Are overseas workers covered by Australian employment laws? What employers should know

Think outsourcing to overseas workers means you don’t have to worry about Fair Work rules? It might not be that simple. A recent Fair Work Commission (FWC) ruling has set a precedent for Australian businesses engaging overseas workers.

In the FWC case, a paralegal working remotely from the Philippines was found to be an “Australian-based” employee, which meant they were entitled to make an unfair dismissal claim under the Fair Work Act. Some key factors in this case were that the paralegal was hired directly by an Australian corporate entity and their contractor agreement referred to Australian law.

So, after this new ruling, what should business owners keep in mind?

What you need to know:

• It is possible for overseas workers to be classified as an “Australian-based” employee under the Fair Work Act.
• This can have big consequences, as it may mean overseas workers are also entitled to Australian minimum wage, superannuation, leave entitlements, and protection under Australia’s unfair dismissal laws.
• It pays for business leaders to understand the details of any overseas arrangements and take steps to reduce risk where possible.

So, how can you reduce risk?

Like many areas of HR, there is no one-size-fits-all advice! Each situation is assessed individually.

Fair Work doesn’t rely on a single factor to determine the classification of an “Australian-based” employee, they look at several details and consider the overall business relationship.

With that being said, here are some key factors that influence the classification:

1. Who engages the worker

If your overseas worker is engaged directly by your Australian company (rather than through a third-party, overseas entity or agency), they’re more likely to be considered to an Australian employee.  

2. Where they are engaged from

This looks at where a contract is created and accepted. In practice, that means things like the office location and email address it is sent from and the location it is signed. For example, was a contact emailed by someone in Australia and then signed/accepted overseas?

To reduce risk, businesses should consider:

• Having contracts sent by an overseas entity or agency local to the worker, where possible.
• Tailoring contracts to refer to the worker’s local jurisdiction and currency, rather than Australian law.

3. Where is work is performed and how closely is it tied to Australia

It also depends on whether their work is closely connected to Australian business operations. For example, this could include work where the role is responsible for supporting Australian clients.

If your core business is in Australia, there’s a good chance the work being performed overseas is closely connected to your business here.  But remember this is just one of several factors that is taken into consideration.

No single factor is decisive. This particular factor may be hard to avoid, so where possible, it’s best to reduce risk and follow best practices in the other areas.

4. Other factors

Other considerations might include how the worker is paid (and in what currency), and where the people they report to are based. There are also other factors that could connect them to Australian legislation, such as the business paying superannuation, deducting PAYG tax, or providing employee-style benefits.

Want peace of mind?

If you’re engaging with overseas workers, it’s worth getting advice and HR support specific to your situation. Get in touch if you’d like to chat a HR partner, we can help!