Unfair dismissal and redundancy; overseas employees

The following extract from decision of a senior member of the Fair Work Commission is very interesting, particularly in its analysis of the extra territorial application and reach of the Act for example in its application to employees employed overseas. An “Australian” flavour or connection is required.

“(i) The Geographical Objection

[56] The Respondent accepted that it is a national system employer by reason of section 14(1)(a) of the Act. It submitted, however, that the Applicant is not to be regarded as a national system employee. Section 13 of the Act provides:

“A national system employee is an individual so far as he or she is employed, or usually employed, as described in the definition of national system employer in section 13, by a national system employer, except on a vocational placement.”

[57] The Respondent submitted the Acts Interpretation Act 1901, as in force on 25 June 2009, applied to the Act. It submitted (as noted below, incorrectly) “At that time (and now), section 21(1)(b) of the Acts Interpretation Act 1901 provided” (emphasis added):

(1) In any Act, unless the contrary intention appears:

(b) references to localities jurisdictions and other matters and things shall be construed as references to such localities jurisdictions and other matters and things in and of the Commonwealth.

[58] The effect of section 21 of the Acts Interpretation Act 1901 is that it limits the territorial application of Commonwealth legislation to matters and things that occur “in and of” the Commonwealth of Australia. The Respondent submitted that this limitation must be applied to section 13 of the Act so that references to an individual’s employment are construed as references to employment “in and of the Commonwealth.”

[59] The Respondent noted that Section 34(3) of the Act provides that operation of the Act can be extended by regulation to areas outside the territorial limits of the Commonwealth, but only in relation to an “Australian employer” and an “Australian-based employee.” The term “Australian-based employee” is defined by ss.35(2) and (3) of the Act. The operation of the unfair dismissal provisions of the Act are given extra-territorial extension by r 1.15F(5) of the Fair Work Regulations 2009 (FW Regulations).

[60] The Respondent submitted that:

(a) Because of section 21(1)(b) of the Acts Interpretation Act 1901, the Applicant is not to be regarded as a “national system employee” because notwithstanding the fact that the Respondent is domiciled in Australia, the employment relationship has an insufficient connection with Australia to regard the Applicant’s employment as being “in and of the Commonwealth” and hence the Applicant is not to be regarded as a “national system employee;” and

(b) The applicant does not meet the definition of an “Australian-based employee” because he was engaged outside Australia to perform duties outside Australia (see section 35(3)), and so the extra-territorial extension of the Act facilitated by r 1.15F(5) of FW Regulations does not operate to extend the operation of the Act to the Applicant’s employment.

…………………………………………………(b) The Geographical Objection

[72] Part 3-2 of the Act deals with unfair dismissal. Section 380 of the Act provides that references to ‘employee’ and ‘employer’ in Part 3-2 of the Act are to be taken to mean ‘national system employees’ and ‘national system employers’ respectively. However, s.34(3) and (3A) of the Act provide:

34 Extension of this Act beyond the exclusive economic zone and the continental shelf

Extensions prescribed by regulations

(3) Without limiting subsection (1), if the regulations prescribe further extensions of this Act, or specified provisions of this Act, in relation to all or part of the area outside the outer limits of the exclusive economic zone and the continental shelf, then this Act, or the specified provisions, extend accordingly to:

(a) any Australian employer; and

(b) any Australian-based employee.

(3A) For the purposes of extending this Act in accordance with subsection (3):

(a) any reference in a provision of this Act to an employer is taken to include a reference to:

(i) an Australian employer; and

(ii) an employer of an Australian-based employee; and

(b) any reference in a provision of this Act to an employee is taken to include a reference to:

(i) an employee of an Australian employer; and

(ii) an Australian-based employee.

[73] Regulation 1.15F(5) of the FW Regulations relevantly provides:

1.15F Extension of Act beyond the exclusive economic zone and the continental shelf

(5) For subsection 34(3) of the Act, Part 3-2 of the Act, and the rest of the Act so far as it relates to that Part, are extended to an Australian-based employee in relation to the employee’s Australian employer in relation to all of the area outside the outer limits of the exclusive economic zone and the continental shelf.

Note: Part 3-2 of the Act relates to unfair dismissal.

[74] Section 35 of the Act defines ‘Australian employer’ and ‘Australian-based employee’:

35 Meanings of Australian employer and Australian-based employee

(1) An Australian employer is an employer that:

(a) is a trading corporation formed within the limits of the Commonwealth (within the meaning of paragraph 51(xx) of the Constitution); or

(b) is a financial corporation formed within the limits of the Commonwealth (within the meaning of paragraph 51(xx) of the Constitution); or

(c) is the Commonwealth; or

(d) is a Commonwealth authority; or

(e) is a body corporate incorporated in a Territory; or

(f) carries on in Australia, in the exclusive economic zone or in the waters above the continental shelf an activity (whether of a commercial, governmental or other nature), and whose central management and control is in Australia; or

(g) is prescribed by the regulations.

(2) An Australian-based employee is an employee:

(a) whose primary place of work is in Australia; or

(b) who is employed by an Australian employer (whether the employee is
located in Australia or elsewhere); or

(c) who is prescribed by the regulations.

(3) However, paragraph (2)(b) does not apply to an employee who is engaged outside Australia and the external Territories to perform duties outside Australia and the external Territories.

[75] It follows that for the Applicant’s application to be within jurisdiction, I must find that The Respondent was an Australian employer and also that the Applicant was an Australian-based employee. I note the Respondent accepts that it is an Australian employer.

