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Private: Overseas working and long service leave
Working for an international company and being transferred to an overseas posting to live and work for a few years is an exciting adventure that many Australians are lucky enough to have the opportunity to undertake in their careers.
However, international service raises many important questions with potentially complex legal consequences. One of those questions is around Long Service Leave and how working internationally plays a part when calculating years of service in Australia.
Different states have varying approaches to Long Service accrual and operation, so whether overseas service is counted towards Long Service Leave in Australia may depend on which state you predominantly work in and whether there is a ‘substantial connection’ between the Australian service and the overseas service.
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A recent court case in 2020, Cummins South Pacific Pty Ltd v Keenan, considers this legal issue in more depth. In this case, an employee worked for a company in Victoria and had previously worked for over 14 years for the Australian employer related company based in the United Kingdom.
There was found to be a ‘substantial connection’ between the employee’s previous workplace and Victorian workplace and the employee’s 14 years of service in the UK was found to apply to Long Service Leave calculations under the Victorian legislation.
In determining whether an employee’s overseas service is governed by the law in Australia, it is irrelevant as to whether an employee is engaged to an Australian company or related entity based overseas, as the Fair Work Act 2009 (Cth) is still applicable.
What if the employee is engaged outside Australia and only ever works outside of Australia?
Generally, an employee’s overseas service will count regardless of their overseas posting if they are employed by an Australian company or a related entity of an Australian company.
However, if an employee only ever works outside of Australia it is unlikely that Australian employment law, and therefore Australian Long Service Leave, will apply.
Some essential factors in determining a ‘substantial connection’ between an overseas workplace and an Australian workplace
- Was the employee initially engaged from Australia or overseas?
- Has the employee worked in Australia at any point throughout the course of their employment?
- Did the company provide the employee with any reimbursement for moving costs or a cost allowance as part of their work relocation?
- Is the employee permanently based in an overseas location or is there an intention to move back to Australia by the company?
- Are payments made to the employee in an Australian or overseas bank account?
- What is the background of the company in terms of its countries of operation?
- Is the company predominantly based in Australia or overseas?
- Was the employment contract drafted under the laws of Australia or does it specify is governed by the laws of Australia or an Australian State or Territory?
Due to the nature of employment law in Australia, getting it wrong can have extremely costly consequences for your business.
If you have any questions regarding Long Service Leave, or employment law generally, please contact Hillhouse Legal Partners to find out how we may be able to assist.
