Can the Fair Work Act Apply to Overseas Employees? Not Always

For HR leaders and Employers in Australia managing international workforces, one of the most misunderstood questions is this:

When does the Fair Work Act apply to employees working overseas?

A recent Fair Work Commission decision highlights just how critical that question can be and how an unfair dismissal claim can fail before the merits are even considered.

The case: Shehzad v WorleyParsons Engineering Consultancies Co (2025) FWC 3413

In this case, an employee brought an unfair dismissal claim after his employment ended with a Saudi-based subsidiary of an Australian engineering group.

But the Commission never reached the issue of whether the dismissal was harsh, unjust or unreasonable.

Why?

Because the claim failed at the jurisdictional threshold.

The key question was whether the employer was a “national system employer” in relation to this employee under the Fair Work Act 2009 (Cth).

The legal framework: where the issue comes from

Under section 14 of the Fair Work Act, a constitutional corporation, including a foreign corporation, can fall within the national workplace relations system.

However, where work is performed outside Australia, the Commission must determine whether the employment relationship is sufficiently connected to Australia for the Act to apply.

That is not a tick-the-box test. It is a practical, fact-based assessment of the reality of the employment relationship.

What the Commission looked at

The Commission closely examined how the employment operated in practice.

The key findings included:

1. The employee was engaged to work in Saudi Arabia

• He was recruited to work overseas
• He required a visa to work in that jurisdiction
• His day-to-day duties were performed there

This was a strong indicator that the employment relationship was centred offshore.

2. The contract was governed by foreign law

• The employment contract was governed by Saudi Arabian law
• It contemplated duties being performed in Saudi Arabia

This pointed away from any legal connection to Australia.

3. Payment and statutory settings were entirely foreign

• Wages were paid in local currency
• Funds were deposited into a local bank account
• Local tax obligations applied
• There was no superannuation
• There was no connection to Australian workers compensation or payroll tax systems

The Commission treated this as a powerful indicator that the employment was embedded in a foreign employment system.

4. The employee lived overseas

• The employee resided in Saudi Arabia
• He received a living allowance for accommodation and expenses in that country

Again, this reinforced that the centre of gravity of the employment was outside Australia.

5. The Australian connections were minimal

The employee relied on:

• occasional interaction with Australian colleagues
• limited involvement in work on Australian bids and tenders

The Commission accepted those connections existed, but found they were incidental and peripheral.

They did not create a meaningful connection to Australia.

The Commission’s conclusion

Looking at the relationship as a whole, the Commission found:

• the employment relationship was overwhelmingly connected to Saudi Arabia
• any Australian connection was minor and incidental
• the employer was not a national system employer in relation to this employee

That meant the Commission had no jurisdiction to deal with the unfair dismissal claim.

The case ended there.

Why this matters for HR and employers

This decision is a practical reminder that:

1. An Australian parent company is not enough

Being part of an Australian corporate group does not automatically bring overseas employees within the Fair Work Act.

2. Jurisdiction follows the reality of the employment relationship

The Commission will focus on:

• where the work is actually performed
• what law governs the contract
• where the employee is paid and taxed
• what statutory systems apply

3. Small Australian touchpoints will not change the outcome

Working occasionally with Australian teams or projects is not enough to establish jurisdiction.

4. This is a threshold issue

If the connection to Australia is not established:

• unfair dismissal claims fail
• general protections claims may fail
• NES obligations may not apply

In other words, the case may never even get off the ground.

A practical checklist for HR teams

If you have employees working overseas or in foreign subsidiaries, ask:

• Where is the employee actually performing their work day-to-day?
• What law governs the contract?
• Where are wages paid and taxed?
• Do Australian statutory systems apply (super, workers compensation, payroll tax)?
• Is the connection to Australia central or merely incidental?

If the answers point offshore, the Fair Work Act is unlikely to apply.

Final Thoughts

For HR leaders and People & Culture teams, this case reinforces a simple principle:

Jurisdiction follows the reality of the employment relationship, not the logo on the letterhead.

In a world of global workforces, secondments and remote work, this issue is only becoming more important.

Getting the structure right at the start can avoid jurisdictional disputes and litigation risk later.

Also check out the Employment Law Health Check which can help understand risks around both unfair dismissal and  structure.

Also feel free to reach out on 07 4936 9100 or via email to Jonathan Mamaril, Director at jmamaril@southgeldard.com.au.  All Employers receive an obligation free consultation.