Are you using offshore workers in the belief that they are not covered by Australia’s Fair Work system? Well, you might be right….but then again, you might not.

What has happened?

Deputy President Slevin at the Fair Work Commission has determined that an offshore worker in the Philippines deemed by her contract to be an independent contractor is actually an Australian National System Employee with access to our unfair dismissal jurisdiction.

The case of Ms Joanna Pascua v Doessel Group Pty Ltd involves a worker engaged to do paralegal work for a Queensland law firm which terminated her contract due to alleged breach of contract which was disputed by the worker and resulted in her lodging an unfair dismissal claim.

That led to a jurisdictional hearing as the respondent alleged (among other things) that she wasn’t an employee and so couldn’t be dismissed.

Here is the decision.

Why did the FWC make that determination?

In his decision, the Deputy President goes into quite a bit of detail on the terms set out in the written contract between the parties as well as the duties and working arrangements for the applicant and relevant case law.

One problem for the respondent was that, in parts, the contract referred to the other party as an employee or had provisions which would typically be associated with an employment arrangement.

The Deputy President also made note that the worker was more likely to be an employee because she worked inside the respondent’s business rather than providing services to the business from outside it. That perspective might be a bit of a red flag for the validity of many nominal independent contracting arrangements, whether local or overseas.

Reference was also made to KPIs that were set for the worker and to potential award coverage under the Legal Services Award 2020 with commentary that what the worker was getting paid ($18 per hour) was significantly below the award rate for the classification of work that she was performing as he saw it. Another red flag perhaps given the current federal government’s legislative changes to protect “employee-like workers” and provide the Fair Work Commission with the power to deal with complaints of unfair contractual terms from independent contractors.

The Deputy President concluded: “For the foregoing reasons I find that the relationship was an employment relationship. Accordingly, the Respondent’s objection is dismissed.” I would note that the foregoing reasoning was a lot more extensive than what I have set out above but hopefully my summary gives you the gist of the factors in play. 

What does it mean?

One of the things that has been repeatedly emphasised in the extraordinary range and number of changes that we are experiencing in our workplace relations system is that the focus going forward will be on the true nature of the relationship rather than just what is written in a contract

Another is to provide some level of security and protection and complaints jurisdictions for what have been called “employee-like workers”, those who might not be classified as National System employees because they are nominally not employees.

While we might not have expected that this would extend to offshore workers, this decision brings a whole new rage of considerations to bear in entering into offshore engagement arrangements.

One thing that is very clear from this case is that the poor drafting of the contract between the parties was a significant factor in the Deputy President’s considerations – he literally pulled it to pieces.

So any business entering into independent contractor arrangements whether locally or overseas needs to get professionally drafted contracts that don’t leave any doubt as to the relationship between the parties.

Another issue to consider which has been on our mind. Is one of the potential outcomes of a complaint to the Fair Work Commission re unfair contract terms by an independent contractor, a determination that the worker is a National System employee rather than a contractor? We reckon that might be on the cards. What do you think?

If you need any assistance with this or any other employment or related matter, please contact us on 1300 108 488 or by emailing us at enquiries@ridgelinehr.com.au