Since 2007, business owners have been following the method outlined by Tim Ferriss to escape the 9–5 and ‘join the new rich’ — by outsourcing their business processes to offshore freelancers working for anywhere from $2 to $10 per hour … some for as low as 50c, according to some Filipino VAs I’ve spoken to.
Why I’ve Never Been on Board
Regular readers will know what my position has been on this since the trend started:
There’s enough work for us all.
And offshore freelancers keep potential clients away from me who think my services are only worth $5 an hour. And rates shouldn’t be based on geography — but on the type and quality of service, your skills and qualifications to do the work. Otherwise, it starts to look a lot like exploitation.
Dodging the Rules — Until Now
For nearly 20 years, businesses have enjoyed the benefits to their bottom-line of this trend — side-stepping Australian employment obligations. And they’ve largely gone untouched.
While the government focused its attention on independent contractors here in Australia — randomly cancelling ABNs of those they felt weren’t “real” businesses — large companies have quietly circumvented payroll tax, super, workers comp, and even the obligation to pay a liveable wage.
Well, it seems all that is about to change.
What Makes Someone an Employee?
For years, I’ve explained the difference between an independent contractor and an employee, and provided tools to help businesses get it right. Here’s a quick refresher:
If you’re doing any of the following with your offshore contractor, you’re likely crossing the line:
- Setting their hours (e.g. insisting they work or are available 9–5)
- Managing or micro-managing them (as Tim Ferriss actually encourages)
- Providing equipment, including software
- Having them perform core business tasks
- Requiring them to work on-site
- Telling them what you’ll pay (rather than agreeing to their rate)
The Ruling That’s Turning Heads
A Filipino woman, dismissed by her Australian client for allegedly copying files (an allegation she denies), took her unfair dismissal claim to the Australian Fair Work Commission.
Even she thought it was a long shot.
But in a watershed decision, the FWC found that she was an employee of an Australian company — and entitled to national minimum work standards, including a minimum wage of $24.87 an hour.
Yes, even though she lives and works in the Philippines.
Offshoring Just Got Riskier
If you’re outsourcing to offshore freelancers and you’re controlling their hours, supervising their work, and dictating their rate, you could very well be in breach of Australian workplace law.
This opens the door to:
- Retrospective wage claims
- Superannuation entitlements
- Workers comp liabilities
- Potential class actions by offshore contractors
The Australian business involved in the case complained that the worker had been:
“Paid more than a senior solicitor, more than an airline pilot in the Philippines.”
But I’ll say it again:
You don’t price people based on where they live — you price based on the service you’re getting.
In fact, YOU don’t price them at all! Your contractor will set their rate, not you.
Can’t Afford Aussie Staff? You Don’t Need To
This business owner went on to say:
“Those who are employing offshore workers are doing it because they can’t afford in the current economy to have the same work done by Australian employees.”
Here’s the thing: you don’t have to employ staff.
Australian Virtual Assistants have been providing confidential, professional, and secure remote support since 1996.
When you work with an Australian VA, you get someone who:
- Understands local laws and business norms
- Protects your data and IP
- Operates in your time zone, with no language or cultural barriers
- Runs a compliant business structure
You avoid hidden risks — and gain a strategic partner.
Industry Voices Are Speaking Up
Ingrid Bayer of the VA Institute says:
“This ruling sets a new precedent, and business owners in Australia need to pay attention. Put simply; if you’re engaging offshore VAs in a way that mirrors an employer-employee dynamic, you may now be liable for far more than you bargained for. … When you factor in legal risks, time zone delays, cultural misalignments, language nuances, and the hidden cost of micro-management, that once ‘cheap‘ option often becomes the most expensive mistake a business can make.”
And the price gap that once made offshore VAs so attractive?
It’s closing — fast.
What About the Big Players?
This ruling does beg the question, what happens to all those large companies — Telcos, for example — who have their call centres entirely offshore?
And what about offshore staffing agencies with Australian offices?
They might offer some buffer — since you’re contracting with the agency, not the worker directly — but they’re still responsible for compliance with Australian employment law. If you currently work this way check with your agency to ensure they are compliant.
However, these agencies are still no guarantee you’ll get your work done cheaply if that’s all you’re after.
I’ve seen one of these agencies charge an Aussie business over $2,000 in one month for an offshore worker — more than what a skilled Australian VA would have cost.
So… why would you?
Bottom Line: The Honeymoon Is Over
If you’re engaging with offshore freelancers directly, this ruling may mean you’re now liable for:
- Backpay
- Superannuation
- Leave entitlements
- Other employee benefits
The offshoring fairytale is fading fast.
And Australian Virtual Assistants? We’re still here — as we’ve been for decades — ready, willing, and able to meet your business needs.
Without the risks.
If you’re unsure whether your outsourcing practices are compliant, now’s the time to review them. Or better yet, explore how an Australian VA can be a safe, strategic, and long-term solution.
