Australian businesses engaging independent contractors overseas, particularly in the Philippines, are facing increased legal exposure. A recent decision by Fair Work Australia has sent a strong signal: even when hiring overseas, Australian employment law may still apply.
A Queensland law firm recently learned this the hard way. After letting go of a legal assistant based in the Philippines, they were hit with an unfair dismissal claim filed with the Fair Work Commission. Despite classifying the assistant as an independent contractor, the Commission determined that the nature of the work arrangement made her an employee under Australian law.
🚨 Key Risk: Australian businesses that hire remote contractors overseas can still be subject to the Fair Work Act. In this case, the court found that the assistant’s ongoing full-time work, salary, and daily instructions from the firm resembled an employment relationship rather than an independent contractor agreement.
Even more concerning is the potential for overseas workers, whether current or former, to file claims for unpaid wages under Australian minimum wage laws. These developments are a game changer, putting companies that hire overseas contractors directly at significant legal risk.
What This Means for You
If you directly hire contractors overseas, particularly in the Philippines, you could be exposed to unfair dismissal claims, back pay issues, and wage disputes under Australian law. Simply labeling someone as an “independent contractor” is no longer enough to shield your business from these risks.
Protect Your Business
The legal landscape is shifting, and it’s more important than ever to ensure compliance with Australian regulations. If you’re unsure about your current arrangements, now is the time to review them. Engaging workers through an Employer of Record (EOR) offers full compliance, shielding your business from legal pitfalls.
The bottom line: if you’re directly hiring overseas contractors, act now to avoid potential claims. The consequences could be costly, and the protections offered by an EOR are worth considering.
For more details, check out the full case here.
