Understanding the FWC case of Pascua v Doessel Group Pty Ltd
A recent case before the Fair Work Commission, has highlighted the difficulties that Australian businesses may face when engaging overseas workers. This practice is common across many industries and workers resident in other countries are used to fill labour shortages or skills gaps, often at a lower cost than in Australia. If your business uses overseas labour sources, it’s important that you understand how they are classified to avoid significant problems down the line.
The case
Ms Pascua was engaged by a Queensland law firm, which specialised in credit repair for individuals. Ms Pascua lived in the Philippines and carried out her work as a paralegal remotely from home, at times that matched Australian business hours. She had an email address with the domain name of the firm, and her signature block referred to her as a paralegal for MyCRA lawyers. For the first year of her work with the firm, Ms Pascua’s work was supervised by a solicitor.
Following a breakdown in the working relationship with the MyCRA Principal, Mr Doessel, Ms Pascua received an email asserting that she had breached her contract and that the contract had been terminated. Pascua contended that she was an employee and had been unfairly dismissed. In response, Doessel argued that she was an independent contractor, not an employee, and could not have been unfairly dismissed – that claim being available to Australian employees only.
The Fair Work Commission held that, despite living and working in the Philippines under a contract which stated that she was an independent contractor, Ms Pascua actually an employee. Reviewing the terms of her contract, the FWC advised that the following matters, amongst others, indicated an employer-employee arrangement:
- The work that Pascua performed was clearly in the business of the law firm, rather than in an independent business conducted for herself.
- The technology arrangements put in place to identify Ms Pascua as calling from Australia suggested that work was being performed by an employee of that business.
- The service targets, such as 10% of matters being removed per week indicated an ongoing relationship, rather than a daily one.
- Ms Pascua was not entitled to transfer her work to another person.
- The law firm controlled / supervised Ms Pascua in her work.
- The low hourly rate paid to Ms Pascua strongly indicated that she was not engaged due to specific expertise or a specialist service on a contract basis, but rather paid to perform work consistent with employment.
The FWC concluded that, although the contract specified that Ms Pascua had agreed to perform the work solely on an independent contractor basis, and there was no employment relationship, this belied the actual nature of the agreement. In other places the contract referred to the arrangement as employment, which also did not assist the respondent.
What does this mean for your business?
This case serves as a reminder that it’s not enough for your contracts to state that workers are independent contractors. The work they do, and the way it is performed must actually reflect that arrangement. Further, the worker’s rate of pay will be a factor that is taken into account – low rates of pay for ongoing work tend to indicate an employee relationship meaning that outsourcing contracts should be carefully considered. Your arrangements with independent contractors should be regularly reviewed to ensure that they are correctly classified, and that you are in compliance with Australian employment law requirements.