[76] I reject the Respondent’s submission that s.21 of the Acts Interpretation Act 1901 limits the territorial application of Commonwealth legislation to matters and things that occur “in and of” the Commonwealth of Australia, or that it applies to s.13 of the Act so that references to an individual’s employment are construed as references to employment “in and of the Commonwealth.” The Respondent referred to the text of the Acts Interpretation Act 1901 as it existed in 2009. The full text of s.21 of the Acts Interpretation Act 1901 as it exists at the present time is as follows:

Office etc. means office etc. of the Commonwealth

(1) In any Act:

(a) references to any officer or office shall be construed as references to such officer or office in and for the Commonwealth; and

(b) references to localities jurisdictions and other matters and things shall be construed as references to such localities jurisdictions and other matters and things in and of the Commonwealth.

(2) In this section:

“office” includes a position occupied by an APS employee.

“officer” includes an APS employee.

[77] The words “unless the contrary intention appears” that were previously included in sub-section (1) were removed from s.21 by Acts Interpretation Amendment Act 2011. That removal did not, however, have the effect of prescribing disregard of contrary intentions expressed in other legislation. While the Acts Interpretation Amendment Act 2011 removed the phrase “unless the contrary intention appears,” or similar wording, from numerous provisions of the Acts Interpretation Act, 5 it inserted at s.2(2) what was described in the Explanatory Memorandum to the Acts Interpretation Amendment Act 2011 as a “general ‘contrary intention’ provision qualifies all relevant provisions of the Acts Interpretation Act.”

[78] Sections 33 and 35 are explicit provisions in the Act which extend it extra-territorially to Australian ships, Australia’s exclusive economic zone, the waters above the continental shelf and by regulation to Australian employers and Australian based employees. 6 Those sections, together with Regulation 1.15F(5), express a clear intention to extend the operation of the Act in unfair dismissals beyond the exclusive economic zone and the continental shelf for Australian based employees.

[79] Regarding the Respondent’s second submission, because the Respondent accepts that it was an “Australian employer” as defined, it follows that the Applicant fell within s.35(2)(b) of the Act. However, the question is whether the Applicant was engaged outside Australia to perform duties outside Australia, and so is excluded by the operation of s.35(3) of the Act from the scope of the definition of an “Australian-based employee.”

[80] The relevant focus in the determination of the relevant connection for the purposes of s.35 of the Act is on the employment relationship between the Applicant and the Respondent. As Buchanan J found in Fair Work Ombudsman v Valuair Ltd (No 2): 7

I accept the respondents’ contention that the FW Act and the Award apply to employment relationships rather than simply to particular work, so that it is necessary first to identify an appropriate connection linking the employment relationship sufficiently with Australia. In my view, the applicant’s approach ignored the overall employment relationship and the contractual setting which underpinned it and should not be accepted.

[81] The exclusion in s.35(3) has two limbs, both of which must be satisfied in order for the exclusion to operate. The first is that the employee is “engaged outside Australia and the external Territories.” The second is that the engagement is to “perform duties outside Australia and the external Territories.” Regarding the meaning of “engaged,” in Munjoma v Salvation Army (NSW) Property Trust. 8 Vice President Hatcher held:

“An approach which has the first limb of the exclusion referring to the location of the formation of the employment contract gives it separate and distinct work to do. It conforms to the ordinary meaning of the word “engaged”. And because an employment relationship formed in Australia between an Australian employer and a person located in Australia at that time can be characterised as having a “substantial connection to Australia”, it conforms to the intention of the legislature as stated in paragraph 168 of the explanatory memorandum.

[82] The Applicant was initially contracted to work for the Respondent in Australia. No new employment contract was executed when the Applicant moved to Israel. 9 Notwithstanding his move to Israel, the Applicant continued to be paid by the Respondent in Australia, with deposits being made to his Australian bank account. Throughout his employment the Applicant remained on the Respondent’s Australian email list.

[83] It was in response the questions regarding the Applicant’s connection with Australia while working in Israel that the candid and honest answers of Mr Chau most assisted the Commission. They included the following exchanges:

“Why does it matter for the purpose of talking about my connections with Australia, whether I actually had face-to-face encounters with clients or I was doing behind the scenes work for them?  How does that change things in terms of my connections with Australia?

THE WITNESS:  I don’t know; I can’t answer.  From my perspective, I can only say your role is part of maintenance work over Australian products or products that we sell in Australia.  That’s all I can say.  I don’t know what the legal ramification of that.

That’s all right, thank you.  You mentioned that some of my work was not for Australia, which is true.  Was I the only one from the development team that, from time to time, was assigned tasks that were not related to Australia?—No, we rotate those tasks across the entire team as we need to.” 10

[84] I consider that there was a substantial connection between the Applicant’s employment and Australia. The contract of employment in existence throughout the Applicant’s employment was that contract entered into when he was an employee of the Respondent based in Australia. He was clearly part of the Australian team of the Respondent, and performed maintenance over Australian products or products sold in Australia. Due to the nature of the work performed by the Applicant, he was able to perform that work from Israel, and the Respondent allowed him to perform the work from Israel. The Applicant was an Australian based employee as defined by s.35(2) of the Act, and the Respondent’s geographical objection is rejected.”

Shur v Innovit Australia Pty Ltd  [2021] FWC 830 delivered 16 February 2021 per Cross DP