Hiring a Filipino virtual assistant might save you money, but doing it wrong could cost you far more. Approximately 80% of Australian companies outsource some business functions, with the Philippines being a top destination due to its skilled, English-proficient workforce and cost efficiency. However, with these advantages come legal and compliance risks that many businesses overlook.
For Australian companies outsourcing virtual staff for the first time, understanding the legal landscape can be difficult. Here are some considerations that firms need to account for when hiring a Filipino virtual assistant.
Dangers of Misclassification and Sham Contracting
Sham contracting is when an employer deliberately disguises an employment as an independent contract to avoid paying entitlements such as superannuation, leave, and tax contributions. Under both Australian and Philippine law, sham contracting is seen as a serious offense that carries financial fines as well as potential harm to one’s reputation.
Misclassification may be unintentional, especially for businesses unfamiliar with international labour laws applicable to the virtual assistant hiring process. However, ignorance is not a defence.
If a contractor performs work under the direct control of the business, cannot reject work, and is economically dependent on the company, they may qualify as an employee. This is even without a formal employment contract.
In addition to legal risks, misclassified workers can challenge their status, file claims, or bring disputes to Australian or Philippine labour authorities. This can result in back pay for unpaid benefits, damages, and penalties. Australian companies must understand that avoiding a physical presence in the Philippines does not exempt them from potential scrutiny, especially under the Fair Work Act.
Australia’s Fair Work Act
The majority of Australian companies often hire Filipino VAs without setting up a Philippine office or legal entity. In such cases, some companies assume they are safe from major responsibilities in managing outsourced virtual staff. However, the Fair Work Act 2009 grounds Australian businesses to take accountability, even for their virtual assistants.
The Fair Work Act 2009 is the central piece of Australian labour law. It was initially designed to protect domestic workers. However, recent developments show that it may also extend protections to workers located overseas, particularly if they work under conditions resembling those of a traditional employee.
A decision in 2024 in the case of Pascua v. Doessel Group Pty Ltd marked a turning point. In this case, a Filipino virtual assistant filed a claim under the Fair Work Act despite residing outside Australia. The Fair Work Commission agreed that the VA was entitled to protections such as minimum wage and unfair dismissal rights, citing her long-term service, fixed working hours, and close managerial supervision by the Australian employer.
Pascua v. Doessel Group Pty Ltd reinforced the legal principle that substance trumps form. Even when a contract labels a worker as an independent contractor, Australian courts and commissions may reclassify them as an employee based on the realities of the working relationship. If so, the employer may be held responsible for providing minimum entitlements under the Fair Work Act, including leave entitlements, superannuation, notice periods, and termination protections.
Australian companies hiring offshore VAs must, therefore, assess not only their contracts but also the way the VA is managed day-to-day. If the relationship mimics employment in all but name, the company could find itself liable under Australian law even without ever operating in the Philippines.
Tax Compliance for Foreign Contractors
While hiring independent contractors in the Philippines does not automatically create a tax presence for Australian companies, certain best practices must still be followed to ensure tax compliance and avoid unnecessary complications.
Filipino VAs who operate as independent contractors are required to pay their own income tax and file BIR returns in the Philippines. However, Australian companies should document the non-residency status of the contractor to prevent issues with Australian tax reporting. This is usually done through a W-8BEN form, which certifies that the contractor is not a resident of Australia and that Australian withholding tax is not applicable.
Confidentiality and Intellectual Property
Hiring a virtual assistant does not make companies safe from serious concerns such as misuse, unauthorised disclosure, and intellectual property (IP) theft. Virtual assistants, after all, handle the company’s sensitive information.
To safeguard business interests, every VA agreement should include enforceable confidentiality clauses and IP ownership provisions. Contractors must agree not to disclose, retain, or reuse any business information, client data, or creative output after the engagement ends. Additionally, all work produced by the VA should be contractually assigned to the business.
Given the international nature of the relationship, contracts should specify which jurisdiction’s laws will apply in case of a dispute. This ensures legal clarity and helps prevent prolonged or unenforceable litigation. Businesses may also opt to require multi-factor authentication, NDA forms, and limited access to sensitive systems for added protection.
Legal and Secure Payment Process
Virtual assistant from the Philippines are still workers, so payments must still be conducted in a legal, traceable, and professional manner.
Companies should avoid cash payments or informal transfers, as these methods are not only untraceable but may also raise concerns with regulators or tax agencies. Instead, the use of international payroll or remittance platforms is strongly recommended. These systems provide built-in tax documentation, allow easy cross-border compliance, and maintain transaction records for accounting purposes.
Furthermore, the structure of payments should also reflect the contractor status of the VA. Project-based payments, milestone billing, or hourly invoicing are all acceptable. However, fixed monthly salaries resembling employee compensation may raise red flags, particularly if paired with other employment-like behaviours such as requiring set work hours or exclusive service.
Ease Legal Burdens – Let Outshore Handle It for You
While some may think it’s easier to hire a virtual assistant directly, without proper legal and operational safeguards, you could be leaving yourself exposed to bigger problems. A more efficient and legally sound alternative is to partner with a VA agency that specialises in sourcing top-tier Filipino talent.
At Outshore, we take the hassle out of outsourcing. From recruitment and onboarding to contracts, compliance, payroll, and benefits, our end-to-end support means you can focus on scaling your business while we take care of the rest.Get in touch with Outshore today and discover how seamless hiring and managing a Filipino VA can be.