Have you thought about outsourcing admin or other virtual work overseas? We highlight the different methods for sourcing workers, whether this is considered an employee or contractor relationship and the risks employers need to be aware of.
Outsourcing is seen as an attractive option for many businesses who may have high labour costs. Labour can be significantly cheaper in other countries, though a recent landmark Fair Work case has highlighted the risks businesses may face.
Methods of outsourcing
There are several different ways to employ someone from outside Australia. Here are the top options available.
Establish a local entity
This involves creating a legal subsidiary in the foreign country. It is best suited for companies planning a significant long-term presence in the overseas nation.
Pros: It is This gives employers full control of the arrangement
Cons: It is complex and costly to arrange.
Hire independent contractors
You can directly hire freelancers or contractors for specific projects or periods.
Pros: It is a flexible arrangement and can be cost-effective for short-term needs.
Cons: It can be challenging to ensure compliance with local labor laws and may not be suitable for long-term, permanent roles.
Use an Employer of Record (EOR)
An EOR acts on your behalf as the legal employer for your international hires, handling payroll, taxes, and compliance in the employee’s country.
Pros: Allows you to hire globally without setting up a local entity, saving time and money. The EOR manages compliance and legal responsibilities.
Cons: You have less direct control compared to having your own entity.
Use a specialist outsourcing company
While this is similar to an EOR, an outsourcing company supplies their own staff to complete certain tasks or projects for you.
Pros: Payroll, taxes and compliance are taken care of, along with education, training and development.
Cons: Those assigned to you are not your direct hires.
It can also be common to start out using a specialist outsourcing company, then transition to a direct arrangement once staff have been trained.
The benefits
Outsourcing admin work or hiring a virtual assistant can bring significant cost savings to your business and free up your/your team’s time to focus on core activities. Working on higher income producing activities can boost productivity and give you much needed time to chase new leads and business.
Another potential upside is the ability to have more hours of support across your business if someone operates in a different time zone, with better customer service support for your clients.
The risks involved
There are several risks involved with hiring offshore workers or virtual assistants, no matter the method by which they are hired.
- Knowing local laws: Every country has their own employment and taxation laws which must be followed.
- Security risks: There are increased cyber security risks which need to be carefully managed.
- Ethical treatment of employees: Businesses need to adhere to the Modern Slavery Act and ensure contracts are ethical and fair.
- Australian legislation protection: Offshore contractors can potentially be considered national system employees and therefore protected by Australian legislation.
Recent Fair work case
A paralegal aid in the Philippines won a landmark Fair Work case in 2025, and was awarded an unfair dismissal from her Australian employer. She was found to be an Australian employee for work purposes, and therefore awarded protection under our employment laws. This was an interesting case for many reasons – she had a written contract with the law firm, worked remotely from the Philippines, but performed duties on behalf of the company as an employee would be expected to. Ultimately, the unfair dismissal claim was successful and the paralegal was awarded 15 weeks pay as compensation, as a reinstatement to the role was deemed inappropriate in the circumstances.
The implications for Australian employers are big. You must ensure you understand the difference between employees and contractors, as well as the rules around when Australian law applies to overseas workers.
If you need more assistance in this space, we recommend you visit Fair Work or consult an employment lawyer.
All content, information and materials (including oral and written) delivered, broadcast, performed or disseminated at any seminars, conferences, webinars, and other public events hosted by Ultimate SK Pty Ltd trading as Ultimate Tax & Advisory (Ultimate Tax & Advisory) are of a general commentary nature only. Such content, information and materials do not constitute personal or general financial or taxation advice and should not be relied upon by the viewer for any such purposes. Ultimate Tax & Advisory does not warrant or represent that any content, information and materials is suitable for any specified purpose or for any specified individual and specifically disclaims all liability in respect of any reliance placed on any such content, information and materials by any third parties.
