General information for Australian business owners and managers, not legal, tax or accounting advice.
Yes, offshoring is legal in Australia. No Australian law prohibits a business from having work done by people overseas; what the law regulates is who employs the worker, what happens to personal information sent overseas, and how the fees are taxed. Offshored's team members are employed in the Philippines by Australian Pathways OPC, a registered Philippine company, so the Australian client engages a staffing service rather than employing an overseas worker.
Offshoring is legal in Australia. An Australian business can have accounting, administration, customer service, marketing or almost any other desk based work performed by people in the Philippines or anywhere else. What the law regulates is not the decision to offshore but how you do it: whether the worker is your employee, what happens to personal information you send overseas, and how the fees are taxed. Those three questions map to the Fair Work Act 2009 (Cth), the Privacy Act 1988 (Cth) and A New Tax System (Goods and Services Tax) Act 1999 (Cth).
Most of the worry owners feel about offshoring comes from mixing up two different arrangements: hiring a person overseas directly and paying them as a contractor, or buying a staffing service from a company that employs the person lawfully in their own country. The first carries real risk. The second is an ordinary commercial contract.
Offshored's team members are employed in the Philippines by Australian Pathways OPC, a registered Philippine company, so the Australian client engages a staffing service rather than employing an overseas worker.
Australian Pathways OPC holds the employment contract, runs payroll, withholds Philippine income tax and makes the statutory contributions Philippine law requires. Offshored, an Australian company, recruits and manages the team members and is the company you contract with. You receive a dedicated person who works your hours on your systems, and you pay one monthly fee.
That structure keeps you clear of the risks below. You are not an employer in the Philippines, not an employer under the Fair Work Act in respect of that person, and not paying wages to a foreign individual. You are a client of an Australian business. Our terms of service set this out.
It can, but the way it does so decides how much risk it takes on. Three models are in common use.
Your company contracts with an individual in the Philippines, usually under an independent contractor agreement, and pays them by bank transfer. This is the cheapest looking option and the riskiest. Your company has no legal presence in the Philippines, so it cannot register as an employer there or make the contributions Philippine law expects. If you also set the person's hours and supervise them day to day, Australian law may treat them as your employee regardless of what the contract says. Misclassification is the central risk of direct hiring.
An employer of record is a company in the worker's country that employs the person on your behalf, runs payroll and passes the cost back to you with a margin. This resolves the Philippine employment question, but you still find, interview and manage the person yourself and carry the risk of a poor hire.
This is the Offshored model. The provider recruits the candidate, employs them through its own Philippine entity, provides equipment and security controls, manages HR and payroll and replaces the person if it does not work out. You contract with an Australian company for a service, and the monthly fee includes everything a compliant employment relationship needs, with no recruitment, placement or setup fees and no lock-in. See how it works for the process from brief to first day.
| Model | Who employs the worker | Fair Work Act exposure | Philippine employment compliance | Who recruits and manages | What you pay |
|---|---|---|---|---|---|
| Direct hire | Your company, in substance, whatever the contract says | High: control plus a contractor label is the misclassification pattern | None: your company cannot register as an employer in the Philippines | You | Hourly rate or salary paid to the individual |
| Employer of record | The employer of record, in the Philippines | Low, provided the employer of record holds the contract | Handled by the employer of record | You | Salary plus a margin |
| Dedicated offshore staffing provider (the Offshored model) | Australian Pathways OPC, in the Philippines | Low: you contract with an Australian company for a service | Handled by Australian Pathways OPC | Offshored recruits and manages; you direct the daily work | One monthly fee, no recruitment, placement or setup fees, no lock-in |
The Fair Work Act 2009 governs the national workplace relations system. The National Employment Standards, modern awards and unfair dismissal protections apply to employees of national system employers, and Australian companies are national system employers. The Act does not stop at the border. Where an Australian company directly engages a person overseas, the Fair Work Commission can look past the label on the contract and ask what the relationship really is. If the company controls how, when and where the work is done, supplies the systems, integrates the person into its business and pays them by the hour like staff, the Commission may find the person is its employee even though they live and work in Manila. That person can then seek Australian minimum entitlements and bring an unfair dismissal claim. The Commission did exactly this in Pascua v Doessel Group Pty Ltd [2024] FWC 2669, where a paralegal working from the Philippines for an Australian firm under an independent contractor agreement was found to be an employee entitled to bring an unfair dismissal claim. Calling someone a contractor when they are in substance an employee is sham contracting, which the Fair Work Ombudsman treats as a breach of the Act.
The Act does not reach a person employed in the Philippines by a Philippine company under a Philippine employment contract. That employer, not the Australian client, carries the employment obligations, and those obligations are set by Philippine labour law. This is why the employment structure matters more than any other feature of an offshoring arrangement.
