Nowadays, employers can find talent and expertise beyond Australian borders to build and improve their businesses. The Fair Work Act governs the responsibilities and requirements of Australian employers to their employees. But, does it apply to your employees working overseas? This article discusses the requirements under the Fair Work Act and which employment laws apply to overseas employees.
Does the Fair Work Act Apply To You?
There are many reasons why you may want to engage an employee who lives overseas.
For example, you may wish to expand into other jurisdictions and send an employee overseas to explore the market.
Perhaps you have found a software engineer with a superb resume overseas who could be invaluable to your company’s growth.
In determining whether the Fair Work Act applies to your business relationship with this employee, the law considers whether:
- you are an Australian employer; and
- the relevant employee is an Australian-based employee.
The Fair Work Act may apply if both of the tests above are satisfied.
Are You an Australian Employer?
To be considered an ‘Australian employer’ you will need to:
- run a training or financial corporation formed within Australia;
- run an entity in one of the states or territories of Australia; or
- carry out work in Australia and have central management and control in Australia.
Is Your Employee Based in Australia?
An Australian-based employee is someone:
- whose primary place of work is in Australia; or
- employed by an Australian employer for the purpose of work within Australia.
This is to say the geographic location of your employee is insignificant if you are Australian and have employed them for the purpose of work within Australia.
Exceptions
In saying that, the definition of an ‘Australian employee’ does not extend to individuals who are employed by an ‘Australian employer’ who is overseas and engaged outside Australia to perform duties outside Australia.
Therefore, some things to consider regarding the meaning of ‘engaged’ is whether:
- you offered the employee their role while they were overseas;
- the employee is in their home country; and
- the employee has travelled to Australia in connection with their employment.
You should proceed with caution if relying on the exemption that the employee is overseas and never in Australia. Employees can be engaged in many ways that the law did not initially consider. Therefore, if you are ever in a dispute for not complying with Fair Work laws, the court may take a different view on how the employee is engaged and consider the advancements in technology.
Sponsoring overseas workers as an Australian business is complicated. Let us simplify it for you with this free employer guide.
Do Local Laws Also Apply?
Whether the Fair Work Act does or does not apply, overseas employees can also be subject to employment laws in their local country. Accordingly, you must also receive advice from a local employment lawyer to understand what other entitlements the employee should be receiving.
You should also consider tax requirements as Australia may have a tax treaty or ‘double tax agreement’ in place with the relevant foreign jurisdiction. This may significantly affect the decision and viability to use foreign-based workers.
Employment Contract
If the Fair Work Act applies, make sure you have a robust employment contract in place with your employee. Ensure you provide your employee with all their entitlements under the relevant award or enterprise agreement. You should also outline this within their employment contract.
If the Fair Work Act applies and you enter a dispute with your employee, you want to ensure that the dispute is heard in Australia. Having an employment matter dealt with by a court in a foreign jurisdiction can be quite complicated. Therefore, to avoid this, you should include a clause in the employment contract that outlines Australia as the jurisdiction.
Fair Work Claims by Employees
Just because your employee works overseas does not mean that they cannot bring a Fair Work claim. Therefore, if the Fair Work Act does apply, your employee must receive all Australian employment benefits.
In the past, employers have suffered when they were not aware that the Fair Work Act applied and employees have made claims for:
- redundancy entitlements;
- long service leave; and
- unfair dismissal.
It would be wise to give your employees a copy of the Fair Work Information Statement before or soon after their employment begins. The Statement provides information about your employee’s conditions of employment, ranging from a copy of the NES to their right to request flexible working arrangements. By giving your employees information about their respective entitlements, you can ensure they receive them and thus avoid Fair Work claims.
Key Takeaways
It is important to know whether the Fair Work Act applies to your overseas employees as you will need to ensure they receive their Australian employment entitlements. The local laws of the overseas country could also apply. You should also get advice from a local lawyer in that jurisdiction to understand what entitlements your employee should receive.
If you need help determining whether the Fair Work Act applies to your overseas employees, our experienced employment lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
Frequently Asked Questions
The National Employment Standards (NES) outline eleven minimum employment entitlements for all workers covered by the national workplace relations system. The entitlements range from maximum weekly hours to annual leave. Since the NES outline eleven minimum standards, an award, enterprise agreement and employment contract cannot reduce or remove these entitlements.
An employee can bring a claim against you if you dismiss them harshly, unjustly or unreasonably. For example, if you had no valid reason for dismissing your employee based on their capacity and performance in the workplace and did not give fair warning to your employee about their dismissal, the Fair Work Commission may consider this unfair.
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