Outsourced but Not Outside the Law: the Pascua Case

In this era of growing technological and economic integration, the modern workplace is no longer confined to national boundaries. Businesses are increasingly choosing to outsource various roles such as administrative work or marketing to foreign markets where workers can be engaged at a significantly lower cost. While these decisions can offer clear financial benefits, they also raise complex legal questions particularly around the nature of the relationship between the company and the worker and the entitlements, if any, that the worker may have under Australian law.

These issues were central to the recent decision by the Fair Work Commission’s (FWC) in Ms Joanna Pascua v Doessel Group Pty Ltd [2025] FWC 1833. Whilst the decision itself is an application for an unfair dismissal remedy, Ms. Joanna Pascua, had to first seek leave from the FWC for approval prior to making such a claim. This was heard by the FWC inJoanna Pascua v Doessel Group Pty Ltd [2024] FWC 2669 and the subsequent appeal application heard by the Full Bench in Doessel Group Pty Ltd v Joanna Pascua [2025] FWCFB 43.

This article focuses on the initial application made by Ms Pascua and the subsequent appeal and examines the significance of the characterisation of the contractual relationship between a worker and a business and its role in determining the employer’s potential legal liabilities.

Facts

1. Ms Joanna Pascua (the Applicant) is a Philippine national who lived and performed work in the Philippines as a legal assistant for the company, Legal Practice Holdings Group Pty Ltd trading as MyCRA Lawyers (the Company).
2.  MyCRA Lawyers operates in Queensland and represents itself as Australia’s only specialist credit repair lawyers. Ms Pascua performed work remotely for the company pursuant to a contract that she had with the respondent, Doessel Group Pty Ltd (the Respondent).
3. Pursuant to the Contract titled ‘Independent Contractor’s Agreement’ which commenced 21 July 2022, the Applicant was to perform paralegal work for the Company. She was expected to work during times that matched business hours in Australia, was allocated files by email each day, and was expected to liaise with clients and banks and other credit agencies on behalf of the clients. She also had to meet key performance indicators such as four hours of billable per day, or adding $2000 in disbursements per day.
4. The Applicant also had an email address with the Company’s domain name and a signature block on her emails which identified her as a paralegal for the Company. Within 12 months of her commencement she was performing unsupervised work and also was training others. The Applicant was paid at an hourly rate of $18.00 and the maximum time she could claim was eight hours a day across five days. Of the 83 invoices that she had submitted during her engagement with the Company, 55 were for payment for the maximum 40 hours of work.
5. On 20 March 2024, the Applicant was terminated. The Applicant asserted that during the last few months prior to the termination, the Company’s principal became increasingly critical, set unreasonable expectations and refused to approve overtime. The Applicant was then terminated on the basis that she had unlawfully copied company information and client information to her personal drive and thus had breached her contract. The Applicant denies that such conduct happened and claims that if such claims are true, then her computer was accessed remotely by someone else who engaged in the conduct.
6. Accordingly the Applicant contends that she was an employee and was unfairly dismissed. Conversely, the Respondent maintains that the Applicant was an independent contractor and thus was not eligible to access the unfair dismissal regime.

The Issues at Hand:

The primary question at hand before the FWC was whether the Applicant was entitled to access the unfair dismissal regime. This gave rise to two threshold questions:

1. Whether the Applicant should be considered an independent contractor or an employee; and
2. If an employee, would the Applicant fall under the definition of a national system employee?

Independent Contractor or Employee

In determining the nature of the relationship, Deputy President Slevin applied the principles set out by the High Court in CFMMEU v Personnel Contracting Pty Ltd [2022] HCA 1 (Personnel Contracting) and ZG Operations Pty Ltd and Jamsek [2022] HCA 2 (Jamsek).

The Principles in Personnel Contracting and Jamsek

The decisions in Personnel Contracting and Jamsek found that if there is a valid, comprehensive and written contract which is not a sham or otherwise altered, then the nature of the relationship must be determined with reference to the contract alone. This means that it is irrelevant whether the subsequent conduct that follows from the contract is consistent with the terms of the contract.

In assessing the contract, the High Court stated that there are two key factors which often help identify the relationship.

• How much control the alleged employer has over the worker; and
• Whether the worker is operating their own business or working as part of the employer’s business.

Other relevant considerations included the provisions in the contract that relate to remuneration, provision and maintenance of equipment, the obligation to work, the hours of work and the provision of holidays. The High Court also found that the use of labels is not definitive and that ultimately due regard needs to be had to the entire contract.

The Current Test to Assess the Nature of the Relationship

It is important to note that, although the applicable test at the time of the decision at first instance was that set out in Personnel Contracting and Jamsek, this has since been overridden by s 15AA of the Fair Work Act 2009 (Cth) (the Act), which came into effect on 26 August 2024. Under this new provision, the determination of whether a worker is an employee or an independent contractor must consider the contract but also the totality of the working relationship and how the contract is performed in practice.

