In the realm of hiring offshore freelancers or contracting staff, many companies opt for direct hiring, unaware of the potential legal pitfalls they might encounter under Australia's Fair Work Act 2009. It's a common misconception that hiring overseas absolves them from local laws, but in reality, falling afoul of the Act can lead to hefty fines and severe reputational damage. Safeguarding your business through risk mitigation is not just advisable, but imperative.
What’s the difference between hiring offshore staff and the direct hiring of freelancers?
With offshoring, you recruit people that you specifically want as your staff. These are full time contractors who work for you and benefit from such things as paid leave and bonuses. They can include roles such as accountants, admin staff, IT operatives, marketing staff etc. Legally, they are We Outsource’s staff — not yours — and We Outsource bears all the legal liabilities as their employer.
Nevertheless, they work exclusively for you and adhere to the hours that you specify. You control the work, KPIs, etc., and the staff report to you. Everything is done according to your policies and procedures which are adopted by the offshore team. You select the IT assets and tools you want to use and staff log in to your systems. Direct hiring of overseas staff, means that you recruit contractors and pay them directly, typically on a contract agreement without strong legal bonds. You also have no idea whether they’re working on your tasks or farming them out.
Your work is done in their own time and, while you set and monitor goals, the time spent on training and development has an impact on your bottom line. Without robust background, criminal or medical checks when direct hiring, there is uncertainty about who you are employing and what their motives are. You are responsible for managing employment law, HR, leave, and all the costs that entails. The overseas staff usually provides their own IT hardware and security, which puts your data at risk.
Remember, the responsibility for ensuring that working conditions under direct hiring are safe and secure is yours — so are the costs and consequences of failure and breaking the law, and they could be heavy and highly damaging.
Australia’s Fair Work Act 2009 is one of the major legislative tools that govern the employment relationship in the majority of Australia’s private workplaces. It sets minimum standards and regulations for employment and is something that employers in all industries, whatever the size of their business, should be familiar with. The terms and conditions for employment and rights and responsibilities for employees and employers which are outlined within the Fair Work Act 2009 are aimed at providing a balanced framework for productive workplace relations, with a focus on national economic prosperity and social inclusion for employees under the national workplace system. If they are to avoid risking financial penalties and reputational damage, companies must realise that even though the staff that work for them might be carrying out their duties in another country, their business is still subject to the Act — regardless of the location of the business activity.
Further pitfalls of direct hiring
When you choose to recruit a freelancer, contractor, or FTE via direct hiring, your business is exposed to various risks and potential liabilities. Your insurance may not cover these consequences:
• Errors which damage your business and reputation.
• Claims filed against your company.
• Data security breaches when a freelancer clicks on risky links or downloads your company data to their local drives.
In such direct hiring cases your insurance may not be valid because the wrongdoers are not your employees, and the correct protocols have not been followed. Staff who are hired through We Outsource are covered by our PI, PL, cyber and worker compensation insurance, thus delivering risk mitigation and business protection to your company as the staff are contracted to us at We Outsource Solutions. By hiring direct, your exposure to breaches of anti-slavery and labour laws or being suspected of money laundering increases. To ensure compliance, companies should partner with a trusted offshoring provider, such as We Outsource Solutions Sri Lanka to employ your staff who are working in a different country to where your business is based. Your offshore staff are employed and legally contracted through We Outsource Solutions Sri Lanka, thus removing this risk from your business operations.
You can ensure that your company is not breaking any laws by following this path. The benefits of outsourcing or offshoring through a professional consulting business include:
• Reduced costs and new opportunities for business growth.
• The retention of control.
• The ability to scale up personnel resources at peak times or when engaged in special projects, product launches, major company initiatives, etc.
• Increased operational capability and flexibility.
• Risk mitigation and business protection from compliance, liability or legal penalties as they are part of the remit of your offshore partner.
• Relief from capital expenditure.
• Highly secure IT environment.
FREQUENTLY ASKED QUESTIONS
What are the financial implications of violations of the Fair Work Act? The penalties and process for each level of offence are summarised below.
| Infridgment Notice | Civil Penalty Order | Criminal Offence | Aggravated Offence |
How Enforced | Issued By the DIPB | Civil Court Proceedings | Criminal Court | Criminal Court Proceedings |
Fault Element | None | None | Knowledge or Recklessness | knowledge or Recklessness |
Fine - Corporate | $24,750 | $123,750 | $165,000 | $412,500 |
Fine Indivdual | $4,950 | $24,750 | $33,000 | $85,500 |
Commencing legal proceedings is another enforcement mechanism available to the FWO and is generally reserved for more serious cases of non-compliance. This would clearly involve substantial legal costs for businesses on top of any major fines or penalties.
How can I protect my business from the severe consequences of violations of the Fair Work Act?
Rather than direct hiring, by outsourcing and offshoring with We Outsource Solutions you will be protected from violations of the Act and any major fines because We Outsource will act as a buffer and take care of everything for you.
There are several factors that distinguish We Outsource from other Australian offshore companies. You can find out more about what we call the WE Difference.
Is it time for you to take the first steps towards business protection, risk mitigation, and compliance with the Fair Work Act? Do it now, by contacting the professionals at We Outsource Solutions for a consultation.
Who We Are
We Outsource is one of the fast-growing outsourcing companies in Sri Lanka, delivering exceptional services where you are 100% in control. We not only offer management of recruitment, HR, payroll, and administration, among others — we also help you manage employee performance, productivity, and quality.
We Outsource’s founders and leaders have over a decade of combined experience of offshoring and outsourcing worldwide. We Outsource has a team of experienced business improvement experts who work in partnership with your business to deliver you the right solutions to improve and grow your business.
Book a Meeting As an outsourcing company in Australia, we are committed to making your offshoring journey easy, successful, rewarding, and empowering.
KEEN TO HEAR MORE ABOUT BUSINESS OUTSOURCING IN SRI LANKA?
Our outsourcing experts are ready and waiting, so schedule your consultation now. Book an appointment with one of We Outsource’s expert offshoring consultants.
Book an appointment with a We Outsource Expert offshoring consultant.
Commentaires