Is Your Offshore VA Really An Australian Employee?
Offshore Workers and Australian Employment Law: A Wake-Up Call for Business Owners
In an increasingly global business environment, hiring offshore virtual assistants (VAs) and contractors is common practice.
The appeal is obvious - cost savings, round-the-clock productivity, and access to a broad talent pool.
But a recent case involving an offshore worker from the Philippines and an Australian company has thrown a serious spanner in the works for those assuming that overseas workers are automatically exempt from Australian employment law.
This case has been labelled a watershed moment. And if you're an Australian business owner engaging offshore contractors directly, it's time to sit up and take notice.
The Case That Changed the Conversation
The focal point of this legal storm is a worker in Manila, Philippines, hired by a Brisbane-based business to provide paralegal services. Though engaged as a ‘contractor’, or as the employer thought that was the arrangement, the worker did work regular, full time hours in accordance with the Australian teams regular office hours. In addition, the worker was solely dedicated to this one employer and complied with all directions in relation to the completion of the tasks.
When her engagement was abruptly terminated over an alleged data breach (which she denied), she felt unprotected by local employment laws and instead turned to Australia’s Fair Work Commission.
While initially told that as a non-resident she wasn’t eligible to lodge an unfair dismissal claim, a critical legal detail emerged: nowhere in the Fair Work Act does it say you must reside in Australia to be protected by its provisions.
The Commission went on to rule that the nature of the relationships meant that she was, in fact, an employee, despite her offshore status – and therefore could be entitled to Australian employment protections.
The Legal and Practical Takeaways
At the heart of the Commission's decision was the definition of an "employee" under Australian law. This isn’t about geography; it’s about the nature of the relationship.
A key factor was that she wasn't conducting her own business. She was not freelancing for multiple clients, managing her own schedule, or using her own resources to independently operate.
Instead, she was working under direction, during fixed hours, with consistent expectations - exactly like a local employee.
Even details such as whether the company supplied her with equipment like a laptop or phone could weigh into the assessment under what's called the "whole of relationship" test.
The end result? She was deemed an Australian employee- and therefore eligible to lodge an unfair dismissal claim and potentially seek back pay based on the national minimum wage or an applicable award rate.
This not only shocked the employer involved but also sent a ripple through countless businesses that thought their offshore contractors were safely outside the reach of local labour laws.
The Floodgates Could Be Opening
What makes this ruling particularly important is the precedent it sets.
Many Australian businesses hire offshore workers under what they believe are contractor arrangements, not realising that the day-to-day engagement could legally classify the worker as an employee.
If you’re engaging someone overseas and treating them like a full-time staff member - fixed hours, direct oversight, ongoing tasks - this case suggests you might be on very thin ice.
This could open the door for other offshore workers to lodge similar claims.
If successful, they could receive back payments, claim unfair dismissal, and potentially be recognised under applicable Australian modern awards. That’s a massive liability many businesses aren't prepared for.
So, What Should You Be Doing Now?
Here are a few crucial steps to consider:
- Assess Your Current Engagements
Review all offshore engagements. Are they truly operating as independent contractors? Are they free to work for others, set their own hours, and use their own tools and processes? Are you complying with the workplace laws of the location they work from? If not, you may need to rethink their classification.
- Understand the 'Duck Test'
My take is always this: If it looks like a duck and quacks like a duck - it’s a duck. That’s essentially how the Fair Work Commission is approaching these cases. Titles and labels won’t save you. What matters is the actual working relationship.
- Avoid Direct Engagement Without Compliance
If you’re hiring offshore workers directly, you’re likely assuming both legal and financial risk unless the arrangement is compliant. Larger businesses often avoid this by setting up local entities in countries like the Philippines or using third-party firms (sometimes called employer-of-record services) that legally employ the workers on your behalf.
- Get Legal Advice
If you're unsure, seek legal counsel- preferably someone experienced in employment law and international workforce compliance. The cost of professional advice is likely far less than the consequences of misclassifying an employee.
- Act Proactively
It’s tempting to bury your head in the sand, especially if everything seems to be working smoothly. But this case has proven that just because a worker is offshore doesn’t mean they’re beyond the reach of Australian employment law. If anything, this ruling shows that assumptions can be very costly.
Why This Case Matters
This case has fundamentally shifted how we must think about offshore workers. It's no longer safe to assume that because someone is outside Australia's borders, they’re outside the purview of Australian law.
While this ruling doesn't mean every offshore contractor is an employee, it does signal a move towards greater scrutiny - especially when contractors function like full-time, exclusive staff.
In short, if you're relying on offshore support, it's time to rethink how you structure those engagements.
Done right, offshore work can still be a smart strategy. But it has to be done legally, ethically, and with full awareness of the implications.
An Invitation
If you’d like to connect with other business owners, leaders and managers, I’d love for you to join us inside our free Facebook Group where you can connect with other like minded business owners, leaders and managers to discuss all things HR:
https://www.facebook.com/groups/hrsupportaustralia
