Thousands of kilometers away from Australia, a Filipino paralegal has changed the rules of the game for every Australian company with offshore workers. Her name is Joanna Pascua, and her victory at the Fair Work Commission has turned a basic assumption about international hiring upside down.
In Pascua v Doessel Group Pty Ltd [2024] FWC 2669, the Commission ruled that distance doesn't matter — if you're working for an Australian company, Australian employment law applies, even if you've never set foot in the country.
Suddenly, that "contractor" in Manila or Mumbai might legally be your employee, entitled to the Australian minimum wage and all the protections of being employed by an Aussie company.
For Australian businesses relying on global talent to stay competitive, this ruling represents more than a legal precedent — it's a fundamental shift in how international employment relationships are viewed under Australian law.
Understanding these changes is essential for any company with overseas workers to avoid compliance risks and unexpected liabilities.
Key takeaways:
- Australian employment law can apply to offshore teams regardless of physical location, making proper classification crucial for compliance.
- Misclassifying employees as contractors can result in substantial financial penalties, back pay obligations, and reputational damage.
- Proper documentation and clear contractual terms are critical, but the actual working relationship, not just paperwork, determines legal classification under Australian law.
The Current State of Global Hiring in Australia
Offshore hiring has transformed dramatically over the past few years. What started as a cost savings strategy has evolved into something far more strategic. Australian companies frequently turn to international talent markets because they simply can't find the skills they need at home.
Australia's tech sector illustrates this challenge perfectly. According to the Australian Computer Society, Australia needs 312,000 additional tech workers by 2030 to meet demand, or more than 60,000 additional people entering the tech workforce annually.
Research shows that 83% of surveyed Australian companies plan to hire international remote full-time employees in the next 12-18 months, with businesses increasingly turning to the Philippines, India, and Latin American markets to find the expertise they need.
This massive shift toward overseas hiring has created unexpected legal complications. When the Fair Work Commission ruled in favor of Pascua in 2024, it established two critical precedents: contractual labels don't determine employment status, and Australian labor laws can apply to offshore employees regardless of location.
The Pascua decision has forced Australian companies to confront an uncomfortable truth — geographic boundaries don't provide the legal protection many assumed they did. This reality is reshaping how businesses approach international hiring strategies.
Challenges for Australian Companies Hiring Abroad
Managing a global workforce comes with unique complexities that go well beyond the usual concerns of hiring and managing employees at home.
Employing international workers often presents issues that most domestic hiring managers have never encountered. These challenges frequently catch companies off guard, particularly those entering global talent markets for the first time.
Compliance complexities top the list of headaches. Every country has its own labor laws, tax rules, and employment regulations, which means Australian HR and finance teams can quickly find themselves juggling multiple countries’ systems, currencies, payment schedules, and time zones simultaneously.
Standard practices that work perfectly in Melbourne might violate employment law in the Philippines. The regulatory landscape also shifts constantly, making maintaining compliance across multiple jurisdictions difficult.
Payment logistics create ongoing operational friction. Hidden fees and processing delays frustrate both companies and workers. Traditional payment processors like PayPal and Wise add foreign exchange markups and transaction fees that erode budgets over time.
Freelancing platforms like Upwork or Fiverr take 10-20% or more in platform fees, directly impacting worker satisfaction. Companies often resort to manual payment management, leading to errors, delays, and wasted administrative time.
Contractor vs. Employee: The Risk of Misclassification
Australian companies, particularly startups and growing businesses, often prefer contractor arrangements when hiring offshore talent. The number of contractors can easily be scaled up or down as needs change, and the administrative burden may feel lighter compared to full employment relationships.
However, the Pascua case shattered a common misconception that geographic distance automatically establishes contractor status. Simply labeling someone based in another country as a contractor means nothing if the arrangement resembles employment.
Employment authorities focus on the actual working relationship rather than contract terminology. Several warning signs that indicate a contractor arrangement might actually constitute employment include:
- Control over work methods: If the company dictates when, where, and how the worker performs their tasks
- Exclusive work arrangements: Contractors who work exclusively for one company and don't maintain other clients
- Company-provided equipment: Workers using company-issued laptops, software, or other tools
- Integration into business operations: Contractors who attend regular team meetings, use company email addresses, or are presented as company employees to clients
- Payment structure: Regular monthly salaries rather than project-based or hourly billing
Penalties for Worker Misclassification
The financial and legal consequences of worker misclassification can be severe. Once the Fair Work Commission determined Pascua was actually an employee, she gained access to all Australian labor protections — protections her employer had ignored during her termination.
According to the Fair Work Commission decision in [2024] FWC 2669, Pascua earned AUD 18 per hour. However, when she started her position in July 2022, the Legal Services Award mandated a minimum salary of AUD 24.76 per hour for her Level 2 position.
The ruling means that Pascula’s former employer is now on the hook for the owed back wages due to the underpayment. The company will likely also need to pay for other owed entitlements the employee didn’t receive, like paid time off and contributions on her behalf to Australia’s superannuation retirement fund.
This underpayment also proved that Pascula wasn't truly an independent contractor with specialist skills, since contractors typically command higher rates than employees doing similar work.
Wage theft prosecutions are a serious risk for businesses. Companies paying below minimum wage or failing to compensate for overtime hours face substantial penalties and potential criminal charges. The reputational fallout often proves equally damaging, with guilty companies attracting ongoing regulatory attention, making future operations more expensive and complex.
Australian employment authorities are already signaling increased scrutiny of offshore hiring practices, meaning more companies face potential audits and investigations in the coming months.
How Aussie Companies Can Ensure Compliance When Hiring Overseas
Australian companies have two primary paths to ensure compliance when hiring international employees: establishing local entities or partnering with an Employer of Record (EOR).
Setting up local entities gives you complete control over your international operations. If you're planning a major, long-term expansion into specific markets with significant headcount, this approach makes perfect sense.
The trade-off? You're looking at six months to two years of setup time, tens of thousands of dollars per country, and the ongoing complexity of managing legal, tax, and HR requirements across multiple jurisdictions.
This route quickly becomes overwhelming and expensive for most Australian companies — especially those testing new markets or hiring smaller international teams.
Working with an EOR is often a more convenient and cost-efficient business alternative. When you hire through an EOR, they become the official legal employer of your international workers. This means your Filipino developers are governed by Filipino employment laws, not the Fair Work Act 2009.
An EOR takes on all compliance responsibilities and associated risks as the legal employer. They ensure contracts meet local standards, handle payroll and taxes, manage benefits, and stay current with changing labor regulations.
EORs also help ensure your contractor agreements are compliant by checking whether the role truly qualifies as independent contractor status in each country where you hire. This adds an extra layer of protection and reduces the risk of misclassification claims.
Hire International Employees Compliantly With RemoFirst
RemoFirst makes it easy for Australian companies to hire and pay talent around the world, with contractor support in 150+ countries and employee coverage in 185+. We ensure contracts comply with local laws and double-check that contractor roles are classified correctly, giving you extra peace of mind against misclassification risks.
RemoFirst handles the complete employee lifecycle, from onboarding to legally compliant termination procedures. Pricing starts at only USD 199 per employee and USD 25 per contractor.
The future of work is undeniably global, but success requires getting the legal foundation right from day one. Schedule a demo to discover how RemoFirst can help your Australian company build a compliant global team without the risks that have caught so many others off guard.
