As more Australian businesses outsource administrative, technical, and even professional roles overseas, a recent Fair Work Commission (FWC) decision is a timely wake-up call.

On 27 June 2025, the FWC confirmed that an offshore worker, a paralegal based in the Philippines, could claim unfair dismissal under Australian law, because she had a direct contractual relationship with an Australian employer and was being managed just like any Australia-based employee. Yes, you read that correctly.

Despite living and working entirely overseas, she was still considered an employee under the Fair Work Act, and her employer’s attempt to label her as an “independent contractor” simply didn’t hold up.

The message for employers is clear. Outsourcing work offshore does not protect you from the Fair Work Act.
If you control the work, schedule, methods, and performance, you may still be the employer under Australian law.

The case

Pascua v Doessel Group Pty Ltd [2024] FWC 2669

A Queensland law firm hired a paralegal who worked remotely from the Philippines. After a breakdown in the working relationship, she was dismissed by email and she filed for unfair dismissal.

The FWC examined the contract and, more importantly, how the relationship operated in practice. Even though her contract included a header stating “Independent Contractor Relationship,” the Commission found:

  • The firm controlled her work, deadlines, tasks, and daily workflow.
  • She appeared fully integrated into the business (Australian phone number, firm-branded email signature).
  • Her pay was below minimum award rates, which made little sense for a genuine contractor.
  • The contract itself was inconsistent and parts of it described her as an employee.

In short, the label didn’t match the reality.

The Commission ruled that she was an employee and therefore able to access unfair dismissal protections. She was ultimately awarded $10,800 in compensation.

Why it matters

Labels won’t save you.

The case coincides with recent reforms under the Closing Loopholes No. 2 legislation. Section 15AA now requires the Fair Work Commission to look beyond what the contract says and focus on:

  • The real substance of the relationship
  • How work is performed in practice
  • How integrated the worker is into the business

This is a major shift and one that removes any doubt. Calling someone a contractor won’t work if they’re treated like an employee.
Calling someone “offshore” won’t avoid Australian obligations if you’re still directing and controlling their work.

What employers should do now

If you use offshore workers directly or through outsourcing arrangements, it’s essential to review your setup. Key considerations include:

1. Ensure contracts match reality – Make sure contractual terms are consistent with how the relationship actually Avoid mixing employment and contractor language.

2. Review how much control you exercise – If you dictate hours, outputs, priorities, workflows, or performance standards, you’re moving into “employee” territory.

3. Assess integration – If offshore workers use your branding, your systems, your email signature, or appear as part of your team, that’s a red flag.

4. Consider engaging through a local third-party provider – Where appropriate, outsource via an overseas agency so they are the employer.

Understand the risks

You may still face:

  • Unfair dismissal claims
  • Underpayment liability
  • Workers’ compensation exposure
  • Tax and superannuation complexities

Cross-border doesn’t mean risk-free.

The takeaway

Offshoring can be a smart business strategy but it does not put you outside the reach of Australian industrial relations laws. If you hire, direct, or manage offshore staff in a way that resembles employment, the Fair Work Commission may treat them as your employees. Now is the time to review your arrangements, tighten up contracts, and ensure your practices align with your intentions.

Need help reviewing your offshore setup or contractor arrangements? We support businesses with contractor vs employee risk assessments, 
HR audits, 
contract reviews and rewrites, compliance advice for offshore or hybrid teams, and training for leaders on managing virtual and cross-border staff.

If you’d like a confidential discussion about your arrangements, get in touch. We’re here to help you stay compliant and protected. Find our articles helpful? Remember to follow us on Facebook, Instagram or LinkedIn to keep up to date with our practical tips and information for business owners and managers.