A recent case in the Fair Work Commission (FWC) highlights the importance of overseas businesses organizing their affairs properly when sending employees to carry work out in Australia.
In O’Farrell v Guest Tek Australia Pty Ltd  FWC 968 a Canadian technology company sent one of its employees – Mr O’Farrell – to carry out project management work in Australia in 2012. As part of this arrangement, a new contract was entered into between Mr O’Farrell and Guest Tek where it was agreed that during the time he worked in Australia:
- Mr O’Farrell would be engaged as an independent contractor
- That his contract was subject to the laws of Alberta (Canada)
- He would be paid in US dollars
Mr O’Farrell worked in Australia until July 2018 when his engagement was terminated with two weeks’ notice in accordance with the terms of his contract, purportedly due to a restructure where his role was made redundant
Mr O’Farrell subsequently brought an Unfair Dismissal claim in the FWC where the Commission found:
- Mr O’Farrell was an employee of Guest Tek’s Australian entity (rather than an independent contractor)
- Mr O’Farrell dismissal was unfair for reasons including he was not adequately consulted about the redundancy or offered redeployment.
- Guest Tek should pay compensation of approximately 18.5 weeks’ pay.
- The FWC also stated that Mr O’Farrell could consider making a complaint to the Fair Work Ombudsman in respect of unpaid superannuation and long service leave.
In finding that Mr O’Farrell was an employee the FWC took into account factors including:
- When Mr O’Farrell took annual leave it would fall on Guest Tek to organize a replacement (whereas a true contractor would be more likely to organize a replacement and incur the costs of doing so)
- Mr O’Farrell’s remuneration was akin to an annual salary (where he was paid in 12 equal monthly installments irrespective of the number of working days in that calendar month)
- Mr O’Farrell did not charge GST
- Mr O’Farrell would be in contact with his managers on a daily or weekly basis
The case illustrates the importance of foreign businesses adequately understanding their obligations under Australian law. It also highlights the risks of basing workers in Australia and taking the position that they not come within the reach of Australian workplace regulations.
At Employment Innovations we act for a number of global enterprises and have significant experience in guiding businesses through the legal maze of employing staff in foreign jurisdictions. Businesses can access unlimited advice through our advisory services. Get in contact here.