Judges clear 13 unfair dismissal cases against Saudi embassy to go ahead
Foreign embassies in Australia can face local unfair dismissal claims, the Federal Court has confirmed in a significant ruling on state immunity and employment law.
In a judgment delivered on 15 December 2025, the Full Court of the Federal Court of Australia dismissed an application by the Royal Embassy of Saudi Arabia Cultural Mission challenging the jurisdiction of the Fair Work Commission (FWC) over unfair dismissal claims brought by former staff in Canberra. The application for judicial review had been filed on 6 November 2024.
The embassy had engaged a number of employees to perform work at its embassy in Canberra. In 2022, the engagement of several of those employees ended. Some of them applied to the FWC for an unfair dismissal remedy under section 394 of the Fair Work Act 2009 (Cth).
The embassy argued that, as a foreign State and diplomatic mission, it was immune from the jurisdiction of Australian bodies under the Foreign State Immunities Act 1985 (Cth). It contended that an unfair dismissal remedy under the Fair Work Act was not available against it, that the Act did not apply to it, that some staff were not “permanent residents” of Australia for the purposes of that legislation, and that contractual clauses directing disputes to Saudi authorities should exclude the FWC’s involvement.
A Deputy President of the FWC rejected the embassy’s jurisdictional objections for most of the employees. The Deputy President found that the embassy was not immune with respect to 15 of the 18 employee claims, but upheld immunity in relation to two individuals, Mr Wedissa and Mr Mubaidin, because there was insufficient evidence to conclude that they were permanent residents of Australia when their contracts were made. In a further decision, the Deputy President dismissed the application of another employee, Mr Almahadi, on the same basis.
On appeal, a Full Bench of the FWC largely confirmed that approach. It held that the embassy was not immune from 13 of the unfair dismissal claims, but found that two employees, Suzanne Maksoud and Mohamed Ben Mansour, were not permanent residents for the purposes of sections 12(6) and 12(7) of the Foreign State Immunities Act and that the embassy had immunity in respect of their applications. The appeals by Mr Wedissa and Mr Mubaidin were dismissed.
The embassy then sought judicial review in the Federal Court on five grounds. It argued that the FWC was not a “court” within the meaning of section 3 of the Foreign State Immunities Act; that the employment exception in section 12 did not extend to unfair dismissal proceedings; that contractual provisions in articles 20 and 21 of the employees’ contracts were “inconsistent provisions” under section 12(4)(a); that it was not a “national system employer” under section 14(1)(f) of the Fair Work Act; and that certain employees were not “permanent residents of Australia” under sections 12(6) and 12(7)(b) of the Foreign State Immunities Act.
Justice Raper, with Justices Rangiah and Lee agreeing, rejected each of these arguments. The Court held that when the FWC exercises its unfair dismissal jurisdiction, it has functions and powers “of a kind similar to judicial functions or powers” and is therefore a “court” for the purposes of the Foreign State Immunities Act.
The Court further held that the employment exception in section 12(1), read with section 12(2), covers unfair dismissal proceedings where the contract of employment was made in Australia or was to be performed wholly or partly in Australia. It found that article 21 of the contracts, which referred disputes “in respect of any article of this contract” to the Saudi Ministry of Civil Service, did not extend to statutory unfair dismissal claims under the Fair Work Act, which concern statutory rather than contractual entitlements.
On the reach of the Fair Work Act, the Court concluded that a foreign State can fall within section 14(1)(f) as a person who carries on an activity “of a commercial, governmental or other nature” in a Territory in Australia and can therefore be a national system employer.
The Court also upheld the FWC’s approach to the concept of “permanent resident of Australia” in sections 12(6) and 12(7), including in relation to certain New Zealand citizens holding subclass 444 visas, by focusing on whether their continued presence in Australia was subject to a limitation as to time imposed by or under Australian law.
The Full Court ultimately ordered that the embassy’s application be dismissed, allowing the 13 remaining unfair dismissal claims to proceed before the Fair Work Commission.
For HR, the message is clear: if you employ staff in Australia – even as a foreign state mission – you can be drawn into unfair dismissal claims before the Fair Work Commission where the statutory conditions are met.
