When an employee is working in a different country – or even in a different state or territory – than that stated in their employment contract, this can open your business up to tax, insurance and legal risk. A lawyer offers key considerations for HR practitioners to stay across.
Remote work opens up incredible opportunities for flexibility, but without clear boundaries, it can quickly turn into a compliance headache. Planning ahead and being clear on where work is being performed can save time, effort and stress.
If your organisation is open to offering remote arrangements – and ABS data suggests that 36 per cent of employees usually work from home – it’s important to establish guardrails to protect both your people and your organisation from unexpected risk.
Before giving the green light, it’s critical to explicitly clarify where work can be performed. In particular, permission should strictly limit working overseas unless HR and leadership have properly understood and assessed associated risk in advance.
Knowing an employee’s true physical location isn’t about micromanagement; it’s about proactively spotting tax, insurance and legal risks before they escalate.
If someone is working outside their ordinary state, territory or country without a specific policy in place around this arrangement, you may have some risk management homework to do.
A 3-step framework for approving remote requests
From state-based WorkCover variations and local payroll tax shifts to home-office WHS duties and ATO guidelines on overseas working arrangements, the risks of an unmonitored remote workforce add up quickly.
To balance employee agility with compliance, HR practitioners should guide every remote request through a simple, repeatable process:
- Step 1: Pinpoint the location.
Confirm the exact state, territory and/or overseas location where the employee intends to set up their workspace, and ensure there is clarity for how long this arrangement will be in place. - Step 2: Map the regulatory landscape.
Evaluate location-specific obligations – such as local workers’ compensation coverage, cybersecurity protocols and potential overseas tax triggers. - Step 3: Mitigate and monitor.
Develop a practical risk-management plan to fulfill local reporting requirements, and maintain regular touchpoints to monitor compliance over time.
Overseas working risks to be mindful of
While granting an employee permission to work outside Australia can be a great tool in your employee engagement and retention strategy, doing so without proper oversight can expose your organisation to significant, unintended liabilities.
Without clear policies and prior written consent, international remote arrangements can quickly spiral into severe compliance and operational risks, including:
- Foreign corporate tax & payroll liabilities: Your business may inadvertently trigger foreign tax registration requirements, requiring local tax withholding, host-country payroll reporting and withholding, or even corporate tax exposure’.
- Establishment and licensing exposure: Operating remotely in certain foreign jurisdictions can lead to your organisation being legally deemed as having established a local business presence. This brings complex regulatory obligations – particularly if your business provides financial services, regulated goods or anti-money laundering designated services.
- Breaches of Australian sanctions: Allowing employees to log in from high-risk or sanctioned jurisdictions can accidentally place your organisation in direct breach of Australian Autonomous Sanctions or UN Security Council framework laws.
- Immigration & work right violations: If an employee logs on while traveling under a standard tourist visa, both you and the employee may be violating local labor laws and visa working rights in that country.
- Data security & privacy vulnerabilities: Connecting to company systems from international networks elevates cybersecurity risks, potentially exposing confidential business information, client data and triggering compliance breaches under the Australian Privacy Principles (APPs).
“Without clear policies and prior written consent, international remote arrangements can quickly spiral into severe compliance and operational risks.”
Interstate moves bring their own compliance checklist
It isn’t just international travel that creates risk; allowing employees to move between Australian states or territories carries distinct legal and operational considerations.
If you have operations firmly established in one state or territory, your inadvertent entry to the jurisdiction of another may bring new compliance considerations, including:
- Long service leave
Long service leave is a state and territory-based entitlement, and the qualifying period, accrual rate and payout rules differ across jurisdictions.
Unlike the portable schemes that exist for specific industries, such as building and construction, there is no general national scheme that automatically tracks an employee’s service as they move between states.
Employment law isn’t static; it follows the work. HR needs to actively track where an employee’s role is primarily located or ‘substantially connected,’ because a change in address often triggers a change in your legal and regulatory obligations.
It’s worth reviewing this whenever an employee’s base changes, rather than assuming the original state of hire still applies years later.
