As remote working becomes commonplace and international hiring becomes more accessible, Australian employers need to be aware that overseas employees may still have access to the unfair dismissal regime under the Fair Work Act 2009 (Cth) (“FW Act”).

This was highlighted by a decision of the Fair Work Commission (“FWC”) where an employee successfully made an unfair dismissal claim despite never being based in Australia and performing their role entirely remotely from New Zealand.

The facts

The employer was an Australian technology company. The employee commenced employment in 2024 in a sales role, responsible for selling products to customers in New Zealand. The employee lived and worked in New Zealand and was paid in New Zealand dollars. After 15 months of employment, the employee was dismissed because of poor performance. However, the employer had not undertaken any formal performance management process or provided the employee with any warnings. The employee subsequently lodged an unfair dismissal claim under the FW Act.

Before determining whether the dismissal was fair, the FWC first had to consider whether Australian unfair dismissal laws applied to the employee at all.

Was the employee an “Australian-based employee”?

The key question was whether the employee was an “Australian-based employee” for the purposes of the FW Act.

An employee will be an Australian-based employee where:

• their primary place of work is in Australia; or
• they are employed by an Australian employer (unless they are engaged outside Australia to perform duties outside Australia).

The employee’s primary place of work was not Australia. However, they were employed by an Australian employer. Accordingly, the only remaining question was whether the employee was “engaged outside Australia”.

To answer this question, the FWC considered where the employee’s employment contract had been formed. This contract had been emailed by the employer in Australia to the employee in New Zealand to sign. Once signed, the contract was emailed back to the employer in Australia.

The FWC applied electronic transactions legislation and found that the acceptance of the contract occurred when the contract was received by the employer in Australia. Therefore, the contract was formed in Australia, and the employee was therefore engaged in Australia for the purposes of the FW Act.

The FWC went on to consider the substance of the unfair dismissal claim and ultimately found that the dismissal was unfair.

What does this mean for employers?

For employers, this decision is an important reminder that overseas employees are not necessarily “out of sight, out of mind”. There will be circumstances where overseas employees can access the unfair dismissal regime and bring claims under the FW Act, even if their work is performed entirely outside of Australia.

Employers need to be mindful of factors such as where an employment contract is formed, an employee’s primary place of work and where duties are performed. If an employer intends an employment arrangement to sit entirely outside the Australian employment law framework, the arrangement should be carefully structured from the outset with that objective in mind.

Importantly, where termination of employment is being considered for an overseas employee, employers should not assume that the FW Act does not apply. Instead, they should take appropriate steps to ensure that any dismissal is procedurally fair and complies with the requirements of the FW Act, including providing clear warnings, an opportunity to respond to concerns and following a proper performance management process where necessary.