Think your offshore team is exempt from aussie laws? Think again

A quiet Facebook post just sent a loud warning to every firm relying on offshore staff

“Is anyone re-thinking their offshoring arrangements after the recent Fair Work decision that offshore employees might be covered by the National Employment Standards?” That single line in a private group sparked a fast-growing thread of accountants and bookkeepers asking the same question:

“If the Fair Work Commission is willing to treat some offshore workers as Australian employees, are we suddenly exposed to unfair-dismissal claims, leave entitlements, super and payroll-tax headaches we never budgeted for?”

Short answer:

yes, you might be.

Long answer: read on, because the rules of the offshoring game just changed.

What actually happened?

In late May the Fair Work Commission (FWC) handed down its decision in

Pascua v Doessel Group

. Joanna Pascua, a Manila-based paralegal, worked remotely for a Queensland credit-repair company on a contractor agreement. When her contract was terminated, she filed an

unfair-dismissal

application with the FWC — and won. The Commission ruled that, despite living overseas, Pascua was an

employee

for the purposes of the Fair Work Act because the company:

• dictated her hours, workload and KPIs

• provided systems access and email credentials identical to on-shore staff

• paid her a flat hourly rate and withheld no local taxes

• expected her to attend virtual team meetings and follow Australian public-holiday schedules.

That finding cracked the long-held assumption that distance alone shields a business from Australia’s industrial-relations regime. Legal commentators are calling it a “turning point” for any company engaging offshore talent directly.

Why this matters to accounting and bookkeeping firms

For most practices, offshoring started as a smart, scalable way to tackle staffing shortages and cost pressures. Hire a Filipino senior accountant or an Indian bookkeeping team, pay them via Wise, give them Xero log-ins and Zoom into the weekly WIP meeting — job done. Under the

multi-factor employment test

the FWC applies, that level of integration looks a lot more like employment than independent contracting. If a similar claim lands on your desk, the Commission may decide that your “contractor” is entitled to:

• Unfair-dismissal protection (including reinstatement or up to 26 weeks’ pay)

• NES leave rights — annual, personal and compassionate leave

• Notice periods & redundancy pay

• The flow-on costs: superannuation, state payroll tax, WorkCover, even long-service leave if they hit the service threshold.

That’s not a theoretical risk. Lawyers are already predicting “tens of thousands” of similar workers could bring claims using the Pascua precedent.

Who’s most at risk?

Engagement model

Control over day-to-day work

Payroll handled by

Relative legal risk

Direct hire / freelancer

You set hours, tasks, KPIs

You (PayPal/Wise)

High

Dedicated staff via BPO or EOR

You manage workload, BPO is legal employer

BPO

Moderate

Project-based outsourcing

Deliverables only, independent scheduling

Contractor invoices

Lower

The danger zone

Firms that

hire individuals directly

– no BPO, no Employer-of-Record (EOR) – and then treat them like internal staff. If you:

• approve their leave

• include them in the team Slack

• require fixed daily hours

• pay them directly from Australia

you’ve ticked nearly every box the Commission looks at when deciding who is an employee.

Five action steps you should take this quarter

1. Audit every offshore engagement

List each worker, their contractual status, how you pay them, who sets their hours and whether you control their workflow. If the relationship looks and feels like employment, assume a regulator will see it the same way.

2. Map your potential liabilities

Use the NES as a checklist: annual leave, personal leave, public holidays, notice, redundancy, parental leave. Then add super, state payroll-tax thresholds and workers’ comp. The numbers get big, fast.

3. Talk to your BPO (or find one)

If you already use a credible BPO:

• Ask for written confirmation that they are the legal employer of record.

• Request a summary of how they handle taxes and statutory benefits in the worker’s home country.

• Check your service agreement indemnities and termination clauses.

Still flying solo? Engage a reputable BPO or EOR provider before the next pay cycle. The margin you save going direct is dwarfed by the downside if something goes wrong.

4. Tighten your contracts & policies

Even with a BPO, review:

• Confidentiality and data-protection clauses

• Intellectual-property ownership

• Dispute-resolution pathways (ideally in the worker’s jurisdiction)

• Clear statements that the worker is not an Australian employee and that local labour laws apply.

Contracts won’t save you if the facts scream “employment”, but they’re a critical first line of defence.

5. Educate your leadership team

Partners and senior managers must understand that

control = risk

. If someone casually instructs an offshore “contractor” to start using our timesheets, clock on at 8 am AEST and join the Friday drinks call, they are inadvertently creating an employment relationship.

What about super, payroll tax and WorkCover?

The Pascua ruling focused on unfair dismissal, but every payroll adviser reading the decision spotted the revenue angle. If a worker is deemed an employee for one part of the Fair Work Act, other regulators may follow.

• ATO & super – The Superannuation Guarantee applies to “employees” under both common law and extended statutory tests. If your contractor primarily provides their labour, you may owe 11.5 % super from 1 July 2025.

• State payroll tax – Most states already include payments to overseas contractors if the service is performed for an Australian business. Expect more audits.

• WorkCover – If the person counts as a worker, the premium authorities will want their slice.

One group member put it bluntly:

“Wait until the states go after payroll tax on offshore wages — it’s a perfect revenue stream.”

Will using a BPO keep you 100 % safe?

No-one can guarantee where case law will land. A BPO adds a strong legal buffer because

they

employ the staff locally, withhold local taxes and provide statutory benefits. In most scenarios the employment relationship sits between the worker and the BPO, not your firm. But:

• The FWC could still examine the triangular arrangement if you exercise significant day-to-day control.

• Some “seat leasing” providers offer limited protection because the worker signs two contracts — one with the BPO, one with you.

• If you terminate the BPO contract and the worker argues it was a sham designed to avoid Australian obligations, you may find yourself back in the Commission.

Due diligence matters. Cheap seat-leasing, mined-out call centres and “virtual assistant” platforms may not withstand legal scrutiny.

What happens next?

Regulators and unions have been looking for a test case to challenge the grey zone of remote work.

Pascua

delivered it. Media coverage is rising, employees are taking notice, and plaintiff lawyers have a new precedent to run with. We’re not predicting the end of offshoring. Global talent is still essential for capacity and cost control. But the

risk-reward equation

has shifted:

• The reward remains: skilled staff, timezone leverage, margin protection.

• The risk is no longer theoretical. It can now be costed — in back pay, penalties and brand damage.

Smart firms will adapt early. The rest will scramble when the first claim letter arrives.

Final word: don’t rely on last decade’s playbook

Five years ago you could hire a virtual senior accountant in Cebu for $4 an hour, pay them via PayPal, and sleep well at night. That comfort blanket is gone.

• Reassess every offshore engagement.

• Strengthen your structures.

• Get legal advice before Fair Work gets you.

Because very soon this won’t be a

“what if?”

. It will be a

“why didn’t we sort this out earlier?”

— and the bill will land on your desk. If you’d like an independent review of your current offshore model, or introductions to BPO providers with robust employer-of-record frameworks, reach out and we’ll point you in the right direction. Let’s raise the bar for how offshoring is done in the accounting industry — before regulators raise it for us.