Since s 15AA of the Act was not in force at the relevant time, Deputy President Slevin applied the principles in Jamsek and Personnel Contracting, and found that the Applicant was indeed an employee. This was due to a variety of factors including:

• Her email and email signature indicated that she was furthering the work of the Company;
• She was conducting administrative tasks, following up with clients and performing ad hoc duties which suggests that she is an employee of an organisation rather than running her own enterprise;
• She had key performance indicators and was required to complete work within specified timeframes which suggests a level of control that is consistent with employment; and
• The fact that her hourly rate of $18.00 was not only less than the award prescribed casual rate for a level 2 employee of $30.95 but if she was a contractor, her remuneration would be well in excess of the award.

Ultimately, her work was subordinate to the business of the Company and “it can be seen to have been performed as an employee of that business rather than as part of an independent enterprise conducted” by the Applicant. Upon the application to appeal, the Full Bench of the FWC agreed with the assessment by Deputy President Slevin and found that there was no error in the overall assessment. Thus, the Applicant was found at first instance and later on the application to appeal, to have been engaged as an employee rather than as an independent contractor.

Was the Applicant a National System Employee?

The Applicant worked in the Philippines. The Applicant had never relevantly visited or performed work in Australia. This is relevant because it raises doubt as to whether she is a national system employee as, pursuant to section 380 of the Act ), the unfair dismissal regime only applies to national system employees.

At the first instance, the Deputy President invited submissions on this point however, the Respondent was content to rely on its argument that there was no employment and thus the issue does not arise. In the absence of argument to the contrary, the Deputy President was satisfied that the Applicant was a national system employee.

Upon the application to appeal, the Full Bench of the FWC conducted further analysis as to this issue. The Full Bench found that the Respondent is without doubt a national system employer. Whilst the Full Bench found that it should logically follow that the Applicant, as an employee of the Respondent, is a national system employee it did not provide a conclusive answer.

The Full Bench also provided further commentary about the territorial limits of the Act.

Regulation 1.15F(5) of the Fair Work Regulations 2009 (Cth) extends the unfair dismissal regime to any Australian-based employee in relation to the Australian employer without territorial limitation. The definition of an Australian based employee can be found in s 35 of the Act.

35 Meanings of Australian employer and Australian-based employee

(2) An Australian-based employee is an employee:

(a) whose primary place of work is in Australia; or

(b) who is employed by an Australian employer (whether the employee is located in Australia or elsewhere); or  

(c) who is prescribed by the regulations.

(3) However, paragraph 2(b) does not apply to an employee who is engaged outside Australia and the external Territories to perform duties outside Australia and the external Territories.

The question before the Full Bench was whether section 35(3) applied. The Full Bench identified that there were two limbs to section 35(3) that needed to be satisfied.

1. Firstly that the employee was engaged outside of Australia and the external Territories; and
2. Secondly, that the duties were performed outside of Australia and the external Territories.

The second limb was uncontroversial as although the Applicant’s work concerned clients of the business in Australia, her work was performed entirely outside of Australia. The key issue was whether the Applicant had been engaged outside of Australia.

The Full Bench referred to various decisions and affirmed the comments by His Honour in Cohen v iSoft Group Pty Limited [2012] FCA 1071 and found that the location of the formation of the contract conforms to the ordinary meaning of the word engaged.

In other words, a worker will be found to have been engaged in Australia if the contract was formed in Australia. The Full Bench also found that the formation of a contract occurred upon receipt by the offeror of communication of its acceptance by the offeree. Thus, if certain logical inferences were made, the Applicant would have been found to have not been engaged outside Australia.

Ultimately the Full Bench did not make a definitive finding and declined to grant permission to appeal on this jurisdictional issue. The Full Bench held that although the matter is important, it was not in the public interest to grant permission to appeal.

For the purposes of the Applicant though, the unfair dismissal claim could still proceed and in Ms Joanna Pascua v Doessel Group Pty Ltd [2025] FWC 1833 the Deputy President the Deputy President found that the Applicant had indeed been unfairly dismissed and was entitled to compensation amounting to 15 weeks’ pay.

What does this mean for you?

The Pascua case underscores the importance for Australian businesses to accurately characterise their relationships with offshore workers. If the practical and contractual circumstances indicate that the worker is an employee, then the employer may face liabilities under Australian employment law even if the worker is based entirely overseas.

Although the Pascua case deals specifically with unfair dismissal, the fact that she was able to access the unfair dismissal regime may carry broader consequences for Australian employers who engage overseas workers. It means that not only are overseas workers potentially entitled to the protections of the unfair dismissal regime, but if classified as an Australian based employee, they may also be entitled to the National Employment Standards, minimum wages and other award conditions.

While this is an interesting point to note, this was not the subject of the Applicant’s current action and would likely need a separate Federal Court or Federal Circuit Court action.

In light of this, whether you are engaging offshore workers or even independent contractors within Australia, we recommend that you review your contracts and ensure that both the contract and the subsequent conduct accurately reflect an independent contractor relationship.

If you require any assistance with any of the issues described in this article or other employment matters, please contact Michael Bishop, Amelita Hensman or Mark Stephen of our Employment Law Team.