Which laws apply to overseas employees?

In an ever-increasing global economy, it is not unusual for Australian businesses to expand their trade or activities and processes overseas. This is primarily influenced by lower labour costs and/or the availability of skilled labour in different jurisdictions. It is crucial that employers and employees understand when and how Australian labour laws, or the Fair Work Act 2009 (Cth) (the Act) applies to ensure compliance and to avoid disputes.

Whilst the Act primarily applies to employees working within Australia, it may also apply to Australian companies and employees who are employed overseas. The only exception to the Act’s application to overseas workers is if an employee is engaged outside of Australia and perform their duties primarily outside of Australia. It ultimately depends on the employee’s contract and whether their work has a connection to Australia.

The contract

To determine whether an employee was engaged outside of Australia the location of where the employment contract was formed is critical. For example, if an employment contract is sent via email from an Australian company’s registered business addressed and is signed and returned via email by the employee, the contract is considered to have been formed in Australia. However, if this process occurs entirely overseas, for example via a face-to-face meeting abroad, the employee is engaged outside Australia.

The recent Fair Work Commission (FWC) decision in Singhal v National Australia Bank Limited (2024) provides valuable insights into this area.

In that case, Mr Amit Singhal, an IT professional, sought an unfair dismissal remedy under the Act following his termination by National Australia Bank Limited (NAB). Mr Singhal was employed by NAB Global Innovation Centre India Private Limited (NICI), a wholly owned subsidiary of NAB, and performed his duties exclusively in India. He had never worked in Australia. NAB contested the application, raising jurisdictional objections, including that Mr Singhal was not employed by NAB and was not an Australian-based employee. The FWC upheld these objections, determining that the Act did not apply to Mr. Singhal’s employment.

Key findings

• The FWC found that Mr Singhal was employed by NICI, not NAB directly. This distinction was crucial, as NICI, being a foreign corporation, was not considered a national system employer under the Act. Therefore, the employment relationship did not fall within the jurisdiction of the FWC.
• The FWC emphasised that Mr Singhal’s employment was not Australian based. His work was performed entirely in India, and he had no involvement in Australian operations. This lack of connection to Australia further excluded his employment from the protections of the Act.
• The decision underscores that the physical location where work is performed is a critical factor in determining the applicability of the Act. Even if the employer is an Australian company, if the employee’s duties are carried out entirely overseas, the Act may not apply.

The Singhal v National Australia Bank Limited (2024) decision highlights the importance of the employment relationship’s structure and the physical location of work in determining the applicability of the Act and Australian labour laws. Employers and employees should carefully consider these factors when establishing and managing employment arrangements that involve work outside Australia to ensure compliance with applicable laws and to safeguard employment rights.

If you have any employment law questions, please contact our team today.