Employee & Industrial Relations Alert

Australian employment laws apply to any employee ‘in’ Australia

Multinational employers which have employees performing work in Australia need to consider Australian employment laws when proposing to employ, to change the terms of contract, or to dismiss an employee regardless of where the employment contract is made. The law of the contract and the nationality of the employee are not relevant. We outline a recent case that demonstrates how Australian employment laws may have a significant impact for multinational employers and their employees.

Case summary

An employee was employed by a New Zealand company (NZCo). The employer was incorporated and owned solely in NZ. The employee was paid by NZCo and remuneration was paid in NZ dollars into the employee’s NZ bank account.

The employee performed work in both NZ and Australia over an 18 month period. At the time of dismissal, the employee had been working continuously in Australia for approximately 2 months and the primary although not sole place of work during the last 11 months of employment was Australia.

The employee lodged a claim with Fair Work Australia (FWA) alleging that he was unfairly dismissed. NZCo objected to jurisdiction, arguing that NZCo was not a ‘national system employer.’

To be a national system employer, NZCo must be ‘a constitutional corporation, so far as it employs, or usually employs, an individual…’ As a foreign corporation, NZCo was a constitutional corporation. The question FWA needed to decide was whether the employee was employed to perform work ‘in’ Australia.

FWA said that it did not matter in which country the employment contract was formed. What mattered was that the employee was ‘in’ Australia.

This employee could be regarded as ‘in’ Australia, by applying either of the following tests:

• the employee worked in Australia, although not solely in Australia, and his employment was terminated in Australia
• the primary place of work was Australia.

FWA found that by applying either test, the Fair Work Act applied.

Implications for employers

Multinational employers which have employees performing work in Australia need to consider Australian employment laws when proposing to dismiss an employee regardless of where the employment contract is made. The law of the contract and the nationality of the employee are not relevant.

If an employee is employed ‘in’ Australia, rights under the Fair Work Act will apply to the employee. For example, the National Employment Standards (covering leave and other benefits) and Australian ‘awards’ (providing for many other benefits such as penalty rates and allowances) will apply.