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FWC finds Philippine-based worker entitled to claim unfair dismissal

When engaging overseas workers to perform work for an Australian entity, employers need to be mindful of the risks that such workers may be considered employees to whom the Fair Work Act 2009 (Cth) might apply.

When engaging overseas workers to perform work for an Australian entity, employers need to be mindful of the risks that such workers may be considered employees to whom the Fair Work Act 2009 (Cth) (the FW Act) might apply.  

In a recent decision of the Fair Work Commission (FWC), Pascuav Doessel Group Pty Ltd [2024] FWC 2669, the FWC has determined that a Philippine-based worker was an employee of Queensland-based Doessel Group Pty Ltd (the Employer) and therefore entitled to protection from unfair dismissal under the FW Act.

The Employer specialised in credit repair disputes in Australia and hired the worker to perform work as a paralegal from her base in the Philippines for a period of 20 months.

In late March 2024, the Employer informed the worker by email that she had breached her contract by unlawfully copying company and client information to her personal drive and that the contract had been terminated. The worker refuted the allegation and commenced unfair dismissal proceedings in Australia.

The Employer raised a jurisdictional objection on two bases, that:

  • the worker was not an employee to which the FW Act applied because she worked in the Philippines; and
  • failing that, the worker was an independent contractor and not an employee.

In relation to the first ground, the Employer ultimately did not press this objection at the hearing. Instead, it relied on the ground that the worker was an independent contractor. On that basis, the FWC found that the Employer was a constitutional corporation so far as it employs individuals for the purposes of the FW Act. Therefore, the worker, being employed by a national system employer, was a national system employee under the FW Act.

In relation to the second ground, the Employer noted that the worker was engaged pursuant to a document entitled “Independent Contractor’s Agreement”, which referred to the engagement as one to “render services”.

The Employer also argued the worker was an independent contractor because the contract suggested the worker had flexibility in performing the work and decided whether or not she completed the work.

The Employer also submitted that it was not liable for benefits that an employee may be entitled to, such as taxes or workers compensation. It was also noted that the worker was allegedly also working for other credit repair agencies and had a social media account which identified her as a “credit repair specialist”.

The worker argued that she was an employee and submitted that the Employer supervised her work and controlled the way in which work was performed.

The FWC disagreed that the worker was an independent contractor and found instead that she was an employee.

In determining so, the FWC considered that the contract itself was non-determinative as it referred to the worker as an independent contractor and as an employee in different sections. The FWC was therefore required to conduct an overall assessment of the relationship to determine the true nature of the relationship (what is commonly known as the “multiple indicia” test).

In finding that it was an employment relationship, the FWC cited the following reasons:

  • the worker was required to perform work in the business of another;
  • the work could not be reassigned;
  • the nature of the work was paralegal work and did not require a profession, trade, or distinct calling;
  • the paid rate was below the minimum wage, whereas independent contractors are generally paid higher than employees;
  • the worker was not conducting her own business;
  • the worker was paid an hourly rate that was described as a salary in the contract;
  • the worker took daily instruction from the Employer and was supervised in performing the work;
  • the arrangement would be ongoing unless terminated in accordance with the contract terms; and
  • in reference to the independent contractor provisions excluding tax and leave benefits, the FWC considered there to be little weight put on provisions such as these, which are merely consequential to the labelling in the contract (Deliveroo Australia Pty Ltd v Diego Franco[2022] FWCFB 156).

The FWC therefore concluded that the worker was an employee and dismissed the Employer’s jurisdictional objection. The matter has been scheduled for hearing to determine the merits of the unfair dismissal claim.

Lessons for employers

This case is a reminder to employers that, when engaging a person outside of Australia, there is a risk the person may still be considered an employee under applicable workplace laws in Australia.

It is also a timely reminder of the changes to the FW Act that recently came into effect in relation to determining whether someone is an independent contractor or an employee.

At the time this decision was made, courts and commissions were first required to consider the terms of the contract, and it was only if the contract was non-determinative could they then consider the actual conduct of the parties in the relationship.

However, the FW Act was changed in August 2024 to revert back to the “multiple indicia” test in determining this question – meaning courts will look at the actual conduct of the parties in the relationship rather than only looking at what is said in the contract.

Information provided in this blog is not legal advice and should not be relied upon as such. Workplace Law does not accept liability for any loss or damage arising from reliance on the content of this blog, or from links on this website to any external website. Where applicable, liability is limited by a scheme approved under Professional Standards Legislation.

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