Overseas posts: does Aussie employment law apply?


Overseas posts: does Aussie employment law apply?

Does Australian employment law apply if an employee is posted overseas? Paul Munro explains.


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Does Australian employment law apply if an employee is posted overseas?

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 head office. The employee has questioned whether employment entitlements such as annual leave, personal/carer’s leave and long service leave will continue to apply.

As the employee won't be employed in Australia, we presumed the minimum employment conditions under the Fair Work Act would not apply. However, the company has received advice that the working arrangement may still be subject to Australian employment law. This seems odd considering the employee will not be performing work in Australia.

Would Australian employment law ‘follow’ the employee and regulate his employment conditions in the United States?

A This issue is subject to some conjecture. In this case, it is not indicated whether the transfer is a permanent placement overseas or a secondment. It is important to clarify the question of which jurisdiction regulates the employee’s future employment conditions as it may be a major factor in whether 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:
  • whether the employee is reporting to or taking direction from management in Australia
  • whether the employee has regular business trips to Australia and, if so, whether this is 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 an employee has completed the minimum period of continuous service with an employer (seven years). However, in NSW, if an 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 that if an 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.

The bottom line: Employers should assess each circumstance as there is not necessarily a general advice that applies across the board with respect to Australian employees moving overseas to a related employer. If in doubt, an employer should seek legal advice, particularly with respect to preparing and drafting the necessary contractual documents.

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