The Australian Fair Work Commission has determined a Philippines based 'independent contractor' was an employee unfairly dismissed by her Australian employer.
The recent case of Ms Joanna Pascua v Doessel Group Pty Ltd highlights just some of the issues Australian businesses face when working with overseas contractors and staff.
- In this case, on weight, the FWC determined Ms Pascua was an employee because the contract indicated Ms Pascua was required to perform work “in the business of another”, instead of for her own enterprise.
In August 2024, a new definition of what is an employee and employer came into effect in the Fair Work Act.
This new definition extends the High Court’s decision in CFMMEU v. Personnel Contracting Pty Ltd and ZG Operations Pty Ltd and Jamsek to rely on the nature of the contract between the parties, not just what the contract says.
- The intent of the legislative change appears to be to ensure that clever drafting of a contract alone will not be sufficient to define an independent contractor arrangement.
- The Fair Work Act now requires that the true relationship between the parties is, “determined by ascertaining the real substance, practical reality and true nature of the relationship between the individual and the person.” The totality of the relationship needs to be considered including how the contract is performed in practice.
What does this decision mean for employers?
What makes this decision unusual is how an international employment arrangement can be drawn into the national workplace system.
Regardless of the geographic location of an employee, if your business is an Australian national system employer (bound by the Fair Work Act), and the individual is deemed to be an employee, the same rights and obligations may apply to that employee as to other employees located in Australia, and to ensure you have characterised the employment relationship correctly.
