In recent years, the Australian Fair Work Ombudsman (FWO) has prosecuted a number of non- Australian corporations in respect of alleged breaches of Australian employment laws.1 A recent decision of the Federal Court provides some clarification of when non-Australian employers and employees will become bound by the Australian Fair Work Act 2009 (Cth).2
The FWO brought proceedings against Singapore incorporated company Valuair Limited and Thailand incorporated company Tour East Limited. The FWO alleged that the companies had failed to comply with various obligations under Australian employment laws in respect of some of their employees.
The employees in question were cabin crew members with a home base in Singapore or Thailand who performed duties on international flights operated by Australian airline Jetstar Airways Pty Ltd. These duties included on ‘tag flights’, which were flights operating between domestic ports within Australia, as part of Jetstar’s international services. Jetstar had commercial agreements with Valuair and TET for the supply of cabin crew and the proceedings were also brought against Jetstar for allegedly being ‘involved in’ the claimed contraventions.
The Federal Court rejected the FWO’s claim that the cabin crew in question became subject to the Fair Work Act simply because they performed some duties within the territorial limits of Australia. Significantly, the Court held that the Fair Work Act applies to employment relationships rather than to particular work, and that for the Fair Work Act to apply, there must be an appropriate connection linking the employment relationship sufficiently with Australia.
In this case, a number of key facts led the Court to find that there was not a sufficient connection. This included the existence of legitimate commercial arms-length arrangements between Jetstar and the non- Australian employing companies to supply the cabin crew. It also included the fact that the employment contracts were between the non-Australian entities and non-Australian nationals, they were concluded outside of Australia and subject to the laws and practices of Singapore and Thailand, and payments of remuneration and social security were made outside of Australia. The Court also noted that the employees commenced and concluded tours of duty at the home base and that the cabin crew entered Australia on special purpose visas.
Implications for companies sending employees to work in Australia
The decision is significant in two respects. Firstly, it gives employers some comfort that they can have employees travelling in and out of Australia and performing a small proportion of overall working time in Australia, without the Fair Work Act necessarily becoming applicable to the employment relationship. Secondly, however, it appears to establish an ‘all or nothing’ approach – if there are sufficient connections linking the employment relationship with Australia, then the whole of that relationship may become subject to the Fair Work Act, even if some of the employment duties are performed outside of Australia.