Sources: Fair Work Ombudsman, National Employment Standards and sham contracting; Fair Work Commission, Pascua v Doessel Group Pty Ltd [2024] FWC 2669.
If your business is covered by the Privacy Act 1988 (most businesses with annual turnover above A$3 million, plus some smaller ones such as health service providers), Australian Privacy Principle 8 applies whenever you disclose personal information to an overseas recipient. You must first take reasonable steps to ensure the recipient handles the information in line with the Australian Privacy Principles, and under section 16C of the Act you remain accountable if they do not. The Office of the Australian Information Commissioner says the reasonable step is usually an enforceable contract binding the recipient to the same standard.
In practice that means a written contract with your provider covering confidentiality and data handling, technical controls on the devices your offshore team uses, and a privacy policy that tells customers information may be disclosed overseas and names the country. Offshored's controls, including confidentiality and IP assignment clauses in the Australian Pathways OPC employment contract, locked down company supplied devices and removal of all logins on the last day, are set out in our data security information. Our own privacy policy shows how we describe disclosure to the Philippines.
Source: OAIC, APP guidelines chapter 8, cross-border disclosure of personal information.
When you engage Offshored you are buying a service from a GST registered Australian company, so GST is charged on the monthly fee in the usual way and a GST registered client claims it back as an input tax credit. If instead you buy a service directly from an overseas supplier, different rules for imported services can apply, one more reason to keep the arrangement simple.
PAYG withholding sits on an employer paying wages. Under the Offshored structure you pay no wages, so there is nothing to withhold. For businesses that do pay foreign resident employees directly, ATO guidance says withholding is unlikely to be required for ordinary work performed outside Australia, though the position depends on the facts and the relevant tax treaty, and it does not remove the Fair Work risk described above.
The ATO states that you do not have to pay super for non-resident employees who work outside Australia. Under the Offshored structure the question does not arise, because you are not the employer.
Sources: ATO, withholding from a foreign resident employee; ATO, work out if you have to pay super; ATO, registering for GST.
Legal is the minimum. Owners also want to know the person on the other end of the video call is treated properly, and the answer again depends on the employer. Because Offshored's team members are employed by Australian Pathways OPC under Philippine law, each receives a salary paid on time, 13th month pay, which Philippine law requires every employer to pay, and statutory contributions to SSS (social security), PhilHealth (national health insurance) and Pag-IBIG (the home development fund). Team members also receive HMO private health cover after their six month probation period. Your monthly fee covers all of this, along with payroll and tax withholding, and office space and equipment for office based staff.
The majority of team members work from home, some are hybrid and some are based in our office in BGC, Manila. Wherever they sit, they are employed by Australian Pathways OPC and managed by Offshored.
If your business has annual consolidated revenue of A$100 million or more, the Modern Slavery Act 2018 (Cth) requires an annual statement on modern slavery risks in your operations and supply chains, and an offshore staffing provider is part of that supply chain. Ask any provider for the information you need. Smaller businesses need not report, but the same questions are worth asking.
Source: Attorney-General's Department, Modern Slavery Act.
Yes. Australian businesses can lawfully have work performed by people in the Philippines. The compliant way is through an employer registered in the Philippines, either an employer of record or a dedicated staffing provider such as Offshored, whose team members are employed by Australian Pathways OPC. Hiring an individual directly as a contractor is legal but exposes you to misclassification risk.
No. An ABN is an Australian registration with no role in the Philippines. Under a staffing arrangement you need no Philippine registration at all, because the Philippine entity that employs your team member holds them. You would only need a Philippine company if you chose to employ people there directly.
Australian Pathways OPC pays the team member's salary, 13th month pay and statutory contributions in the Philippines. You pay a single monthly fee to Offshored in Australian dollars, plus GST, and nothing else: no recruitment, placement or setup fees and no lock-in.
Your service agreement with Offshored is a contract between two Australian companies governed by Australian law. The team member's employment contract is with Australian Pathways OPC and governed by Philippine labour law. Keeping those two contracts separate is what makes the arrangement work.
More questions? The full FAQ covers superannuation and payroll tax, the legal employer, data security, time zones and the minimum commitment, and the glossary defines employer of record, misclassification and 13th month pay.
This article is general information only, not legal, tax or accounting advice. Laws and ATO guidance change. Check the primary sources linked above and obtain advice specific to your business.
To talk through how the structure applies to your business, book a call or send us a note. We will explain who employs your team member, what your contract covers and what you need from your side, with no obligation. We reply within one business hour, 8am to 6pm AEST, Monday to Friday.
Ask how the employment structure works Use the enquiry formPrefer to email or call? connect@offshored.net or +61 485 039 163.