Can Offshore Staff Claim Unfair Dismissal in Australia? What the 2026 Fair Work Cases Mean for Your Malaysian Team

The short answer: yes, offshore staff can sometimes claim unfair dismissal in Australia, even if they have never set foot in the country. It depends mainly on two things: whether your Australian business is, in law, their employer (whatever the contract calls them), and whether the contract was made in Australia or overseas. Recent Fair Work Commission decisions have turned on exactly these points. A person who works only for you, on your hours, under your direction, is likely to be an employee rather than a contractor. If your Australian company employs them and the contract was formed in Australia - for example, because they emailed back a signed offer you received in Sydney - they may be an "Australian-based employee" with access to Australia's unfair dismissal laws.

For an Australian business with people in Malaysia, the practical lesson is not "find a way around the law". It is to decide deliberately who employs your team member, under which country's law, and to treat them fairly whichever system applies. Malaysia has its own unfair dismissal protections, and they are taken seriously.

This article is general information current as at 18 October 2026, not legal advice. The decisions discussed turn on their facts, some are first-instance decisions, and the law in this area is still developing. Get advice on your own arrangements, particularly before ending anyone's employment.

Three recent decisions every Australian business with offshore staff should know

None of these cases involved Malaysia - all three involved workers in the Philippines - but the Australian law they apply is the same wherever your team member is located.

Read together, they show the questions the Commission asks - and that the outcome can go either way on details many businesses never think about.

What is an "Australian-based employee"?

The Fair Work Act extends some of its protections beyond Australia, including unfair dismissal and general protections, to "Australian-based employees". Section 35(2) of the Act says an Australian-based employee is an employee:

1. whose primary place of work is in Australia; or
2. who is employed by an Australian employer (whether the employee is located in Australia or elsewhere); or
3. who is prescribed by the regulations.

Section 35(3) then carves out an exception: paragraph (b) does not apply to an employee who is engaged outside Australia to perform duties outside Australia. Both parts must be satisfied for the exception to apply.

An "Australian employer" (section 35(1)) broadly includes companies incorporated in Australia and businesses whose central management and control is in Australia. If you run an Australian Pty Ltd, you are almost certainly one.

Why where the contract was signed matters so much

"Engaged" is generally read as where the employment contract was formed. Under ordinary contract principles and Australia's electronic transactions laws, when a contract is accepted by email, it is usually formed where the acceptance is received - not where the worker was sitting when they signed it.

That is why the two Philippines decisions above came out differently. In the BikesOnline matter, the acceptance was received in Sydney, so the contract was made in Australia and the exception did not apply. In the ConnectOS matter, the offer and acceptance passed between people who were both in the Philippines, so the worker was engaged outside Australia to work outside Australia, and the exception did apply.

Think about how a typical Australian business hires someone overseas directly: the owner sends an offer from their Melbourne office, the candidate signs it in Kuala Lumpur and emails it back, and it lands in the owner's inbox in Melbourne. On the reasoning in these cases, that contract may well have been made in Australia.

Calling someone a contractor does not settle it

Both the BikesOnline and Pascua workers had contractor agreements. In both, the Commission looked past the label to how the relationship actually worked: who set the hours, who directed the work, whether the person needed approval to take leave, whether they had performance reviews, and whether they worked only for one business. The BikesOnline worker issued "invoices", but they simply reflected the hours on her timesheet, which the Deputy President said was not consistent with an independent contracting arrangement.

Malaysian law points the same way. Since 2023, section 101C of the Employment Act 1955 presumes a person is an employee where, for example, their manner of work or hours are controlled by someone else, they are provided with equipment, or their work is done solely for that business. We explain this in more detail in our guide to how to hire staff in Malaysia from Australia.

So a full-time, dedicated "contractor" can be treated as an employee in Australia, in Malaysia, or potentially both - with all the entitlements that follow. The Pascua case also showed the cost side: she had been paid A$720 a week for full-time work, below the Australian national minimum weekly wage of A$882.80 that applied when she was dismissed.

Who is the employer? The outsourcing lesson from the ConnectOS decision

The ConnectOS decision is worth reading closely if you use, or are considering, an offshore provider. Three points stand out.

• A foreign-sounding name is not a foreign employer. The provider argued that the worker's employer was a Philippine "Regional Headquarters" and therefore not covered by the Fair Work Act. The President was not satisfied it had a legal identity separate from an Australian company, and found that the Australian company was the employer. The same question can arise anywhere an Australian business operates overseas through a branch or a trading name rather than a separately incorporated local company.
• Directing the work did not make the client the employer. The worker argued that the real employer functions - salary, staffing and operational control - were exercised in Australia by the client's executives. The President found that the client's supervision of tasks under the outsourcing contract did not change who the legal employer was.
• The law may not stay where it is. The President said that, if he had not been bound by an earlier Federal Court decision, he would have read the regulations as extending general protections to anyone employed by an Australian employer, wherever and however they were engaged. He followed the narrower view, but that comment signals the boundary could shift.

