Fair Work obligations for offshore staff are decided by two facts you set on day one: where the person was engaged, and where they actually perform the work. Not the job title. Not the clause your lawyer drafted. Section 35 of the Fair Work Act extends coverage to an Australian-based employee, then carves out anyone engaged outside Australia to perform duties outside Australia.
Most founders think the contract settles this. It does not even come second.
Outstaffer sells the structure being described here, so treat this as disclosure rather than pitch: Employer of Record exists because most businesses build this arrangement by accident.
What Fair Work obligations for offshore staff actually turn on
A Commission decision on 4 September 2026, [2026] FWC 3379, dismissed a general protections claim by a Philippines-based head of delivery against an Australian employer. He was hired in the Philippines and worked there throughout. Human Resources Director reports the Commission finding that an Australian employer is not on its own enough to pull an overseas worker under the Act. The decision itself is not publicly fetchable, so that reporting is the source here.
Second one this year. In June, [2026] FWC 2068 went the same way for a Philippines-based developer working exclusively on an Australian trading platform, because his contract was formed in Manila and every hour was worked there.
Read the statute, not the coverage. The definition of an Australian-based employee is short, and the carve-out sits in plain sight.
Are your offshore contractors actually employees? Wrong question first
Classification is the fight everyone has. It is the second fight.
In 2024 a Philippines-based paralegal won access to unfair dismissal against a Queensland law firm, because the Commission looked past the contractor paperwork at control, integration and income dependency. We broke that reasoning down in the five-question test the Commission actually applied.
The 2026 pair never reached classification. Jurisdiction stopped them at the door.
Which fact decides coverage?
Where the engagement was formed and where the duties are performed. An Australian company signing an Australian-drafted agreement with someone who has never worked a day in Australia is still, on the statute, outside the Act for that person.
Does a better contract fix it?
No. Both 2026 employers won on structure, not drafting. Neither result turned on a clause.
The arithmetic sits in the fee, not the fine
Every one of these employers still needed a lawful entity or partner in the worker's own country. Published monthly Employer of Record fees, per employee: Outstaffer USD $250, Deel USD $599, Remote USD $699, Team Up Now A$300.
On a five-person team that is USD $15,000 a year against USD $41,940. The same structural protection, a USD $26,940 annual difference, and none of it visible in the headline day rate anyone quotes you.
Compare that to the alternative most people are running: no entity, a contractor invoice, and a jurisdiction argument you have to win twice.
The honest counter is that both employers won
The base rate is genuinely low, enforcement is thin, and thousands of Australian businesses have run direct offshore contractor arrangements for years without a claim. If you are cynical about compliance content, that is the right thing to be cynical about, and the contractor arrangement most businesses fall into has not cost most of them anything yet.
It changes the shape of the risk, not the odds. Both winners still went to the Commission and still paid to argue it.
Related reading
- Payroll tax on offshore employees in Australia
- The hidden cost of getting your first offshore hire wrong
What I would do about Fair Work obligations for offshore staff
Decide the structure before the person. Both facts that decide coverage are fixed at hiring and neither can be retrofitted. Engage through an entity in the worker's country, document where the contract was formed, and stop pretending a governing law clause does that work. Get advice on your own arrangement.
Then check what you pay for it. Our published pricing is on the site because most of this market will not put a number on a page.
Here is what I want an argument about. If two rulings in one year say the border is where you hired, is anyone actually going to move their contracts, or will everyone wait for the case that goes the other way?
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