By Robert Brough B. Juris, LL.B (Hons), MBA – CEO Healthscope-Agility
As the founder of a Philippine-based remote staffing agency, I’ve witnessed firsthand the benefits and pitfalls of directly hiring Filipino professionals for offshore clients. The recent landmark ruling by Australia’s Fair Work Commission in Doessel Group Pty Ltd v Joanna Pascua shines a spotlight on serious risks that extend far beyond Australia—and straight into employee-friendly jurisdictions like California and New York.
What Happened in Australia
In a groundbreaking decision, the Fair Work Commission ruled in favor of Joanna Pascua, a Filipino paralegal who worked remotely for Australian law firm Doessel Group. Though she lived and worked in the Philippines, she was hired directly by the Australian company as an “independent contractor.” Despite this classification, the Commission found that the true nature of her work resembled that of an employee—she worked fixed hours, performed core business functions, and was under the firm’s direct supervision.
Crucially, the Commission emphasized that because Joanna was not hired through a Philippine company, she was excluded from the protections of Philippine labor law—such as minimum wage, severance, and statutory benefits. At the same time, her “contractor” status in Australia denied her those rights under local law as well.
The court determined this left her in a legal void, without access to basic employment protections in either country. To resolve this, the Commission applied Australian labor standards, granting her full employee rights, including minimum wage, back pay, and protections against unfair dismissal.
This decision sets a powerful precedent: when workers are directly engaged by a foreign business, courts may step in to ensure they aren’t left unprotected by both local and foreign labor regimes.
How This Applies to Other Employee-Friendly Jurisdictions
Other employee-friendly jurisdictions in the United States such as California and New York also adopt broad definitions for employment. Courts in these states scrutinize actual work relationships—not just contracts.
- California’s ABC test: To classify someone as an independent contractor, you must prove (A) they’re free from your control, (B) they perform work outside your usual business, and (C) they’re properly licensed or independently engaged. Remote Filipino hires often fail parts B and C.
- New York’s multi-factor test: Focuses on control, integration, who sets hours, and degree of economic dependence—strikingly similar to the Australian evaluation.
Result? A Filipino worker in California or New York, working under the same conditions as Joanna, could successfully claim employee status and sue for wage violations or wrongful termination under state law.
Risks for Offshore Businesses
Retrospective liabilities
Misclassified workers might claim back-pay—including minimum wage—or file wrongful termination suits. In CA and NY, penalties can extend 3–6 years back.
Risk of unfair dismissal
Terminating a remote worker without proper cause doesn’t insulate you from legal claims, as shown in Pascua’s case—these claims can stretch years after the end of engagement.
Class-action exposure
When many remote workers are hired similarly, a single precedent could spark class-wide legal actions targeting offshore teams.
Brand and reputational risk
Courts and media may portray offshore hiring—even at local-standard rates—as exploitation. The Pascua ruling triggered strong negative coverage despite her wages being double the local average.
Safer Alternatives
At Healthscope-Agility, we help clients structure hiring to avoid these pitfalls – by hiring through us we legally employee the staff you need and “lease” them to you at a single monthly rate. This not only saves you up to 80% of your onshore cost for an equivalent level of talent, we also act as a cut-out against the potential liability exposed in the Pascua case. Other options you could consider include:
Employer of Record (EOR)
Hiring through a Philippine-registered EOR allows your business to purchase services from a local entity—removing direct employment ties and associated liabilities.
Foreign subsidiary model
Establishing a local company and hiring through it aligns employment with local laws, ensuring proper compliance while maintaining control—though it requires setup and overhead.
Robust contractor arrangements
If you must hire directly, avoid tight integration: engage multiple clients, allow flexible hours, focus on deliverables instead of time, and minimize managerial control.
Final Thoughts
Joanna Pascua didn’t just win for herself—she created a legal template that other offshore workers can follow. Her victory teaches that substance always outweighs form—independent contractor labels won’t hold up if the work looks like employment in practice.
If you’re an offshore business owner, it’s time to reevaluate your remote staffing strategy:
- Review all engagements for risks of misclassification.
- Consult legal counsel familiar with California, New York, and Philippine employment laws.
- Engage a compliant hiring structure—whether that’s an EOR, local subsidiary, or properly structured independent contractor model.
Your remote team deserves respect—and your business deserves protection. Let’s build both together.
Want to dive deeper into safe remote staffing models? Reach out to explore tailored, compliance-first solutions for building your offshoring strategy.
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