If Australian law does not apply, is your Malaysian team member unprotected?

No - and this is the point that some commentary on these cases misses. A person employed by a Malaysian company in Malaysia has real protection under Malaysian law.

• Industrial Relations Act 1967, section 20. A worker who believes they were dismissed "without just cause or excuse" can make a written representation to the Director General of Industrial Relations within 60 days of the dismissal. The Department of Industrial Relations (DIRM) first runs a conciliation meeting. If settlement is unlikely, the Director General refers the case to the Industrial Court, whose award binds both parties.
• Employment Act 1955. This sets out notice, termination and other minimum entitlements, and since 2023 applies to all employees for most purposes. Dismissal for misconduct requires a proper inquiry first.

In practice, ending someone's employment in Malaysia without a genuine reason and a fair process is risky. The aim of getting the structure right is clarity - one employer, one legal system, one clear process that everyone understands - not avoiding obligations.

Checklist: is your offshore arrangement set up properly?

Use these questions to review an existing arrangement or plan a new hire in Malaysia.

1. Who is the legal employer? Name the entity. Is it a company incorporated in Malaysia (a Sdn Bhd), or your Australian company, a branch or a trading name?
2. Is the person really a contractor? If they work only for you, on set hours, using your systems, under your direction, treat them as an employee and employ them properly.
3. Where and how is the contract formed? Who issues the offer, where is it accepted and received, and which country's law governs it? Make this a deliberate decision, not an accident of who clicked "send".
4. Does the contract match reality? A Malaysian employment contract will not help if, in practice, your Australian business is hiring, paying and firing the person directly.
5. Are pay and entitlements correct? Check salary, EPF, SOCSO, EIS, leave and public holidays under Malaysian law. Our guide to what it costs to employ someone in Malaysia sets these out.
6. Who makes and carries out dismissal decisions? Agree in advance how performance concerns are raised, documented and resolved, and who runs the formal process.
7. Is there a fair process? Clear expectations, documented feedback, a genuine chance to improve and, for misconduct, a proper inquiry. This is good management in either country.
8. Have you had advice? If you already engage people overseas directly, particularly on contractor agreements, have an employment lawyer review the arrangement before anything goes wrong.

Questions to ask an offshore staffing provider or EOR

• Which entity will employ my team member, and where is it incorporated?
• Under which country's law is the employment contract, and how and where is it signed?
• Who handles performance management and termination, and how is my business involved?
• Has the provider dealt with Malaysian Industrial Relations Department or Industrial Court matters, and how were they handled?
• What does our services agreement say about responsibility if a claim is made?

Good management matters more than jurisdiction

Almost every dismissal dispute starts with a relationship that has broken down: expectations that were never written down, feedback that was never given, or a decision made quickly over a video call. All three cases above ended in dismissals that the worker felt were unfair enough to take further.

The businesses that rarely face these problems treat offshore team members as part of one team. They set clear expectations in the first 90 days, hold regular one-on-ones, raise concerns early, and keep records. Our article on making your offshore team feel local covers the everyday side of that.

How CMX Co fits

When you build a team with CMX Co, your team member is employed in Malaysia by our Malaysian company, CMX People Sdn Bhd, under a Malaysian employment contract, with payroll, EPF, SOCSO, EIS and HRD Corp handled by us. You choose the person and direct their day-to-day work, and they work only for your business. Our local HR team provides performance support, and if a team member is not meeting expectations and it cannot be resolved through performance management, we will find you a suitable replacement at no additional cost. You can read more about our employer of record and dedicated team services, or see why Australian businesses choose CMX.

An arrangement like this gives clarity about who the employer is and which law applies. It does not replace good management or legal advice on your particular circumstances.

Sources: Federal Register of Legislation, Fair Work Act 2009 (section 35) · AustLII, [2026] FWC 3379 · OnNotice, ConnectOS fails to show a foreign entity was the employer (12 September 2026) · HR Leader, Offshore employee wins 'Australian-based' status in unfair dismissal application (8 October 2026) · AustLII, Doessel Group Pty Ltd v Pascua [2025] FWCFB 43 · Pinsent Masons, Workers outside Australia can access unfair dismissal protections (July 2025) · BAL Lawyers, Offshore workers, Australian rights: lessons from Pascua v Doessel · Hall & Wilcox, Beyond borders: when the Fair Work Act follows your employees overseas (June 2026) · Department of Industrial Relations Malaysia, Dismissal (section 20, Industrial Relations Act 1967) · JTKSM, Employment Act 1955 (Act 265)