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In this day and age, employers can find talent and expertise beyond Australian borders to build and improve their businesses. The FairWork Act governs the responsibilities and requirements of Australian employers to their employees. But, does the FairWork Act apply to your employees working overseas? This article discusses the requirements under the FairWork Act and which employment laws apply for overseas employees.

Does the FairWork 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 want to send an employee overseas to check out 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 legislation considers whether:

  1. you are an Australian employer; and
  2. the relevant employee is an Australian-based employee.

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, regardless of their geographic location.

If both of the tests above are satisfied, the FairWork Act may apply. 

Exceptions

The definition of an ‘Australian employee’ does not extend to individuals where they 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 you are relying on the exemption that the employee is overseas and never in Australia. Employees can be engaged in many ways that were not taken into account when the legislation was drafted. Therefore, if you are ever in a dispute for not complying with FairWork legislation, the court may take a different view on how the employee is engaged and consider the advancements in technology.

Do Local Laws Also Apply?

Whether the FairWork Act does or does not apply, overseas employees can also be subject to employment laws in their local country. It is essential that you 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 have a significant effect on the decision and viability to use foreign-based work.

Employment Contract

If the FairWork Act does apply, make sure you have a robust employment contract in place with your employee. Ensure you provide your employee will all their entitlements either under the relevant award or enterprise agreement. You should also outline this within their employment contract.

If the FairWork Act does apply, and you get into a dispute with your employee, ensure that the dispute is heard in Australia. Therefore, you should include a clause in the employment contract that outlines Australia as the jurisdiction. 

Dealing with a court in China, for example, could be quite challenging.

FairWork Claims by Employees

Just because your employee works overseas, does not mean that they cannot bring a FairWork claim. Therefore, if the FairWork Act does apply, your employee must receive all Australian employment benefits. 

In the past, employers have suffered when they were not aware that the FairWork Act applied and employees have made claims for: 

Key Takeaways

It is important to know whether the FairWork 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 the FairWork Act applies to your employee and you have any questions about ensuring you are compliant, contact LegalVision’s employment lawyers on 1300 544 755 or by filling out the form on this page.

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