Australian employers who use email to employ foreign nationals working overseas could inadvertently cause Australian employment laws to apply to them. That is the key message to take from a decision by the Fair Work Commission which caused some alarm in employment circles in Australia given that, post-Covid, it is quite common for Australian employers to have employees living and working in other countries. We’ll speak to a Sydney based lawyer about what HR can do to manage the risk.
The case centred on the definition of an ‘Australian-based employee’ under section 35 of the Fair Work Act. The Act applies to employees employed by an Australian employer, whether the employee is located in Australia or elsewhere, unless the employee is engaged outside Australia to perform duties outside Australia. The issue was whether that exception applied.
The facts briefly. Gautam Parimoo, is a US national who was employed by Australian company, Lake Resources, to perform work at one of its mine sites in Argentina. He had never worked in Australia and had never been based in Australia. He was approached by a recruiter in Santiago, Chile, on behalf of Lake Resources , about a chief operating officer role in Argentina. He then attended three interviews via video conference from Chile, with representatives from Lake Resources, who attended the video conference interviews from Australia. Subsequently, Lake Resources sent a signed, unconditional employment agreement to Parimoo via email from Sydney. Parimoo opened the employment agreement and signed it in Chile. He sent it back to Lake Resources via email, where the email containing the signed employment agreement was opened by a Lake Resources representative in Sydney. Parimoo then commenced work in Argentina, where he performed work exclusively until his dismissal in January 2023. Parimoo filed a general protections application with the Fair Work Commission claiming to be an 'Australian-based employee' under the Fair Work Act. The Commission decided in his favour. The point at which he became engaged as an employee of Lake Resources was when his signed employment agreement was opened by Lake Resources in its Sydney office. Accordingly, the Commission decided Parimoo was an Australian-based employee.
Clearly this case speaks to the recruitment practices of employers in Australia and will also be of interest to multinational companies with a presence in Australia, so let’s get a view on that. Earlier employment lawyer Emma Lutwyche joined me by video-link from Sydney to discuss the case. I asked her why hiring by email was a problem in this case:
Emma Lutwyche: “It was a problem because the email in particular was opened by the office in Australia and that meant that under the Australian definition of ‘Australian-based employee’ under the Fair Work Act that employee, even though he had never entered Australia and never performed work in Australia, was found to have been engaged in Australia. Now, there's a long line of case law that, of course, supports that - the way that a contract is made by email is when it is opened and the offer has been accepted, and that acceptance is communicated - and the place where the acceptance was communicated was Australia and, therefore, the employee was covered by the Fair Work Act.”
Joe Glavina: “So presumably, Emma, a different method would have been a safer and better bet in this case and that's presumably what you're advising to do. I was thinking here in terms of using foreign agents, perhaps, to facilitate the signing of the contract.”
Emma Lutwyche: “Foreign agents, yes. We have been advising clients, for example, to have their contracts sent from Australia, if necessary, but the acceptance of the contract should be sent back to a place outside of Australia, preferably the place where the employer will perform work. One of the practical ways that we've been advising clients to do this is by having the contract sent back to our offices in the UK, for example, instead of the office in Australia, and that's where then the contract will be accepted under Australian law.”
Joe Glavina: “Are there any action steps for HR to take in light of this ruling, Emma? What are you advising your clients to do?”
Emma Lutwyche: “We've certainly been recommending, firstly, an audit so that businesses operating internationally can understand whether this is a risk for them, particularly where HR is headquartered, or run, out of Australia. Then, practically, an information and education piece around how this can apply to the operations for HR and line managers is also really important.”
Joe Glavina: “I understand this case might be appealed, Emma. What’s the latest news on that?”
Emma Lutwyche: “So there has been quite a bit of discussion about whether or not this decision is right. Having read the decision, I can see that what the Commission has done is pull together a bunch of different strands of different case law to come up with what has become quite a novel and alarming, for some employers, decision but the case law that was otherwise relied on in each strand that has been brought together is relatively sound so I couldn't see any wildly appealable errors when I read the decision. Also, at this point, the decision can't be appealed anymore. unless it has already, and it's possible that it has already but we just don't know about it yet because it's at the stage that it's at in the Commission, but the appeal date has passed.”
Joe Glavina: “If employers carry on regardless Emma, using email in the way the employer did in this case, what are the potential consequences? What's the risk they face?”
Emma Lutwyche: “The potential risk is claims in Australia for employees like in this decision who have never set foot in Australia before. That can be wide ranging and it can it can include stuff like challenging decisions about terminations, or promotions, or offering of roles, but also could include entitlements to minimum wages, to award entitlements, and that could be really significant for businesses operating overseas from Australia and assuming, of course, that those entitlements don't apply to overseas employees.”
Joe Glavina: “Finally, Emma, what’s your take-away point for HR professionals? The overall advice to HR watching this?”
Emma Lutwyche: “My overall advice is ensure that you're checking whether this is a risk for your business because it won't be for all businesses and, if it is, then putting in place measures such as local agents, such as ensuring there is someone else on the ground that can receive that acceptance of the contract and open that in a place that's not Australia.”
Emma has written about this case in some detail in an analysis piece for Out-Law if you’re interested. That’s ‘Australian workplace protections may extend to overseas employees’ and we’ve put a link to it in the transcript of this programme for you.
LINKS
- Link to decision of Fair Work Commission in Gautam Parimoo v Lake Resources NL
Check recruitment practices for Australian overseas hires after Parimoo, warns lawyer
16 Nov 2023, 10:45 am
Emma Lutwyche tells HRNews about the implications of the recent decision of the Fair Work Commission in Gautam Parimoo v Lake Resources NL.
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Transcript
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