Contractor or Employee? What a Fair Work Case Means

In 2024, a Filipino paralegal working from home for an Australian law firm won a case that most people in this industry have never heard of and it's worth knowing about, whether or not you ever work with an Australian client. It's not really a story about lawyers or courts. It's a story about the gap between what a contract calls you and what your actual working relationship really looks like, and why that gap matters more than most candidates realize.

This guide walks through what actually happened, the principle behind it and a practical way to think about your own working arrangement - written for you, the candidate, not for the employer trying to avoid a similar case.

What Actually Happened to Joanna Pascua

Joanna Pascua worked from the Philippines as a paralegal for MyCRA Lawyers, a Queensland credit-repair law firm, starting in July 2022. Her agreement labeled her an independent contractor: paid an hourly rate, with the usual contractor language about being responsible for her own taxes and having no entitlement to standard employment benefits.

When her contract was terminated in March 2024, she filed an unfair dismissal claim. The company argued she couldn't make that claim at all because, they said, she was a contractor, not an employee, and lived outside Australia besides.

The Fair Work Commission disagreed. In September 2024, it ruled that despite the contractor label, the real substance of the relationship looked like employment: she worked fixed hours for a fixed hourly rate, was supervised daily, used the company's own email and phone systems, and couldn't send someone else to do her work in her place. The company appealed. In February 2025, a Full Bench of the Commission upheld the original ruling.

The label on the paperwork didn't decide the outcome. What actually happened, day to day, did.

This isn't an isolated, unusual result either. Legal commentary on the case has noted it as part of a broader shift - Australian regulators and courts, after a period of leaning heavily on written contract terms, have moved back toward looking at how a working relationship functions in practice. For a candidate, the practical lesson isn't "watch out, you might get in trouble" - it's the opposite. It's a reminder that a contract's label doesn't automatically strip away protections that the real, functioning relationship might actually entitle you to.

It's Not What Your Contract Calls You - It's What the Relationship Actually Looks Like

This case landed at an important moment. A change to Australia's Fair Work Act, effective from late August 2024, shifted how "employee" gets defined under that law. Rather than leaning mainly on what a written contract says, the test now looks at the real substance, practical reality, and true nature of the whole working relationship - both the contract terms and how things actually play out day to day.

A few of the factors that matter under this kind of test:

• Control - who decides how, when and in what order the work gets done? Genuine contractors usually have real say over their own process; if every detail is directed and supervised, that leans toward employment.

• Integration - are you using the company's own systems, email address and tools as if you were part of the internal team, or operating with your own separate setup?

• Delegation - can you genuinely send someone else to do the work in your place, or does it have to be done by you personally? Real contracting usually allows substitution; employment usually doesn't.

• Financial risk - do you bear any real business risk (the chance of loss, the need to invest in your own equipment or systems), or is it a fixed hourly arrangement with none of that risk?

None of these factors alone decides anything, it's the whole picture together. But the underlying principle is the one worth remembering: what something is called on paper doesn't automatically match what it actually is in practice.

This matters practically, not just legally. Many offshore VA arrangements genuinely are structured as real, independent contracting relationships, with real flexibility and real business risk on the candidate's side and there's nothing wrong with that when it's accurate. The issue the Pascua case highlights is specifically the arrangements that function exactly like a regular job in every practical sense, but are labeled otherwise, often without the candidate ever being told that label might not hold up.

A Quick Self-Check

This isn't a legal test you can run yourself with certainty - that's genuinely a job for a qualified employment lawyer familiar with the specific country involved. But a few honest questions can help you get a sense of where your own arrangement sits:

• Do you work fixed hours, set by the client, rather than choosing your own schedule around the work getting done?

• Are you closely directed and supervised on how to do the work, not just what the end result should be?

• Do you use the client's own email address, phone system, or software logins, making you look like part of their internal team to anyone outside?

• Would you be unable to send a substitute to do the work in your place, even briefly?

