Understanding the Key Question
The recent Fair Work Commission (FWC) decision in Joanna Pascua v Doessel Group Pty Ltd[1] (‘Pascua’) highlights a critical issue for Australian businesses: under what circumstances are overseas workers considered Australian employees?
The Pascua decision illustrates the responsibilities businesses have when engaging international workers and underscores the importance of correctly classifying employment relationships.
The central question in Pascua was whether a worker based overseas, engaged under an independent contractor agreement, could be classified as an employee under Australian law. In this case, Ms Joanna Pascua, a legal assistant in the Philippines, worked remotely for an Australian legal firm. Despite the contractor label in her agreement, the Fair Work Commission (‘FWC’) determined that the practical realities of her role established her as an employee. This allowed her to pursue an unfair dismissal claim under the Fair Work Act 2009 (Cth)(‘FWA’).
Factors Influencing the FWC Decision
The FWC evaluated the relationship based on its substance rather than its contractual description. Ms Pascua worked under the firm’s direct control and performed tasks central to its operations, such as legal research, client liaison, and administrative duties. The provision of firm-specific tools, such as a PBX phone system and email address, further demonstrated her integration into the business. Additionally, her inability to delegate tasks and her hourly rate of $18—well below standard contractor rates—supported the conclusion that she was operating as an employee rather than independently. The decision reflects the changed definition of employment in Australian workplace law, where practical realities are increasingly prioritised over contractual labels.
Legal Framework and Broader Implications
The Pascua decision confirms that Australian workplace laws can apply to overseas workers if the employer operates within Australia’s national system. Regardless of the geographic location of an employee, if your business is an Australian national system employer (bound by the FWA), and the individual is deemed to be an employee, the same rights and obligations may apply to that employee as to other employees located in Australia. The ruling highlights the need for employers to be particularly cautious when engaging international workers under contractor agreements, particularly considering the amended definition of employment in Australia.
Practical Steps for Employers
To mitigate the risk, employers must ensure that contracts accurately reflect the nature of the working relationship. This includes clearly defining tasks, setting appropriate remuneration, and ensuring that working arrangements align with the intended classification. When terminating these arrangements, employers should pay close attention to Australian unfair dismissal legislation and guidelines. Employers should also remain informed about legislative changes and consider seeking legal advice to structure international arrangements and review contracts to ensure compliance with Australian laws.
Conclusion
The Pascua decision demonstrates that the classification of overseas workers engaged by Australian businesses will be judged in line with the changed definition of employment in Australia, which focusses on the substance of their role rather than contractual labels. For Australian businesses engaging overseas workers, careful planning, compliance, and legal guidance are essential to avoid costly disputes and liabilities from inaccurately defined employment relationships. To better understand how these changes might affect your business and to ensure compliance with all relevant laws and regulations, reach out to Daniel Morgan (daniel@morganenglish.com.au) and our Workplace & Conduct team at M+E today.
[1] Ms Joana Pascua v Doessel Group Pty Ltd [2024] FWC 2669.
