Offshore contractor or employee?

Case note: Pascua v Doessel Group Pty Ltd [2025] FWC 1833

Following a ruling from the Fair Work Commission (FWC) that determined she was an employee, an offshore paralegal was successful in her unfair dismissal application despite the respondent’s objection that claimed she was engaged as an independent contractor.

Facts

On 21 July 2022, Ms Joanna Pascua was contracted to work for MyCRA Lawyers, an entity owned by Doessel Group Pty Ltd (Doessel). MyCRA Lawyers are ‘credit repair’ lawyers in Australia that operate from Queensland. However, Ms Pascua lives in and works remotely from the Philippines.

Ms Pascua performed paralegal work, whereby she would investigate MyCRA Lawyers’ client credit claims. MyCRA Lawyers provided Ms Pascua with a computer and a phone. Her email signature block identified her as a MyCRA Lawyers paralegal.

In March 2024, Doessel summarily ended Ms Pascua’s engagement.

Ms Pascua made a claim seeking a remedy for unfair dismissal in the FWC pursuant to section 394 of the Fair Work Act 2009 (Cth) (the Act). To be entitled to a remedy under section 394(1), a dismissed person must be an employee (s 386(1)). Doessel made a jurisdictional objection to Ms Pascua’s application, arguing that she was not an employee.

Was Ms Pascua an independent contractor or an employee?

Ms Pascua argued that she was an employee because of the way in which Doessel supervised and controlled the performance of her work.

Doessel contended that Ms Pascua was an independent contractor because:

• her contract described the relationship as one of an independent contractor;
• she provided weekly invoices using an invoicing system provided by Doessel; and
• her working hours were flexible — her contract outlined the minimum hours of work, but she could decide whether she would work those hours, which meant she took time off at her own discretion.

Deputy President Slevin held that the true character of the relationship is determined by referring to the rights and duties arising from Ms Pascua’s contract.

Although Ms Pascua’s contract stated that she was an independent contractor, and that it was not an employment relationship, these were not determinative factors¹. After careful analysis of the rights and obligations created by the contract, the Deputy President was satisfied that Ms Pascua was an employee on the basis that the contract required her to:

• perform the work herself — she could not assign the work to someone else;
• complete on-going duties (including administration, following up clients and ad hoc duties²) which could have been performed by an employee of MyCRA Lawyers; and
• perform the duties outlined in the contract, unless terminated.

Further, the Deputy President was persuaded by Ms Pascua’s low hourly rate ($18.00 an hour). She received less than the minimum rates payable under the applicable award classification, which was not consistent with the standard practice of independent contractors charging higher rates. Ms Pascua’s remuneration suggested that she was not being engaged for any specific expertise or specialist service, which warranted a higher payment.

The Deputy President held that Ms Pascua was an employee and that she was entitled to make an unfair dismissal application under section 394.

Appeal

Doessel sought permission to appeal this decision. Within its appeal submissions, Doessel contended that Ms Pascua’s employment relationship did not have a sufficient connection with Australia, given she was not an Australian resident, and the contract of employment was made outside Australia. Doessel had not raised this question during its initial jurisdictional objection application.

To be entitled to pursue an unfair dismissal application, Ms Pascua needed to be an Australian-based employee. Under section 35(2)(b) of the Act, an “Australian based employee is an employee who is employed by an Australian employer (whether the employee is located in Australia or elsewhere)”. However, this “does not apply to an employee who is engaged outside Australia and the external Territories to perform duties outside Australia and the external Territories”, per section 35(3). [emphasis added]

The Full Bench of the FWC was satisfied that Ms Pascua was an Australian-based employee for the purposes of section 35(2)(b). The question that remained was whether Ms Pascua was engaged outside Australia and the section 35(3) exception applied. The Full Bench stated that to determine whether an employee has been ‘engaged outside Australia’, it is necessary to look at where the contract was formed. A contract is formed when an employer receives acceptance of the contract from the employee (eg. if an employment contract is signed and sent via email, the contract is formed when the employer receives the executed document)³.

Ultimately, the Full Bench did not grant permission to appeal on the question of employee or independent contractor and it refused permission to appeal on the basis of whether Ms Pascua was ‘engaged outside Australia’, as the Full Bench held it was not in the public interest to answer this question given it was not a question that had been put before the Deputy President during the original jurisdictional objection application⁴.

It was therefore established that Ms Pascua was eligible to file an unfair dismissal application, and the matter was sent back to be heard before a single member of the FWC.

Unfair dismissal

Deputy President Slevin held that Ms Pascua was unfairly dismissed. He found that reinstatement was inappropriate in the circumstances and ordered that Doessel pay Ms Pascua’s compensation of $10,800 (15 weeks’ pay).

Lessons for employers

It is necessary for employers who engage workers as independent contractors to review their contracts for service to ensure the rights and duties conferred to the worker under this contract do not give rise to an employment relationship.

Further, although the Full Bench did not answer the question on appeal, the section 35(3) exception will not apply to offshore workers if the contract is formed inside Australia.  Formation of the contract will occur at the location the employer receives the executed document. Employers should consider this when setting up the process of engaging overseas workers, as any ambiguities may give rise to that worker being covered by the Act.  In particular, we note that where offshore workers have a lower rate of pay than the modern award, employers must ensure the contract is formed outside of Australia. There may be significant underpayment claims arising if it is later established that the worker is an Australian-based employee and therefore entitled to the rates and benefits of a modern award.

Contact us

If you are an employer seeking advice on offshore workers, please contact a member of our Workplace Relations group.

_References

<sup>1. Pascua v Doessel Group Pty Ltd [2024] FWC 2669 at [22]
2. Pascua v Doessel Group Pty Ltd [2024] FWC 2669 at [26]
3. Doessel Group Pty Ltd v Joanna Pascua [2025] FWCFB 43 at [47]
4. Doessel Group Pty Ltd v Joanna Pascua [2025] FWCFB 43 at [53]</sup>