Criminal Wage Theft Laws Are Now in Effect: What Every Australian Business Needs to Know About Offshore Workers
Fair Work has ruled offshore contractors can be employees. Criminal wage theft laws apply from Jan 2025. Here's what changed and what to do about it.
If your business engages offshore workers — virtual assistants, bookkeepers, paralegals, customer service staff, developers — and you’re paying them as independent contractors, a series of legal developments since 2024 have materially changed your risk exposure.
Pascua and Digo show that offshore contractor arrangements can fall within Australian unfair dismissal jurisdiction. Criminal wage theft provisions commenced in January 2025, and the superannuation guarantee rate rose to 12% where it applies. These are separate legal questions, not automatic consequences of a jurisdiction finding.
Here’s what changed, and what it means for your business.
The Legal Timeline
2024: Pascua and employee status
In Pascua v Doessel Group Pty Ltd [2024] FWC 2669, the Fair Work Commission ruled that a Filipino paralegal engaged as an “independent contractor” was in fact an employee entitled to Australian workplace protections.
The Commission found that geographic distance, contractual labels, and invoice-based payment arrangements do not override the true nature of the working relationship. The key factors the Commission examined:
- Fixed or set working hours determined by the Australian business
- Daily supervision and performance management by the Australian employer
- Worker integrated into business operations, not free to work for others
- Payment by hourly rate rather than a fixed price per deliverable
- Use of company-provided tools, systems, or email addresses
This wasn’t a fringe case involving unusual facts. It described the exact working arrangement used by thousands of Australian businesses engaging offshore staff today.
February 2025: Pascua Full Bench appeal
A Full Bench in Doessel Group Pty Ltd v Pascua [2025] FWCFB 43 upheld the employee finding and the Commission’s jurisdiction in February 2025. The worker’s offshore location did not by itself prevent the unfair dismissal claim.
This does not establish an automatic award of minimum wages, superannuation or compensation. Each entitlement or remedy requires its own legal assessment.
October 2026: Digo and contract formation
In Sheena Digo v The Trustee for Bicycles Online Unit Trust t/a BikesOnline Australia (C2025/11633), Deputy President Boyce found that a Philippine-based CPA was an employee despite contractor agreements signed in 2024 and 2025. She started through Upwork in 2017 and worked directly full-time from 2019. The business set her hours and priorities, reviewed her performance annually, required leave approval, and paid invoices that mirrored timesheet hours.
She had never visited Australia or held an Australian visa. The Commission found she was Australian-based because her 2025 agreement was made in Australia: the offer was sent from Sydney, acceptance was received in Sydney, and NSW law governed it. This was a jurisdiction ruling only; whether her dismissal was unfair has not yet been decided. Read our Digo v BikesOnline article.
1 January 2025: Wage Theft Became a Criminal Offence
Under the Fair Work Amendment (Closing Loopholes) Act 2023, intentional underpayment of a worker is no longer a civil matter alone. From 1 January 2025, it carries the risk of criminal prosecution — including substantial fines and potential imprisonment.
Where Australian wage theft provisions apply, intentional underpayment may create criminal exposure. Unintentional underpayment can have civil consequences, but a reclassification or jurisdiction finding alone does not establish a criminal offence.
2025–26: Superannuation Obligations Increased to 12%
The superannuation guarantee rate is 12% of ordinary time earnings from 1 July 2025 where the obligation applies. Superannuation coverage has its own rules, including for workers overseas; a Fair Work finding does not automatically establish super liability. Historical rates must be assessed for the relevant period.
Who Is Actually at Risk
The risk is not limited to large businesses or formalised outsourcing arrangements. Legal experts confirm that any Australian business engaging offshore workers may be affected if the working relationship resembles employment.
You are likely at risk if your offshore arrangement involves any of the following:
- Fixed or set working hours that you determine
- Daily check-ins, supervision, or performance management
- Worker using company-provided tools, systems, or email addresses
- Worker integrated into your business and not free to work for others
- Payment by hourly rate rather than a fixed price per deliverable
- Contract formed or accepted while you were in Australia
This describes the typical virtual assistant, bookkeeper, paralegal, or customer support role. The contractual label — “contractor”, “freelancer”, “consultant” — does not determine the outcome. The actual nature of the working relationship does.
Industry sources report that lawyers are now advising clients of all sizes — from sole traders to companies with 80+ offshore staff — to move to a formal Employer of Record (EOR) model as a matter of urgency.
What a properly structured EOR changes
An Employer of Record (EOR) structure significantly reduces direct employment and misclassification exposure.
Under an EOR model, a locally registered entity in the Philippines becomes the legal employer — handling Philippine labour law compliance, payroll, statutory benefits (SSS, PhilHealth, Pag-IBIG, 13th month pay), and tax. Your Australian business directs the day-to-day work without directly employing the worker.
This removes the direct employment relationship considered in cases such as Pascua and Digo, rather than guaranteeing that no claim can arise. Get legal advice specific to your arrangement.
Importantly, a properly structured EOR arrangement can still be 50–70% cheaper than an equivalent Australian hire while significantly reducing compliance risk. Use the calculator for role-specific costs.
Team Up Now provides both the recruitment and the EOR structure as a single service, removing the need to manage a separate EOR provider on top of the hiring process. We also offer Australia’s first lifetime replacement guarantee: if your team member ever leaves for any reason, we replace them at no additional placement cost.
What to Do Now
If you’re currently engaging offshore workers as contractors, the prudent steps are:
- Review the working relationship against the Fair Work Commission’s classification indicators — not your contract, the actual day-to-day arrangement.
- Get legal advice on your specific arrangements, particularly if workers have fixed hours, daily oversight, or are integrated into your operations.
- Assess the EOR option — calculate the true cost of a compliant structure versus your current arrangement. In most cases, the difference is smaller than expected.
You can assess your offshore hiring risk and calculate the cost of a compliant EOR structure at teamupnow.com.au/eor-calculator. Information on our lifetime replacement guarantee is at teamupnow.com.au/lifetime-guarantee. For a full breakdown of the legal landscape, risk indicators, and compliance obligations for offshore workers, see our Fair Work offshore compliance guide. If you are considering outsourcing customer support specifically, our customer support outsourcing guide for Australian businesses covers the EOR model and how to structure that arrangement compliantly.
Sources
- Pascua v Doessel Group Pty Ltd [2024] FWC 2669 — Fair Work Commission — fwc.gov.au
- Doessel Group Pty Ltd v Pascua [2025] FWCFB 43 — Fair Work Commission Full Bench
- Sheena Digo v The Trustee for Bicycles Online Unit Trust t/a BikesOnline Australia (C2025/11633) — Deputy President Boyce; reported by Accountants Daily, 8 October 2026.
- Fair Work Amendment (Closing Loopholes) Act 2023 — Criminal wage theft provisions effective 1 January 2025
- Superannuation Guarantee (Administration) Act 1992, s.12(3) — 12% SG rate for 2025–26
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