Philippine-Based Worker Entitled to Claim Unfair Dismissal: FWC Ruling

Employers engaging overseas workers for Australian entities must be cautious, as such workers may be deemed employees under the Fair Work Act 2009 (Cth) (FW Act), with rights to unfair dismissal protections. This was the conclusion in a recent decision by the Fair Work Commission (FWC) in Pascua v Doessel Group Pty Ltd [2024] FWC 2669.

The Case

The Queensland-based Doessel Group Pty Ltd, a credit repair business, employed a paralegal worker based in the Philippines for 20 months. In March 2024, the employer terminated the worker’s contract via email, alleging she unlawfully copied company and client information onto her personal drive. The worker denied the allegations and filed for unfair dismissal in Australia.

The employer raised jurisdictional objections, arguing:

1. The worker, based in the Philippines, was outside the scope of the FW Act.
2. The worker was an independent contractor, not an employee.

FWC Findings

Jurisdictional Scope:
The employer ultimately abandoned the claim that the FW Act did not apply. The FWC determined that the employer, as a constitutional corporation employing individuals in Australia, was a national system employer. Consequently, the worker was considered a national system employee under the FW Act.

Employee or Contractor?
Despite the engagement being governed by an “Independent Contractor’s Agreement,” the FWC conducted the “multiple indicia” test to assess the true nature of the relationship. The contract was deemed inconsistent, referring to the worker as both an independent contractor and an employee.

Key indicators of an employment relationship included:

• Control and Supervision: The worker was supervised and took daily instructions from the employer.
• Integration into the Business: The worker performed tasks central to the employer’s business, and her work could not be reassigned.
• Remuneration: The worker received an hourly rate below minimum wage, which is atypical for independent contractors.
• Nature of the Role: Paralegal duties were not a distinct trade or profession requiring independent operation.
• Ongoing Engagement: The arrangement was continuous unless terminated per the contract.

The FWC gave minimal weight to contractual provisions excluding tax and leave benefits, viewing them as consequential rather than determinative (citing Deliveroo Australia Pty Ltd v Diego Franco [2022] FWCFB 156).

The FWC ruled the worker was an employee and dismissed the jurisdictional objection. The case will now proceed to a hearing on the merits of the unfair dismissal claim.

Implications for Employers

This decision highlights the risks of misclassifying overseas workers as independent contractors when they perform core business functions under direct supervision.

Key lessons include:

1. Risk of Employee Classification: Even workers outside Australia may qualify as employees under Australian workplace laws.
2. Importance of Contractual Clarity: Ambiguities in contracts can lead to adverse findings. Ensure agreements align with the actual working relationship.
3. Evolving Legal Standards: The FW Act now prioritises the “multiple indicia” test, focusing on the actual conduct of the parties, not just the terms of the contract.

Employers must carefully assess their workforce arrangements and remain updated on legal developments to minimise compliance risks.

Disclaimer: This information is for general purposes only and does not constitute legal advice. Workplace Law is not liable for any loss or damage arising from reliance on this content. Where applicable, liability is limited under Professional Standards Legislation.