Can an employee engaged to work overseas still bring a claim in Australia? Are employees overseas covered by Australian industrial instruments? These and other questions are answered in our 5 key lessons for employers with a global workforce.
Lesson 1 – An employee engaged to work overseas can still bring a claim in Australia
It is a common misconception that an Australian employee engaged to work in another country will be covered solely by that jurisdiction’s employment laws. This is not strictly the case. The Fair Work Act 2009 (Cth) (FW Act) has extra-territorial application. The extent to which that is applied must be considered on a case by case basis.
Employers must consider the desired jurisdiction for dealing with disputes when sending employees overseas. It is also important that employers ensure that all Australian employment legislation is complied with if there may be a connection with Australia, regardless of where the employee is carrying out their employment. The details of an overseas assignment and the ongoing nature of the original Australian contract should be made clear in an assignment agreement. We discuss this below in Lesson 5.
Lesson 2 – Employees working overseas can be covered by Australian industrial instruments
Employers must consider whether a modern award or enterprise agreement will apply to any employee who is sent on a work assignment overseas.Employers must consider the continued application of any relevant modern award or enterprise agreement to an employee before sending them overseas. This is not only to ensure compliance with obligations under the industrial instrument, but also to appropriately manage any termination of employment.
Lesson 3 – Overseas workers count when determining whether the business is a small business employer
The FW Act defines a small business employer as one that employs fewer than 15 employees at the time of an employee’s dismissal. This is relevant to unfair dismissal claims because an employee must have been employed for a minimum of 12 months to have access to the unfair dismissal regime if their employer was a small business.
The FW Act states that employees of “associated entities” of the employer are to be included when calculating the number of employees at any given time, and the FW Act adopts the definition of “associated entities” from the Corporations Act 2001 (Cth) (Corps Act). Because of this, any employees of overseas associated entities must be counted to determine if the employer was a small business employer at the relevant time.
Employers must remember to consider the employees of overseas associated entities to determine whether they are a small business employer. This should be done before the termination process commences to ensure compliance with the procedures that are relevant to the size of their enterprise.
Lesson 4 – Employers need to consider redeploying employees overseas in cases of redundancy
When an employer makes an employee redundant, it must seek to redeploy the employee if it is reasonable in the circumstances. This usually requires considering whether there are any other suitable positions available for the employee within the employer or any of its associated entities. But do employers need to consider whether there are any foreign roles available when making an employee redundant?
Bearing in mind the types of matters outlined in the case study above, employers should consider whether it is reasonable to redeploy an employee to a vacancy within an overseas associated entity before terminating the employment on account of redundancy.
Lesson 5: Ensure employees heading overseas have clear, up-to-date contracts and an assignment agreement
Without a clear agreement regarding the assignment in place, the terms and conditions of the assignment and the original employment may become confused and the relationship adversarial. In order to clarify this, the employment contract should be revisited and an assignment agreement provided to the employee. The assignment agreement should clarify the employing entity, the terms and conditions of the employment relationship during the assignment and whether the original home contract is intended to be amended, “frozen” or terminated during the assignment period.
The iSoft Group case was an expensive lesson about ensuring clarity in assignment documentation for iSoft. Employers should give careful consideration to the employment agreements in place at any given time. When dealing with overseas-housed employees, corporations must be especially careful regarding the effect of the ongoing “home” employment contract.
When an employer is managing a global workforce, or is part of a group of companies that have employees outside Australia, it must remember that:
- in certain circumstances, an employee stationed overseas may still be subject to Australian employment laws. This means that the employer needs to remain aware of the rights the employee has under Australian law and the obligations the employer owes to the employee; and
- being part of a global corporate structure has ramifications when terminating an employee.
If you are unsure about the employment of overseas workers, it is best to obtain advice. Not only could an employee look to bring a claim against the employer, the employer could also face significant penalties for any breaches of Australia’s workplace laws.