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.
Recent case
In O’Farrell v Guest Tek Australia Pty Ltd [2019] FWC 968 a Canadian technology company sent one of its employees โ Mr OโFarrell – ย to carry out project management work in Australia in 2012. As part of this arrangement, a new contract was entered into between Mr OโFarrell and Guest Tek where it was agreed that during the time he worked in Australia:
- Mr OโFarrell 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 OโFarrell worked in Australia until July 2018 when his engagement was terminated with two weeksโ notice in accordance with the terms of his contract, purportedly due to a restructure where his role was made redundant
Mr OโFarrell subsequently brought an Unfair Dismissal claim in the FWC where the Commission found:
- Mr OโFarrell was an employee of Guest Tekโs Australian entity (rather than an independent contractor)
- Mr OโFarrell 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 weeksโ pay.
- The FWC also stated that Mr OโFarrell could consider making a complaint to the Fair Work Ombudsman in respect of unpaid superannuation and long service leave.
In finding that Mr OโFarrell was an employee the FWC took into account factors including:
- When Mr OโFarrell 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 OโFarrellโs 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 OโFarrell did not charge GST
- Mr OโFarrell 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.
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