Overseas jobs: do Australian work laws apply?

Q&A

Overseas jobs: do Australian work laws apply?

If employees at multinational companies accept postings overseas, do they continue to be covered by Australian employment law? Paul Munro explains.

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If an employee accepts a position with our head office in the US, will he continue to be covered by Australian employment law?

This question was recently sent to our Ask an Expert service.
 
Q Our company is a multinational organisation, of which the Australian company is a subsidiary of its American parent. One of our employees has accepted a position at our head office. He has questioned whether employment entitlements such as annual leave, personal/carer’s leave and long service leave will continue to apply.

As the employee will no longer be employed in Australia, we presume the minimum employment conditions under the Fair Work Act will cease to apply when his employment starts at head office. However, the company has received advice that the employment arrangement may still be subject to Australian employment law. This seems odd considering the employee will no longer be performing work in Australia.

In this circumstance, would Australian employment law ‘follow’ the employee and regulate his employment conditions when employed in the United States?
 
A This is an issue subject to some conjecture. In this case, it is not indicated whether this is an acceptance of a permanent placement overseas or a secondment.

It is important to clarify the question of which jurisdiction regulates the employee’s overseas employment conditions as it may be a major factor in whether the offer of employment at head office is accepted.
 
Presuming it is a permanent transfer, the company may wish to structure the arrangement whereby Australian law will no longer apply. For example, if the employee is engaged by an overseas entity (head office would presumably be incorporated in the United States), this could provide a clean break from the Australian subsidiary, which would mean that Australian law would no longer apply. Other factors to be considered could include:
  •  the employee is not reporting to or taking direction from management in Australia
  • the employee does not have regular business trips to Australia
  • any rights to business trips to Australia are at the company’s expense.

 Who is an Australian-based employee?

The Fair Work Act (s35) defines an ‘Australian-based employee’ as an employee:
  • whose primary place of work is in Australia, or
  • who is employed by an Australian employer (whether the employee is located in Australia or elsewhere).
 However, the relevant parts of the legislation will not apply extra-territorially where an employee is "engaged outside Australia and the external territories to perform duties outside Australia and the external territories".

Long service leave

Where an employee leaves Australia in a ‘clean break’ scenario, and moves to work for a related entity overseas, the consequences will usually depend on the particular state or territory long service leave legislation.

For example, in Victoria, termination of employment on departure will trigger a payout if the employee has completed the minimum period of continuous service with the employer (seven years).

However, in New South Wales, if the employee will be employed by a related company overseas, employment with the first employer is deemed not to have been terminated for the purposes of long service leave entitlements and no payout will be triggered. In the case of NSW, this could mean if the employee eventually returns to work with the Australian subsidiary, all service (including service with the American parent) may be recognised for the purpose of long service leave accrual.
 
In the case of a secondment, however, the nature of the relationship with the Australian entity will usually mean no termination of employment occurs; consequently, no payout of long service leave is necessary.

Bottom line

Each circumstance should be examined by an employer as there is not a general advice that applies across the board with respect to Australian employees moving overseas to a related employer. If in doubt, the employer should seek legal advice, particularly with respect to preparing and drafting the necessary contractual documents.

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