International Employment Contracts

In an era of globalisation and remote work, businesses frequently employ workers across jurisdictional borders, leading to complex employment law challenges. Australian companies that operate overseas, and international organisations that employ workforces on Australian soil need to understand these legal implications. This article focuses on the jurisdictional issues involved in international employment contracts.

Legislative framework

In Australia, the cornerstone of employment law is the Fair Work Act 2009 (and the attendant Fair Work Regulations 2009). This law applies across the national workplace relations system, but in some instances, it also applies outside this system and beyond the borders of Australia. The Fair Work Act applies to almost all Australian employees, as long as the employee primarily works within the country for an Australian employer. The Fair Work Act applies in all circumstances except when:

• the employer engaged the employee outside Australia and its external Territories; and
• the employee was engaged to perform duties outside Australia and its external Territories.

In other words, the two crucial elements in determining the applicability of the law are the location where the employment agreement is made, and the location where the employee is expected to perform their duties. In Gautam Parimoo v Lake Resources N.L. [2023], the applicant was a U.S. citizen born in India, recruited by an Australian public company to work as a Project Director in an Argentinian lithium mine. The employer’s principal office was in Sydney. The recruitment was arranged through several online interviews between the prospective employee (who attended from overseas) and company employees (who attended from Australian cities). The worker signed the employment agreement electronically. Notably, the contract stated that the employment was to be governed under the laws of New South Wales, Australia.

When the worker’s employment was terminated, he lodged a general protections application with the Fair Work Commission (FWC). In response, the company raised a jurisdictional objection on the basis that the worker was not an Australian-based employee and had no entitlement to the “general protections” provisions of the Fair Work Act.

The FWC considered whether the worker was “engaged outside Australia” and therefore fell outside the jurisdiction of the Act. According to the Electronic Transactions Act 2000, electronic communication is dispatched at the place where the originator has its place of business and received where the addressee has their place of business. Subsequent case law has adopted the view that contracts are formed at the location where the employer receives the acceptance email (e.g. Australian Competition and Consumer Commission (ACCC) v Valve Corp (No 3)). In Parimoo, the FWC ruled that the employment offer was only accepted when this acceptance was communicated to the employer in Canberra. As the employment contract was made in Australia, the applicant was an Australian-based employee employed by an Australian employer. Accordingly, the employee did have a jurisdictional claim to general protections before the FWC.

The FWC’s decision denotes a significant expansion in the scope of the Fair Work Act’s jurisdiction over overseas employees engaged by Australian employers. An employee who was never based in Australia or performed work in the country may still be entitled to claim protections under Australian law.

International employment contracts

Australian workers and organisations should carefully look at potential safeguards when engaging in cross-border employment. Before signing a contract, both parties should agree on the law that will govern the contract (with a “choice of law” clause) and which tribunal or court should have jurisdiction to adjudicate a contractual dispute (with a “choice of jurisdiction” clause).

The choice of law clause is especially important in international employment contracts, as it sets the guidelines for employment entitlements and protections. The specification should be as precise as possible, such as ‘this contract is governed by the law of Victoria’, rather than merely ‘Australian law applies to this agreement’. A choice of jurisdiction clause is a separate but equally important inclusion, selecting the legal institution (such as a tribunal or court) that will be the decision maker in the event of a dispute. For example, the contract may state that ‘in case of a dispute under this agreement, the parties agree to submit to the exclusive jurisdiction of the Supreme Court of Victoria’. Businesses will often take the opportunity to stipulate that employees must first submit to alternative dispute resolution to try and resolve these disputes. In such cases, the contract may specify the forum for dispute resolution, the duration allowed for attempting dispute resolution, and whether the parties are obligated to accept the decision of the alternative dispute resolution authority.

Companies that operate in multiple countries encounter a broad range of legal issues such as local employment laws, international labour standards, expatriate employment contracts and compliance with multinational regulatory requirements. Companies need to be able to have confidence that their employment systems operate lawfully around the world. Go To Court Lawyers can assist employers with all employment law matters. Please contact our offices on 1300 636 846.