Law firm urges employers to review offshore contracts after FWC jurisdiction ruling
The Fair Work Act 2009 can apply to employees who have never set foot in Australia and whose work is carried out entirely overseas, according to law firm Hall & Wilcox, which warned employers against assuming that local laws in an employee's country will operate to the exclusion of Australian legislation.
The warning follows a recent Fair Work Commission decision, Sanderson v Brightest Australia Pty Ltd [2026] FWC 1633, in which a New Zealand-based employee was found to have access to the FW Act's unfair dismissal jurisdiction.
David Sanderson, who lived and worked in New Zealand selling a subscription-based app product to New Zealand customers, lodged an unfair dismissal application against Brightest Australia after his employment was terminated for alleged underperformance.
Deputy President Farouque held that Sanderson was an Australian-based employee under the FW Act because he was employed by an Australian employer and his contract of employment was formed in Victoria.
Despite Brightest's status as a small business employer, the FWC ruled that the company breached the Small Business Fair Dismissal Code. Sanderson was never clearly warned that he could lose his job if his performance did not improve, nor was he given a genuine chance to respond before the company moved to terminate him, leading the FWC to conclude the dismissal was harsh, unjust, or unreasonable.
When the FW Act applies offshore
According to Hall & Wilcox, the FW Act contains two principal pathways through which it can apply to employees working abroad.
The first is the national system employer test, which asks whether the employment relationship as a whole is sufficiently connected to Australia, regardless of where the employee is physically located. The firm noted that foreign corporations are also capable of being national system employers under the legislation.
The second is the Australian-based employee test, under which some, but not all, parts of the FW Act may apply to an employee. An offshore employee of an Australian employer will only fall outside this coverage if they were both engaged outside Australia and engaged to perform duties outside Australia.
"We continue to see employers operating under the assumption that the exception applies because an employee is engaged to perform duties wholly offshore, only to discover that the employee was engaged in Australia by operation of contract law principles and electronic transactions legislation," the law firm's insights said.
In the Sanderson case, the contract was signed by the employee and returned by email, meaning the place of receipt of the acceptance, not the employee's location when signing, determined where the contract was formed.
"Unfortunately for Brightest Australia, this resulted in Mr Sanderson, a New Zealand based employee, having access to the unfair dismissal jurisdiction," the law firm added.
What employers should do
Hall & Wilcox said employers should understand that the FW Act can apply in whole or in part to employees located entirely offshore, and should review how they employ and onboard overseas staff, including where offers of employment are issued and accepted, and where contracts are signed and received.
Each employment relationship should be analysed on a case-by-case basis, as the application of the FW Act will turn on the individual facts and circumstances of the arrangement, the firm said.
Where the FW Act applies, termination processes for overseas employees should comply with both the legislation and the laws of the country in which the employee is located, while advice should be sought early, particularly on structuring offshore employment and before making decisions to end employment.
"For Australian businesses operating across borders, the consequences of getting this wrong can be significant and can include exposure to unfair dismissal claims, general protections applications, underpayments and under accrual of paid leave entitlements where FW Act coverage (in whole or in part) is successfully established," the law firm said.
