TL;DR
- A 2024 Fair Work Commission ruling confirmed the Act can apply to offshore workers - if the engagement is structured incorrectly.
- The risk is not offshore hiring itself. The risk is direct contracting without a compliant employment structure in place.
- A properly structured arrangement through a Philippine-based employer of record carries no Fair Work exposure for the Australian business.
- Most businesses asking this question are stopped by a risk that a well-run offshore partner eliminates entirely.
Before most Australian businesses commit to building an offshore team, one critical question needs to be asked.
"What does this mean for us under the Fair Work Act?"
For a long time the answer was either "we're not sure" or a vague assurance that because the workers were overseas, Australian employment law simply did not apply. Both were inadequate - and in September 2024, a Fair Work Commission ruling made that very clear.
The case that changed the conversation
Pascua v Doessel Group Pty Ltd [2024] was a single unfair dismissal claim brought by a paralegal in the Philippines against a Queensland-based law firm. It was not a high-profile case. But the ruling matters.
Joanna Pascua worked remotely from the Philippines for MyCRA Lawyers. Her contract described her explicitly as an "independent contractor." When the firm terminated her engagement, she lodged an unfair dismissal claim.
Deputy President Slevin found that the substance of the relationship - the degree of control exercised over her work, directed timeframes, ad hoc duties, and her integration into the business (her phone and email signature identified her as calling from the Queensland law office) — was consistent with employment, not contracting.
The label in the contract was irrelevant. What mattered was how the relationship actually functioned. Ms Pascua was found to be an employee, her dismissal was unfair, and the firm was ordered to pay $10,800 in compensation.
What the Fair Work Act actually requires
The ruling clarified two things every Australian business needs to understand.
1. The Act can apply even when the worker is based overseas.
The Fair Work Act's reach is determined by connection, not geography. If there is a "sufficient connection" to Australia — typically through where the employment contract was formed — Australian law may apply. A contract is generally formed where the final act of acceptance takes place. An offshore worker accepting a role verbally on a Zoom call may be accepting into an Australian jurisdiction, regardless of where they are sitting.
2. The label "independent contractor" does not protect you.
Post the High Court decisions in ZG Operations and Personnel Contracting, worker classification is determined by how the relationship actually functions — not what the paperwork calls it. If you direct the hours, dictate the tasks and integrate the staff member into your team's systems, the relationship may be employment regardless of what the contract says.
So does the Fair Work Act apply to your offshore team?
The honest answer is: it depends entirely on how the arrangement is structured.
Direct contracting = exposure.
If you hire an offshore worker directly, issue them a services agreement, and manage their day-to-day work, you are operating in territory where the Commission has shown it is willing to intervene. The Pascua case is the precedent. It will not be the last.
Structured offshore through a compliant provider = no Fair Work exposure.
If your offshore team is engaged through a properly registered employer of record in the Philippines — an entity that is the legal employer, handles Philippine labour law compliance, manages payroll, statutory contributions and employment contracts under local law — the team member is not your employee under Australian law. The employment relationship exists between the staff member and the Philippine entity. Your Australian business has a commercial services agreement with the provider. That is a fundamentally different legal relationship.
This is not a technicality. It is the structural difference between a compliant offshore model and one that creates genuine legal risk.
What compliant offshore actually looks like
A well-structured engagement through a Philippine-based provider includes the following:
- Local employment contracts that establish the worker's employment relationship under Philippine Labour Code, not Australian law.
- Statutory compliance covering mandatory contributions to SSS (social security), PhilHealth and Pag-IBIG, plus 13th-month pay — all required under Philippine employment law.
- A commercial services agreement between the Australian business and the offshore provider — establishing the relationship as a B2B arrangement, not an employment one.
- Clear separation of control — the offshore provider is responsible for HR, performance management, payroll and compliance. The Australian business directs the work outcomes, not the employment conditions.
None of this prevents an Australian business from working closely with their offshore team, integrating them into workflows or treating them as genuine extensions of the business. It simply means the legal structure is clean — and the Fair Work risk does not exist.
See how Sourcewiser structures compliant, integrated offshore teams.
What this means for business leaders
The Fair Work question stops many businesses before they start — and for most, once they understand the actual risk profile, the hesitation dissolves.
The risk is not offshore hiring. The risk is structuring it badly: hiring directly, using a services agreement that functions like employment, managing day-to-day work in a way indistinguishable from having someone on payroll. That model has now been tested and found wanting.
A reputable offshore partner will be transparent about the employment structure, proactively manage Philippine compliance and explain exactly why your business carries no Fair Work exposure. If they cannot articulate that clearly, it is a useful signal.
A question worth asking once, and answering properly
The 2024 Pascua ruling was a useful reminder that unstructured offshore arrangements carry genuine risk. It was also a clear illustration that structured ones do not. The businesses building offshore teams with confidence are not ignoring compliance — they are working with partners who have built it into the model from the start.
Want to understand what the right offshore partner actually looks like before you make a decision?
Read: How to choose the right outsourcing partner in the Philippines.
Note: This article provides general information only and does not constitute legal advice. Australian businesses should seek independent legal advice for guidance specific to their circumstances.
Sources: Pascua v Doessel Group Pty Ltd [2024] FWC; Gadens Legal Insights; Hicksons Lawyers; Onyx Legal; HR Legal Australia; McCabe Curwood.