• Is there effectively zero financial risk on your side - a fixed hourly rate regardless of outcome, with the client bearing all the risk?

Answering yes to most of these doesn't automatically mean you're misclassified under any specific country's law, that depends entirely on which country's rules actually apply to your situation. But it's a useful, honest starting point for understanding your own arrangement, rather than assuming a contract's label settles the question.

It's also worth noticing the pattern across both the Australian and Philippine tests above: control over how the work actually gets done is consistently treated as the most important single factor, more than payment structure or even what the contract is titled. If you're being told exactly how, when, and in what order to do everything, that's a genuinely different arrangement from being handed a result to deliver and left to figure out your own process.

This Is Australia-Specific. Here's What That Actually Means

It's worth being direct about scope rather than overselling this. The Pascua case and the Fair Work Act changes behind it are Australian law, and they apply to relationships that fall under Australia's jurisdiction. If your client is based somewhere else, this specific case and this specific legal test don't automatically apply to you.

That said, the underlying pattern isn't unique to Australia. The Philippines has its own long-established version of exactly the same question, known as the "four-fold test," used by Philippine labor courts and the National Labor Relations Commission to decide whether a relationship is genuine independent contracting or actually employment. It looks at who selected and engaged the worker, how wages are paid, who holds the power to dismiss and the single most important factor - who controls the actual means and manner of how the work gets done, not just the end result. The core idea is the same one at the heart of the Pascua case: if the real relationship looks like employment, a contract that calls it something else doesn't settle the question on its own.

Other countries have their own separate rules too, several of which are actively changing right now. Rather than assume any one country's rules apply to your situation, the honest takeaway is broader: labels on paperwork are not the final word anywhere, and it's worth understanding what protections might actually apply to you, based on where you and your client are each based, not just what your contract calls you.

If you're ever genuinely unsure where you stand, a real conversation with an employment lawyer or your home country's labor department is worth far more than guessing from an article, this piece is meant to make you aware the question exists, not to answer it for your specific situation.

How Innovex AI Supports You

This is exactly the kind of ambiguity a properly structured placement is built to avoid. When Innovex AI places a candidate with a client, the relationship, expectations and structure are clear from the start, not something you have to reverse-engineer from how the work actually unfolds months later. No fees at any stage of the process and no guesswork about what you actually signed up for.

If you're building your first portfolio of proof points before applying, start with the beginner roadmap. If you want to understand what a structured, properly vetted placement actually looks like before you commit to one, it's worth reading how the vetting and interview process works. And if you're comparing this kind of structured placement against picking up work on an open marketplace, this comparison covers the difference in more depth.

Candidates from India, the Philippines, and Bangladesh are placed with clients across Australia, the UK, the USA, Canada, New Zealand, France, the UAE, the Netherlands and Singapore.

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Frequently Asked Questions

Does this mean every "independent contractor" VA arrangement is actually illegal?

No. Genuine independent contracting is real and common, and plenty of arrangements are correctly classified. The point isn't that contractor arrangements are inherently wrong, it's that the label alone doesn't decide the answer and it's worth understanding what your actual working relationship looks like.

I don't work with Australian clients, does any of this apply to me?

The specific Australian law discussed here applies to relationships under Australian jurisdiction. But the broader principle that regulators increasingly look at substance over labels - shows up in other countries too, each with its own separate and evolving rules. Worth being aware the question exists everywhere, even if the specific answer depends on where your client is based.

What should I actually do if I think my arrangement looks more like employment?

This article is meant to raise awareness, not settle the question for your specific situation. A genuine conversation with an employment lawyer, or your home country's labor department, is the right next step if you have real concerns, not guessing from something you read online.

How is this different from just getting a normal job?

It isn't necessarily - that's actually the point. When an arrangement labeled "contractor" functions like a real job in practice, the label doesn't automatically strip away the protections that would normally come with that kind of role. A structured, properly vetted placement avoids this ambiguity by being clear about the actual working relationship from the start, rather than leaving it to be figured out later if something goes wrong.