- Workers compensation insurance
Because each state and territory operates its own distinct workers’ compensation scheme, national employers rely on a cascading test to determine where an employee must be insured.
The obligations you have in relation to work health and safety and workers compensation can vary between different states and territories.
It’s important to consider whether the proposed work location of a remote employee might trigger an obligation for you to obtain workers compensation insurance and/or to meet other obligations in that state and territory. This will be especially important if an employee is the first person to be working from a state or territory that is new for your organisation.
Whether you must have workers compensation insurance in a particular state or territory may turn on:
- Where the employee usually works: The primary physical location of their day-to-day duties.
- Where the employee is usually based: Their primary operational base or the location from which they receive management direction (if they work across multiple states).
- Where your business is anchored: The State or Territory where your company maintains its principal place of business in Australia.
A permanent shift or long-term interstate move changes the outcome of this test. As a result, HR may need to adjust payroll declarations or take out fresh policy coverage in a state where the business previously had no registered presence.
- Payroll tax
Payroll tax operates on a state-by-state basis. When an employee splits their time across borders in a single month, specific “nexus” rules dictate which state or territory gets to tax those wages.
When an employee makes an interstate move, payroll tax liability may move with them. This change impacts your grouped tax thresholds across jurisdictions and can quickly trigger a registration requirement in a brand-new state.
- Reportable conduct schemes and other obligations to prevent and respond to certain types of misconduct
If employees perform regulated work or provide services to a regulated cohort (for example, working with children), your obligations to prevent and, where required, respond to certain behaviours may differ between states and territories.
This is especially true in the case of states and territories with a reportable conduct scheme. Determining whether certain conduct is reportable, and any obligation employers may have to conduct an investigation, will vary between states and territories.
What this means in practice
None of this means you should say ‘no’ to flexible work arrangements. The message is simply that a request to work from a new location must involve a consideration about where an employee will be performing work.
Whether an employee proposes to work from Bali or Brisbane, you should run a compliance check before approving a request, rather than defaulting to an automatic yes.
Use these six practical starting points to build a resilient framework:
- Embed consent into your policy. Explicitly state that remote work approvals apply only to a specific, agreed-upon location. Any shift, whether interstate or international, must require prior written consent.
- Ask the right questions upfront. Before signing off, clarify the physical address, duration and whether the arrangement is temporary or permanent. These details directly shape long service leave entitlement, WorkCover rules, payroll tax thresholds and international risk.
- Standardise and centralise approvals. Avoid off-the-cuff manager approvals. Route every request through a central compliance check to ensure consistency, accurate record-keeping and proactive risk reviews.
- Loop in payroll and insurance early. A change in work location isn’t just an HR decision – it’s a financial and operational one. Treat location changes as a trigger for a joint, cross-functional review across HR, payroll and risk teams.
- Maintain a clear audit trail. Document the approved location, key dates and the rationale behind your compliance decisions so you’re fully prepared if an insurer or regulator ever inquiries.
- Establish a regular review cadence. Remote setups evolve over time. Build in routine check-ins for individual arrangements and review your broader remote work policy at a whole-of-workforce level.
Finally, for those with a presence or employees in Victoria, bear in mind the impending change to the Equal Opportunity Act 2010, which is expected to have a right to work from home enshrined in legislation and effective from 1 July 2027.
Remote work remains one of the most valuable flexibility tools available to Australian employers. The trick is making sure the guardrails move with your people, wherever they end up working from.
🧰 HR’s career resource toolkit
- Article: When can you say ‘no’ to a remote work request?
- Course: Develop and implement HR policies
- Listen: HR’s ER/IR questions answered (ER/IR Unpacked podcast)
Lachlan Carr is the Managing Partner of Angus & Carr, a specialist employment and workplace relations law firm operating across Australia. He is an Accredited Specialist in Workplace Relations Law.
All information, content and materials available on this site are for general informational purposes only. The contents of this article do not constitute legal advice and should not be relied upon as such.
