Australia: Cross-Border Outsourcing Arrangements: When Workers Overseas Can Claim Unfair Dismissal
Authors: Lauren Brouwer-French, Edward Raftesath and Zoe Nutter
On 27 June 2025, Deputy President Slevin handed down a decision on the question of whether Ms Joanna Pascua, a paralegal working remotely in the Philippines for a law firm based in Queensland, was unfairly dismissed and could thereby receive compensation under the Fair Work Act 2009 (Cth) (“FW Act”). Pascua v Doessel Group Pty Ltd [2025] FWC 1833 is the latest in a sequence of decisions in this matter (“Pascua case”), highlighting core insights for employers in the face of cross-border outsourcing arrangements.
The Pascua case confirms that employees based overseas can apply to the Fair Work Commission (“Commission”) for unfair dismissal, so long as they have a direct contractual relationship with an Australian employer that purports to dictate and control the manner of performance of their work. It also stands as a reminder to employers that the Commission and Courts alike can ignore “false labels” when it comes to assessing whether a worker is an employee or independent contractor.
Overview of the Pascua case
Ms Pascua worked as a paralegal for a law firm that provided specialist credit repair services. While the firm operated solely out of premises located in Queensland, Ms Pascua lived and performed work from her home in the Philippines. She worked from her computer, providing general legal assistance to the firm, at times that matched business hours in Australia.
In the last seven months of her less than two years at the firm, Ms Pascua found working there difficult. In particular, she described the firm’s principal, Mr Graham Doessel, as overworking her, setting unreasonable expectations, being overly critical and refusing to approve overtime. The issue of dismissal arose on 20 March 2024, when Mr Doessel sent Ms Pascua an email asserting that she had breached her contract and it had therefore been terminated.
Pascua v Doessel Group Pty Ltd [2024] FWC 2669
At first instance, the case concerned whether Ms Pascua could make use of the Commission’s jurisdiction to seek a remedy for unfair dismissal. When Ms Pascua’s application was heard by the Commission on 26 September 2024, the primary issue was whether she was an employee or independent contractor.
Employee vs independent contractor
Only employees can claim unfair dismissal under Part 3-2 of the FW Act. In response to Ms Pascua’s application, Doessel Group Pty Ltd (“Doessel Group”) claimed that the legal relationship it had with Ms Pascua was under a contract to perform work as an independent contractor, not as an employee. The company highlighted that section four of Ms Pascua’s contract was even headed “Independent Contractor Relationship”.
Still, Deputy President Slevin confirmed that despite general emphasis on the terms of the contract in determining a worker’s classification as an employee, the Commission can ignore “false labels”. A determination of the classification of a worker requires comprehensive analysis of the contract terms to determine whether the relationship between the parties reflects the terms in practice, as opposed to a shallow reliance on labels or headings. A contractual label will not in itself be determinative when assessing whether the relationship is one of employment.
Factors indicative of an employment relationship
Degree of control exercised by the employer
Although there was a section in Ms Pascua’s contract that was headed “Independent Contractor Relationship”, Deputy President Slevin held that the “true nature of the relationship” was one which suggested “a level of control being exercised over the work being performed” that was “consistent with employment”.
The indicators of control by Doessel Group used to determine Ms Pascua’s conditions of work included that the duties Ms Pascua performed were to be completed within a directed timeframe and that there was a requirement for Ms Pascua to perform ad hoc duties as required.
Organisational integration
Moreover, there were key indicators that Ms Pascua was integrated into the organisation given the phone account Ms Pascua used identified her as calling from the law office in Queensland and the signature block on Ms Pascua’s emails suggested that the work was being performed by the law firm.
Contractual inconsistencies
Even though Ms Pascua’s contract included the heading “Independent Contractor Relationship”, it also referred to the arrangement as one of employment in a number of places. This inconsistency “belied the actual nature of the contract” in the words of Deputy President Slevin.
Inadequate remuneration
Finally, Ms Pascua’s remuneration was well below the minimum award rate for paralegal work under Australian law. Given independent contractors are typically paid higher rates, this marked another indicator of an employment relationship.
Doessel Group Pty Ltd v Pascua [2025] FWCFB 43
Work performed overseas
On appeal, Doessel Group’s submissions assumed it was relevant to the legal character of the relationship between the parties that Ms Pascua performed work in the Philippines. This was rejected by the Full Bench, which found that “[t]here is nothing preventing an Australian employer engaging an employee under a contract of employment to perform work overseas”.
Territorial limits to the operation of the FW Act
Still, another issue arose in relation to the jurisdiction of the Commission to determine Ms Pascua’s application. While the Full Bench noted that, in a simple sense, Ms Pascua fit within the concept of being a “national system employee” to the extent she was employed by Doessel Group, it acknowledged that “[t]here are, however, territorial limits to the operation of the Act”. In particular, there was the outstanding question of whether Ms Pascua was an employee “engaged outside Australia and the external Territories to perform duties outside Australia and the external Territories”.
While the Full Bench found that Ms Pascua’s work appeared to have been entirely performed outside Australia, it did not address the question of whether the contract of employment was formed in Australia because direct evidence on formation was not given at first instance.
Although the question of the general application of Part 3-2 of the FW Act to employees of Australian employers performing work overseas was considered important, the Full Bench did not grant permission to appeal in relation to it because the issue was not directly argued and the evidence was incomplete.
Pascua v Doessel Group Pty Ltd [2025] FWC 1833
Nonetheless, Deputy President Slevin recently determined that Ms Pascua was entitled to bring an unfair dismissal claim and that she was unfairly dismissed. Ms Pascua was awarded compensation in the sum of $10,800.
Key Takeaways for Employers
While outsourcing can offer significant benefits, the terms of the contractual relationship will not always be determinative.
The introduction of s 15AA, Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 (Cth), which took effect from 26 August 2024, should alert employers to the fact that the Commission will now disregard contractual labels if they do not reflect “the real substance, practical reality and true nature of the relationship”. This new provision requires that the Commission not only assess the terms of the contract governing the relationship between the parties, but also look to other factors relating to the “totality of the relationship”, including how the contract is performed in practice.
Employers should therefore consider:
- drafting consistent contract terms that accurately reflect the true nature of the working relationship between the parties;
- reviewing work schedules; performance metrics; levels and methods of remuneration, as well as organisational integration to ensure that working relationships appropriately reflect the true intentions between the parties;
- whether it is appropriate to contract an individual via a third party in the country in which that individual is working;
- structuring outsourcing arrangements to allow greater autonomy for contractors; and
- the proper law governing contracts for workers based overseas to confirm whether any liability in Australia exists.
If you require cross-border employment law advice or assistance, please contact our Harmers legal team at + 61 2 9267 4322.
