Why EOR Might Be Smarter Way Forward for Australian Companies Under the New Contractor Laws
If you work with independent contractors in Australia, you’ve probably already felt the ripple effects of the new Fair Work Amendment (Closing Loopholes) Acts that came into effect on 26 August 2024. These laws have redefined what it means to be an employee versus an independent contractor, and the impact is already reshaping how businesses operate, both locally and offshore.
Under the new rules, what happens day-to-day matters more than what the contract says. Regulators now look closely at how the work is actually performed, who controls it, and how integrated the person is into your business.
In short: what happens day-to-day now carries more weight than what’s on paper.
When “offshore” still feels onshore: Don’t think that distance keeps you safe
A recent case shows just how far these definitions can reach. In Pascua v Doessel (2024 FWC 2669), an Australian law firm engaged a remote paralegal based in the Philippines. Her contract labelled her as an independent contractor, but reality told a different story. She worked Australian hours, received daily task assignments, and was embedded in the firm’s systems and workflows.
When her contract ended, she filed for unfair dismissal and won. The Fair Work Commission ruled that despite being overseas, she was effectively an Australian employee. The decision hinged on two key factors, control and integration. The firm managed her daily work the same way it did its onshore staff.
This landmark case made one thing clear: physical distance doesn’t automatically protect businesses from Australian employment law. If an offshore contractor operates under your direct supervision, your business could still fall under the Fair Work Act.
Navigating the new rules for Australian businesses
The Closing Loopholes reforms have raised the bar for compliance, particularly for companies that rely on contractors and freelancers. Here’s what’s changed:
- The “whole-of-relationship” test now determines employment status, assessing how work is actually performed.
- The sham-contracting defence has been narrowed: businesses must prove they reasonably believed the person was a contractor.
- Contractors earning below the Contractor High Income Threshold (A$183,100 for FY 2025–26) can now challenge unfair contract terms through the Fair Work Commission, instead of federal court.
In practice, this means a “contractor” who behaves like an employee (working fixed hours, taking direct orders, and reporting to your internal managers) could now legally be treated as one. That opens the door to potential back-pay, benefits, and unfair-dismissal claims, even for offshore arrangements. Based on historical audits, any business randomly audited has roughly a 20–50% chance of non-compliance being detected if they engage contractors under conditions resembling employment.
How EOR Wipes Away The Worry
To stay compliant while keeping flexibility, more Australian businesses are turning to Employer of Record solutions for their offshore teams. With an EOR like Glints TalentHub, your overseas employees are legally employed under local labour laws, not by your Australian entity.
Glints TalentHub handles your contracts, payroll, benefits, taxes, and compliance across Southeast Asia, giving your business structure, protection, and peace of mind. Here’s why this model stands out in today’s tighter regulatory climate:
- It unlocks top Southeast Asian talent: Beyond compliance, EOR offers access to one of the fastest-growing regional talent pools, skilled, cost-efficient professionals who can help your business scale confidently.
- It clearly separates control and employment: Glints acts as the legal employer, managing all HR, payroll, and compliance obligations. Your company focuses on deliverables and outcomes, not daily supervision that could blur employment lines.
- It ensures local compliance across markets: Whether in Indonesia, Vietnam, Malaysia, the Philippines, or Singapore, every contract is aligned with local labour laws, covering statutory benefits, taxes, and social security.
- It supports compliance under the “whole-of-relationship” test: Because employment sits locally with Glints, the arrangement maintains a clear legal and operational separation, reducing the risk of misclassification under Australian law.
- It strengthens governance and documentation: All records, from signed contracts to payslips and terminations, are centrally managed and auditable, helping you prove that Glints, not your company, holds the employment relationship.
The Price of Playing It Safe with EOR
| Risk Category | Misclassification Exposure | EOR Protection |
|---|---|---|
| Maximum Corporate Penalty | AUD 4,695,000 per violation | Zero exposure |
| Sham Contracting Penalty | AUD 469,500 per breach | Zero exposure |
| Back-pay Obligations | Years of historical wages | Zero exposure |
| Superannuation Penalties | 200% + 10% annual interest | Zero exposure |
| Legal & Professional Fees | AUD 200,000-500,000+ | Minimal consultation |
| Management Time Cost | 500-1,000+ hours annually | 10-20 hours annually |
- Avoiding a single serious-contravention penalty: If your EOR annual cost for 10 employees is ~AUD 80,000, that’s just 1.7% of the penalty that you could incur because of misclassification (AUD 80,000 ÷ AUD 4,695,000).
- Small-business sham-contracting penalty coverage: A AUD 93,900 penalty equals 1.2–1.9 years of EOR fees (given an annual range of AUD 48,380–80,000).
- Management time saved: Freeing up 200–500 hours at AUD 250–500/hour creates AUD 50,000–250,000 in value per year.
Turning Risk Into Opportunity
The Closing Loopholes reforms mark a turning point in how Australia approaches flexible work. They also push businesses to find smarter, more sustainable ways to build distributed teams.
The Pascua v Doessel case proved that even offshore arrangements aren’t immune if control and supervision come from Australia. But with Glints TalentHub’s EOR Service, you can maintain the agility of offshore hiring, without the compliance uncertainty. We bridge the gap between Australian businesses and Southeast Asia’s best professionals, ensuring every engagement is structured, compliant, and future-proof.
This article is brought to you by Glints TalentHub. Leading companies are actively building their borderless teams in Southeast Asia, Taiwan, and beyond. However, the prospect of going borderless can be daunting due to complex regulations and cultural ambiguities. With Glints TalentHub, you’ll have a dedicated team of in-market legal, HR, and talent experts by your side at every step of the way.
Glints TalentHub offers an end-to-end, tech-enabled talent solution that encompasses talent acquisition, EOR, and talent development. We empower businesses to leverage the strengths of regional talent efficiently to build high-performing, cost-efficient teams.
Schedule a no-obligation consultation with our experts to receive a tailored proposal today!
