foreign corporations
  • trading or financial corporations formed within the limits of the Commonwealth
  • the Commonwealth
  • a Commonwealth authority
  • a body corporate incorporated in a territory, or
  • businesses or organisations operating principally in a territory or Commonwealth place.

Constitutional covered businesses don’t include sole traders, partnerships, some state government employees, or corporations whose main activity is not trading or financial.

Exclusions for state referred national system business

There are a number of provisions that don’t apply or apply differently to state referred businesses.

This includes provisions relating to:

  • superannuation
  • definition of employment
  • labour hire
  • independent contractors
  • textile, clothing and footwear workers
  • offences.

State referred businesses and their workers should understand which provisions are different and how they change.

Superannuation

Employees of state referred businesses don’t have an entitlement to superannuation under the National Employment Standards.

They may still be entitled to superannuation under the super guarantee and under terms in an award or registered agreement.

For more information, read Tax and superannuation.

Definition of employment

A definition of employment was introduced into the Fair Work Act and applies from 26 August 2024. This definition determines whether a worker is a contractor or an employee.

This means these businesses, when determining if a worker is a contractor or an employee, use the start of relationship test. For information about the test and how it works, visit Start of relationship test.

Other impacts of the definition of employment

State referred businesses are excluded from this definition for the purposes of most provisions of the Fair Work Act.

However, the definition of employment will apply to state referred businesses for the purpose of the following provisions of the Fair Work Act:

  • Section 484 – right of entry to hold discussions with employees
  • Section 772 – protection from unlawful termination
  • Section 572E – vicarious liability for the prohibition on sexual harassment in connection with work
  • The general protections in very limited circumstances where the general protections only apply to that business because of a reason other than state referral of powers.

For more information, visit Independent contractors.

Protected pay rates for labour hire employees

Labour hire employees may be entitled to a protected pay rate if they work for a business with a labour hire arrangement order in place.

Labour hire employees who work for a state referred business have some amounts excluded from the calculation of:

  • a protected pay rate
  • an arbitrated protected pay rate
  • payment on termination.

This includes amounts that relate to:

  • superannuation (although the employee may still be entitled to the superannuation guarantee)
  • workers compensation
  • long service leave
  • leave for victims of crime
  • leave for jury or emergency services duty.

For more information about protected pay rates, see Protected pay rates for labour hire employees.

Textile, clothing and footwear workers

Textile, clothing or footwear industry work may be performed:

  • directly, for the person who directly employed or engaged the worker or
  • indirectly, for a person, who is a party to a chain or series of arrangements, that is taken to have arranged for the work to be performed.

However, the meaning of ‘directly’ and ‘indirectly’ does not apply for state referred businesses.

Textile, clothing and footwear contract outworkers are taken to be employees in certain circumstances for certain provisions of the Fair Work Act. However, this is not the case for outworkers who work for state referred businesses.

Criminal offences

Some criminal offences under the Fair Work Act apply differently to state referred businesses.

Failing to pay certain amounts

A criminal offence of failing to pay certain amounts to an employee commences on the later of:

  • 1 January 2025, or
  • the day after the first time the Minister declares a Voluntary Small Business Wage Compliance Code.

If the employer is a state referred business, the following aren’t amounts for the purpose of the criminal offence:

  • superannuation
  • long service leave
  • paid leave for victims of crime, or
  • paid leave for jury/emergency services duties.

Corrupting benefits

The criminal offence of providing, causing or offering to provide a cash or in kind payment to an employee organisation, or prohibited beneficiary in relation to an employee organisation, does not apply to a state referred business.

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