Many businesses are multinational organisations with offices all over the world. Part of the appeal of working for these companies is the opportunity to work overseas. Some employers believe that because an employee isn’t based in Australia, our employment laws do not apply. Is that the case?

It all depends on whether the person is deemed an ‘Australian-based employee’ and is employed by an ‘Australian-based employer’. 

What is an Australian-based employer?

The Fair Work Act 2009 (s35(1)) defines an Australian-based employer as:

  • a trading corporation formed within the limits of the Commonwealth
  • a financial corporation formed within the limits of the Commonwealth
  • the Commonwealth or a Commonwealth authority
  • a body corporate incorporated in a territory, or
  • one that carries on business in Australia, in the exclusive economic zone or in the waters above the continental shelf an activity (whether of a commercial, government or other nature), and whose central management and control is in Australia.

What is an Australian-based employee?

The Fair Work Act (s35(2)) defines an Australian-based employee as an employee:

  • whose primary place of work is in Australia, or
  • who is employed by an Australian employer (whether the employee is located in Australia or elsewhere).

This means the Fair Work Act may apply to an employee whose primary place of work is not Australia, provided they are employed by an “Australian employer”.

When are you engaged outside Australia?

The Fair Work Act (s35(3)) does not apply extra-territorially where an employee is “engaged outside Australia and the external territories to perform duties outside Australia and the external territories”.

The meaning of this term is unclear: it could mean where the employee was originally employed or hired, or it could refer to the continued engagement of an employee. Factors that may mitigate the application of Australian employment law could include having the recruitment process take place outside of Australia. This circumstance may be considered ‘engaged outside Australia’.

Other factors to be considered include:

  • the amount of contact with Australia (such as regular trips to Australia)
  • does the employee report to or take direction from management in Australia, and
  • whether personal trips to Australia are at the company’s expense.

It is not possible to contract out of the jurisdiction of Australian employment law. Any such term in a contract of employment would be invalid.

Case law

The Fair Work Commission determined it had jurisdiction to hear an application from a person dismissed after making a complaint to their employer about their job. The person was employed to work in Nauru as an HR consultant. The employer argued the person was outside the jurisdiction of the Fair Work Act because the person was employed outside of Australia. The employee was originally engaged in Australia to perform work overseas. The tribunal determined there was substantial connection between the employee’s work and Australia. The employee maintained a residence in Australia while undertaking work in Nauru.

Offshore workers in Australia

An employee does not become subject to the Fair Work Act simply because they perform some duties in Australia. The Federal Court held that the Fair Work Act applies to employment relationships, rather than to particular work. For the Fair Work Act to apply, there must be an appropriate connection linking the employment relationship sufficiently with Australia.

Factors such as the length of time spent in Australia, where remuneration and social security contributions are made, the degree of connection between the work performed and Australia, and the immigration status while in Australia may all be relevant factors. See Fair Work Ombudsman v Valuair Limited (No 2) [2014] FCA 759.

The bottom line: If an employer’s intention is that Australian employment law should not apply to a worker’s employment, it may be prudent to have the recruitment process and contract negotiations occur in the country where the employee’s duties will be carried out. Other measures may include the employee reporting to management that is based overseas, or that the employee is a foreign national.

Employers should individually assess each circumstance as there is no general advice that applies across the board regarding Australian employees working overseas. If in doubt, seek legal advice, particularly with respect to preparing and drafting the necessary contractual documents.