Does The Fair Work Act Apply To Employees Working Overseas? It Says Outside Australia Three Times

The Fair Work Act does not switch itself off because an employee works overseas. Nothing in it says that. Coverage turns on who the employer is, not on where the employee sits, and the only passage that talks about geography is a short block near the front about the exclusive economic zone, the continental shelf and ships.

Which is not where anyone looks.

Founders argue about the governing law clause instead. Outstaffer sells the structure that makes that argument unnecessary, so read this as disclosure rather than pitch: Employer of Record exists because most businesses build the arrangement by accident.

Does the Fair Work Act apply to employees working overseas? Count the words

Compilation No. 73 of the Fair Work Act 2009, compilation date 7 July 2026, runs to 800 sections. The phrase “outside Australia” appears three times. Once in the definition of constitutional trade or commerce. Twice in one subsection, 35(3).

“Australian-based employee” appears seven times, all in Volume 1, all inside sections 33 to 35. Volumes 2, 3 and 4 never use it.

What does section 35 actually do?

It defines two terms used to extend the Act past the exclusive economic zone, to Australian ships, and to whatever else the regulations prescribe. Section 34(3) extends the Act beyond the zone only “if the regulations prescribe further extensions”, and section 35A lets regulations exclude the Act from those areas altogether.

So what switches the Act on?

Section 13: a national system employee is an individual “so far as he or she is employed, or usually employed” by a national system employer. Section 14(1)(a): that employer is “a constitutional corporation, so far as it employs, or usually employs, an individual”. Neither mentions a border or a place of work.

Working overseas is one limb. Where you engaged them is the other

Subsection 35(2)(b) makes an employee of an Australian employer an Australian-based employee “whether the employee is located in Australia or elsewhere”. That is the default, and it is wide.

Subsection 35(3) is the only thing that pulls it back, and it has two limbs joined by “and”. It covers someone “engaged outside Australia and the external Territories to perform duties outside Australia and the external Territories”. Engaged outside. To work outside. Both, or neither.

Both facts are fixed on the day you hire. If you signed someone while they sat in Sydney, the first limb may already have failed, which is worth thinking about before you hire a candidate who is already onshore.

What it costs if the Act does reach your overseas employee

Say a role ends after five years on $100,000.

Section 117(3) gives four weeks of notice past five years of service, five if the employee is over 45. Section 119(2) gives ten weeks of redundancy at five. Fourteen weeks, which on $100,000 is $26,923. Section 90(2) then pays out untaken annual leave, accrued under section 87 at four weeks a year, so an unused year adds $7,692.

Now read section 121(1)(b). Redundancy pay does not apply where the employer is a small business employer, which section 23 defines as fewer than fifteen employees. Under fifteen heads the same termination is four weeks and $7,692. Your fifteenth hire moves that one number by $19,231.

The honest counter is that the Act does not answer this either way

Nothing above says the Act follows your employee. It says the Act never wrote down the switch everybody assumes is there, and that cuts both ways. Two Commission decisions this year went the employer’s way on jurisdiction, and we covered why both turned on facts fixed at hiring. The base rate of claims is low.

It changes the shape of the exposure, not the odds.

Related reading

• Workers compensation for an overseas employee
• The five-question test the Commission actually applied

What I would do

Stop asking whether the Act applies to employees working overseas. Write down two facts instead: where the person was when you engaged them, and where the duties were always going to be performed. That is what subsection 35(3) reads. Get advice on your own arrangement before you rely on any of this.

Then price the alternative. Run one role through a structure that already answers this, or keep the clause and the argument.

Here is the argument I want. If the switch is not in the statute, why does every offshore contract open with a governing law clause?