Gone are the days of working 40 years in the one job, and with them, the days of working 40 years in the same place. International expansion, secondment, employee-transfer programs and short- and long-term projects mean the incidence of Australians working overseas or for foreign corporations in Australia, or of foreign employees working in Australia, will continue to escalate.
But which laws apply to whom in these increasingly tangled webs?
In Australia, most private sector employee arrangements are governed by the Fair Work Act 2009 (“the Act”). But whether the Act applies to work performed outside Australia by an Australian employee can be a complex question. The answer is not always clear and will depend on a variety of legislative and factual considerations.
The Act is defined as applying to a “national system employer”. But what does this mean? It includes Australian businesses – corporations, partnerships, sole traders and public employers and foreign corporations (those registered outside of Australia) — that carry on business in Australia. The definition of “national system employer”, therefore, can extend to Australian corporations that operate in an overseas location through a branch or office, as well as situations where an Australian employee is sent from one corporation to a related overseas company, such as a US parent company. Consequently, it is already evident that the application of relevant laws will depend on the structuring of the relationship. Is this a permanent move for the employee? Or is it a short-term posting? Is the employment with the Australian company terminated or continuing?
If employment is with a foreign corporation in Australia, then what determines whether they are “carrying on a business”? Unfortunately, this is not a simple answer and, requires and examination of all the circumstances of the company’s activities in Australia in light of several provisions of the Corporations Act and a body of common law principle. However, if a company is deemed to be “carrying on a business” there are two simple consequences: first, they must register with ASIC and provide financial statements; second, any employee will be fully covered by the Act.
Also worth considering are sections 34 and 35 of the Act. These deal with “Extension of this Act beyond the exclusive economic zone and the continental shelf” and provide that the Act applies to “Australian-based employers” (Australian companies) and any “Australian-based employee”, defined by section 35(2) of the Act as an employee “whose primary place of work is in Australia; or who is employed by an Australian employer (whether the employee is located in Australia or elsewhere)”. But then “paragraph (2)(b) does not apply to an employee who is engaged outside Australia … to perform duties outside Australia …”.
The easy and unsurprising conclusion is that an Australian corporation with an Australian employee, in Australia, is bound by the Act. But once again for an Australian employee, if the corporation is a foreign corporation, and the work is outside Australia, the application of the Act will need to be determined on a case-by-case basis.
If you are a foreign national working in Australia then generally, the Act (and other statutory employment benefits) will apply to you, regardless of the governing law of the employment contract or the location of the employer. However, when it comes to issues such as breach of contract, enforcement of contract or issues of post-contract restraints (which can have limited validity in Australia) the governing law of the contract probably has some effect.
