Hiring Offshore: Legal and Practical Considerations of Using Overseas Contractors in Australia

Introduction

In a globalised economy, it is now easier than ever to engage with and connect with workers internationally. As such, when growing your business, you may question whether it is beneficial for you to engage and hire workers from overseas.

We would recommend seeking legal advice before starting any hiring process.

This article explores the key legal and practical considerations that should be taken into account by a business when considering hiring offshore contractors.

While not explored in depth in this article, it must be noted that the considerations of determining between an employee and contractor in Australia remain the same when engaging contractors from overseas. Recently, the Fair Work Commission in Pascuav Doessel Group Pty Ltd [2024] FWC 2669 determined that a Philippine-based worker was an employee, not a contractor. We outline the difference between an employee and contractor in another article, available here.

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Advantages and Disadvantages of Hiring Offshore Contractors

There are several advantages and disadvantages associated with hiring overseas contractors.

Advantages include:

• Lower Costs: Hiring overseas may reduce labour costs, particularly when hiring from countries with different currencies and lower wage expectations.
• Access to Specialist Skills: You can often find contractors with highly specialised skill sets for diverse and complex roles that may be difficult to fill if you can only look at the local talent pool.
• Flexibility: Given the ability to work remotely and noting different time zones, overseas contractors can offer flexible working times to suit your needs. For example, you may need contractors to work at night and engaging contractors willing to do this may be easier when they are in a different time zone.

Disadvantages include:

• Lack of control: As the contractors are located overseas, there may be difficulty in supervising and managing the work.
• Miscommunication: Whether it be language barriers or time zone challenges, there may be levels of miscommunications that impact the work being conducted.
• Risks and Disputes: It is important to ensure that your contract clearly states in what country disputes are to be resolved, noting that it can be difficult to bring a claim or action in a different country.

Legal and Practical Considerations

When engaging contractors from overseas to conduct work for Australian businesses, there are several legal and practical considerations that you should turn your mind to. They include:

• Employment laws: The Australian Fair Work Act 2009 (Cth) applies to some overseas workers and as such you should consider whether Australian laws apply to the contractor. You will also need to take into account any local laws that apply to the contractor where they are based.
• Intellectual property: Intellectual property laws vary in each different country and contracting overseas may raise issues in relation to this.
• Taxes and Payroll: You will need to consider how you pay your contractor (i.e. what currency) and consider the potential tax implications that may arise. You should seek accounting advice in this regard.

Each of these considerations can be dealt with by ensuring that you have a clear independent contractor agreement that covers each potential issue that may arise.

Conclusion

The issues raised in this article can be addressed by ensuring that you have a well-drafted independent contractor agreement in place with your overseas contractors.

Your independent contractor agreement should clearly outline the rights and obligations of both parties and address items such as the relevant jurisdiction, intellectual property ownership, dispute resolution and payment terms (amongst other things). Taking these steps will help your business mitigate risk and establish a successful working relationship with your overseas contractors.

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