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Australian businesses are continuously expanding and establishing overseas relations. Hiring workers overseas might make sense for a variety of reasons. This might include accessing talent you can’t find locally, or if your employee moves to a different country but continues to work for you.
However, engaging in overseas ventures and hiring local workers in other countries can raise a few points businesses need to be aware of.
The Fair Work Act 2009 (‘the Act’) was designed to manage relationships between employees and employers in Australia. Even if you’re an Australian business hiring overseas workers, there’s a good chance that the Fair Work Act will still apply to them.
If you’re hiring overseas, you might consider having a Non-Disclosure Agreements (NDA) and ensuring there’s an internationally enforceable contract. We’ve also written about engaging overseas contractors here.
So, how exactly does all this affect foreign employees?
Who Is Covered By The Fair Work Act?
The Fair Work Act is applicable to a national system employer. Under section 14 of the Act a national system employer means a constitutional corporation, so far as it employs or usually employs an individual.
A constitutional corporation is defined as:
- A financial or trading corporation formed in Australia, or
- A foreign corporation (a corporation incorporated outside Australia) that does business in Australia
So broadly speaking, this will apply to most Australian businesses.
While there is some variation across States and Territories, it generally excludes:
- the public sector; and
- local government employees
Check who isn’t covered in your State or Territory here.
Fair Work Ombudsman v Valuair Limited [2014]
| The Fair Work Ombudsman had started proceedings against Valuair Limited, a Singaporean company, and Tour East Ltd (TET), a Thai company. These companies employed cabin crew to work for Jetstar (an Australian company) on its routes from Thailand and Singapore into Australia. The Fair Work Ombudsman argued that Australian employment laws (namely the FW Act and the Australian Aircraft Cabin Crew Award 2010) applied to these employees. However, the Federal Court said neither applied. They were an overseas-based crew, who sometimes worked on flights within Australia, after flying-in on Jetstar flights from either Singapore or Thailand. Justice Buchanan said “Those internal flights were part of Jetstar’s international network, rather than its domestic network and were crewed by international flight and cabin crew rather than domestic flight or cabin crew.” |
It is important to note the outcome of this case where the Federal Court determined:
- that a constitutional corporation must have an appropriate and ‘sufficient connection’ with Australia in order to be considered a national system employer and fall under the Act.
A sufficient connection to Australia was considered by:
- The background of the corporation (foreign or Australian)
- Residency of the employees
- Location of the contract of employment and which governing laws regulated the contract
- Location of payments made to employees
In determining whether an employee is covered by the Act, a court will consider not only the work being performed by the employee, but also the employment relationship as a whole.
Hence, the employment contracts created need to be ‘in and of Australia’ in order to activate the Act.
Can The Fair Work Act Apply To Employees Overseas?
In short, yes.
Of course, it depends on the individual situation, the employment relationship and its purpose.
Based on the case of Fair Work Ombudsman v Valuair Limited [2014], the employment relationship must be ‘in and of Australia’ to trigger the Act. If there is a sufficient connection to Australia, employees from overseas will be covered by the Act.
Section 35(2) of the Act states that an ‘Australian-based employee’ is an employee who is employed by an Australian employer (whether the employee is located in Australia or elsewhere).
This means that the location of an employee is insignificant towards the Act if they are employed by an Australian employer for the purpose of work within Australia.
If the employees are covered by the Act, the National Employment Standards (NES) will also apply. The 10 minimum entitlements of the NES are:
- Maximum weekly hours
- Requests for flexible working arrangements
- Parental leave and related entitlements
- Annual leave
- Personal/carer’s leave, compassionate leave and unpaid family and domestic violence leave
- Community service leave
- Long service leave
- Public holidays
- Notice of termination and redundancy pay
- Fair Work Information Statement
If a company has an appropriate and sufficient connection with Australia, the Act and NES will apply.
Local Laws In Other Countries
Despite the application of the Act, employers who are hiring overseas employees must take into consideration local employment laws and how they apply to their employees. It is best to seek the advice of a local employment lawyer to ensure you are aware and up to date of foreign employment laws.
Governing Law And Jurisdiction
The governing law and jurisdiction are essential to contracts formed with overseas employees.
The governing law will dictate which country’s laws are applicable to the contract and the jurisdiction will determine where the case will be heard if complications were to arise. This is essential to ensure both parties are aware of how a legal dispute will unfold.
Need Help?
Hiring overseas employees can be overwhelming, with employers needing to cover all legal aspects of the relationship in both Australia and the country where the employee resides.
If you’re not sure about whether your employees fall under the Act or plan on hiring overseas employees, get in touch with us! You can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no obligations chat.
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