Navigating The Application Of The Fair Work Act To Overseas Employees

An employee who resided and worked in New Zealand for a Victorian-based employer has been found to be covered by the Fair Work Act 2009 (Cth).

In the recent case of David Sanderson v Brightest Australia Pty Ltd [2026] FWC 1633, the Fair Work Commission found that the application of the Fair Work Act to overseas employees depends upon where the contract was formed and whether the employee is primarily engaged to perform work inside or outside Australia. This case emphasised the importance for small businesses to comply with dismissal procedures and provides insights for employers managing employees working overseas.

Facts

In David Sanderson v Brightest Australia Pty Ltd, an employee who resided in New Zealand worked in a sales role for an Australian employer based in Victoria. The employee’s role involved selling subscription services for Android phones and iPhones to New Zealand customers.

The employment agreement outlined the disciplinary procedures that were to be followed in cases of employee misconduct or poor performance. The agreement also outlined the employee’s performance targets and stipulated that, if the employee failed to meet these targets, the employer was permitted to terminate the employment with one week’s written notice.

The employee failed to meet the set targets but claimed that his inability to do so was due to the poor sales leads generated by the employer, rather than any fault of his own. His employment was terminated with immediate effect and without warning for performance reasons, in breach of the disciplinary procedures contained in the employment agreement.

Application of the Fair Work Act to an employee residing overseas

A key issue before the Commission was whether the unfair dismissal provisions in Part 3-2 of the Fair Work Act applied to the employee, given that he resided and worked in New Zealand. The Commission noted that the unfair dismissal provisions apply to an ‘Australian based employee’ in relation to the employee’s ‘Australian based employer’.

In this case, the employer was an ‘Australian based employer’ under section 35(1) of the Fair Work Act, as it was ‘a trading corporation formed within the limits of the Commonwealth’. However, while an ‘Australian based employee’ includes someone employed by an Australian employer, section 35(3) excludes employees engaged outside Australia to perform duties outside Australia. To determine whether this exclusion applied, the Commission considered two limbs that needed to be satisfied.

First limb of exclusion – engaged to perform work outside Australia

It was clear that the employee was ‘engaged to perform work outside Australia’ as he was a New Zealand resident engaged to sell products in New Zealand. The Commission noted that any work directed to Australian customers was incidental and insubstantial, satisfying the first limb.

Second limb of exclusion – engaged outside Australia

Determining whether an employee is ‘engaged outside Australia’ depends on where the employment contract was formed. The Commission noted that, under the Electronic Transactions Act 2000 (Vic) and the Electronic Transactions Act 1999 (Cth), the place of ‘receipt’ of a document is where the ‘contract is made’.

In this case, the Commission held that acceptance occurred when the employer received the employee’s email accepting the offer of employment. Therefore, the contract was formed in Australia. As a result, the employee did not fall within the second limb of the exclusion, so the exclusion did not apply.

Accordingly, the unfair dismissal provisions in the Fair Work Act were held to apply to the employee.

Whether the employee was unfairly dismissed

As the employer had fewer than 15 employees, they were required to comply with the Small Business Fair Dismissal Code. The Commission determined that the employer had not complied with the Code because the employee was not given any verbal or written warning that he risked being dismissed due to his performance.

Therefore, the Commission needed to consider whether the dismissal was harsh, unjust or unreasonable under section 387 of the Fair Work Act to determine if the employee was unfairly dismissed.

The Commission noted that although the employee’s unsatisfactory sales targets were due to poor-quality leads, it was not commercially justifiable for the employer to continue the employment, providing a valid reason for dismissal. However, the Commission was not satisfied that the employee received any verbal or written warning or an opportunity to respond to the proposed dismissal. Overall, the Commission found that the dismissal was harsh, unjust or unreasonable.

In considering the appropriate compensation, the Commission noted that, had the employee not been terminated, the employment was unlikely to have continued for long due to insufficient sales. Therefore, the employer was ordered to pay the employee an equivalent of two weeks’ gross pay.

Key takeaways for employers

• The Fair Work Act can apply to employees residing and working overseas if the employment contract is formed in Australia and the employee is engaged by an Australian-based employer.
• Employers managing overseas employees should familiarise themselves with how the Fair Work Act applies to these employees to avoid legal risks.
• Small business employers must also comply with the Small Business Fair Dismissal Code by providing employees with clear warnings and opportunities to improve their performance before dismissal.
• All formal disciplinary procedures and warnings should be documented and communicated clearly to employees.

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Cooper Grace Ward is a leading Australian law firm based in Brisbane.

This publication is for information only and is not legal advice. You should obtain advice that is specific to your circumstances and not rely on this publication as legal advice. If there are any issues you would like us to advise you on arising from this publication, please contact Cooper Grace Ward Lawyers.