A Fair Work Commission ruling has shown that using offshore talent won’t absolve advice practices of any obligations under Australian employment law.
A recent FWC case ruled in favour of an offshore worker’s case regarding unfair dismissal. The Applicant, Joanna Pascua, lived in the Philippines and worked remotely as a legal assistant for MyCRA Lawyers, performed under a contract she had with Doessel Group.
Pascua alleged that she was unfairly dismissed by Doessel Group. Doessel objected to the application on the basis that Pascua was not dismissed because she was not an employee but rather an independent contractor. The decision from the Fair Work Commission was that Pascua was an employee.
According to the Fair Work Commission, tasks identified as “administration” and “ad hoc duties as required” suggest employment. This sets a clear precedent for advice businesses hiring offshore workers to do back-office tasks such as administrative duties.
Outsourcing, especially for back-office and administrative tasks, is becoming increasingly popular with advice firms due to its benefits, but the risks involved with outsourcing can be overlooked.
Australian owned, Philippines-based outsourcing company Vital Business Partners chief executive Nathan Jacobsen tells Professional Planner that while outsourcing has become an effective alternative for advice practices the case highlights the risks that come with not relying on proper due diligence.
“A lot of these conversations [about outsourcing] people think are actually cost decisions, but for a lot of advice practices, they’re actually making a talent decision because they can’t get [workers] in Australia,” Jacobsen says.
Advice businesses usually choose one of two models when outsourcing. Some choose to hire people directly, especially when starting to outsource.
“A lot of advice practices would partner with a company like VBP…some firms go direct,” Jacobsen says.
“It’s quite common that when practices start out, they want guidance around how to make it work, but as they become more confident and familiar with the model there’s a temptation to start entering into direct arrangements.”
Jacobsen says that regardless of which model advice businesses choose when outsourcing, they must not overlook the risks that come with it.
“Whether you go with a partner like VBP or you go direct, we’re just urging people to consider all these risks and be managing them, because the alternative is these sort of cases where consumers and advisers or Australian businesses are impacted by not managing these risks,” Jacobsen says.
Jacobsen says that firms that go direct are often doing so because they can either save money or offer more to the person due to not having to cover the overhead of an intermediary making the arrangement.
However, the benefit of paying a provider means hedging against potential legal risks.
“The benefits of partnering with an Australian company with on-the-ground operations is that these risks are managed for the practice, at scale and to a high standard, protecting both the advice practice and the offshore people,” Jacobsen says.
These aforementioned risks include local taxation laws, business continuity and ethical treatment of offshore workers.
“Not only have you got the risk that as a contractor, they may be considered an employee, as this case has highlighted, there’s also risk to manage around taxation,” Jacobsen says.
“You don’t know whether this person that you’re contracting is paying their taxes, so you may be actually facilitating non adherence to the taxation laws of the country you’re working with.”
Furthermore, advice businesses need to be conscientious that outsourced hires are treated as part of the team and treated the same as an Australian employee, even if they are working from another country.
Advice businesses must ensure they treat all outsourced workers ethically.
“There are risks around ethical treatment, so Modern Slavery Act, reporting, obligations, medical, health insurance, workplace services. Are they working in a safe environment? You don’t know any of these things if you’re contracting them directly,” Jacobsen says.
Another major risk that advice businesses need to manage is the cyber security risk if they hire offshore workers.
“What are the risks of cyberattacks or breaches, and breaches of the Privacy Act, client data? How are all those things being protected, the risks that have to be managed, and also validity of insurance.”
