Protecting Your Business from Worker Misclassification

Lessons from Pascua v Doessel Group and the Value of EOR Solutions

In today’s globalized workplace, the demand for skilled remote professionals has led companies to adopt diverse worker engagement models. While these flexible arrangements offer speed and scalability, they also come with significant risks if not structured correctly—particularly around the classification of workers as employees vs. independent contractors.

A landmark case in Australia has brought these risks into sharp focus. In Doessel Group Pty Ltd v Joanna Pascua [2025] FWC 1833, the Fair Work Commission ruled that a Philippine-based paralegal—engaged under an "independent contractor" agreement—was, in fact, an employee of the Queensland-based Doessel Group. Despite working remotely, Ms. Pascua’s fixed hours, use of company systems, and close supervision showed she was not operating her own business but integrated into the firm’s operations.

This case offers critical lessons for businesses engaging offshore workers—and highlights the value of Employer of Record (EOR) solutions, such as those offered by KMC Teams, to mitigate legal, financial, and reputational risk.

Misclassifying offshore workers as independent contractors—while exercising control typical of an employer—can expose companies to serious consequences:

• Legal Liability: The Fair Work Commission determined that Ms. Pascua was entitled to unfair dismissal protections under Australian law due to the employer-like relationship.

• Compliance Complexity: Misclassification often breaches local and international labor laws, triggering back payments of wages, benefits, and penalties.

• Reputational Damage: Legal disputes can undermine your brand’s credibility, especially in markets where compliance and fairness are valued.

• Administrative Burden: Disputes over worker classification drain legal and operational resources, diverting focus from growth.

These risks multiply when managing teams across borders, where compliance expectations vary by jurisdiction and are harder to navigate without in-country expertise.

The Pascua ruling shines a light on common mistakes businesses make when hiring offshore talent without clear legal frameworks:

Control Over Work

Ms. Pascua received daily task assignments and performance supervision—clear indicators of an employment relationship.

• Avoidance: Limit direct control over contractors—or better yet, engage them through a compliant EOR framework.

Integration into the Business

She used company-branded tools, email signatures, and systems like a PBX phone line, making her appear as part of the internal team.

• Avoidance: Avoid branding and system access that implies employee status unless the worker is legally employed.

Remuneration Model

Her capped hourly rate and fixed schedule aligned more with employment than contractor flexibility—and her pay was below Australia’s minimum wage standard.

• Avoidance: Contractor pays should reflect independence. Otherwise, a local EOR ensures compliant compensation structures.

Contractual Ambiguity

While her agreement labeled her an “Independent Contractor,” it contained KPIs, exclusivity, and required personal performance—all inconsistent with contractor status.

• Avoidance: Contracts should match the true working relationship. Misaligned terms increase risk of misclassification.

Jurisdictional Blind Spots

Doessel lacked expertise in cross-border labor law, leaving them vulnerable to international legal action.

• Avoidance: Partner with an EOR that specializes in local labor law and compliance in offshore markets.

KMC Teams offers a full-service Employer of Record (EOR) solution that eliminates the gray areas exposed in cases like Pascua vs. Doessel. Our model helps businesses scale confidently, without misclassification risk.

KMC Teams becomes the legal employer of your offshore staff—handling all regulatory, tax, and employment obligations—while you retain day-to-day oversight of operations.

• This structure shields you from liability related to misclassification or dismissal claims.

We ensure:

• Employment contracts align with local regulations.

• Registration with statutory bodies (e.g., SSS, Pag-IBIG, PhilHealth).

• Payroll, taxes, and benefits are accurately managed and reported.

This eliminates compliance risk across jurisdictions, including minimum wage enforcement.

By removing the direct employer relationship, KMC absorbs employment liabilities:

• We manage payroll, contracts, HR, and employee relations.

• Your business avoids legal exposure while maintaining operational control.

Our EOR model centralizes:

• Onboarding, employee records, and payroll.

• Benefits administration and compliance tracking.
  This streamlines offshore team management and frees your internal resources.

Our on-the-ground teams understand local employment culture and regulations. We:

• Source high-quality talent aligned with your needs.

• Offer competitive benefits to retain top talent.

• Help you avoid the same compliance missteps seen in the Doessel case.

Rather than underpaying or overpaying contractors, our model:

• Provides cost efficiency by accessing Philippine talent at competitive rates.

• Ensures compensation is compliant, fair, and defensible in any jurisdiction.

KMC Teams offers more than compliance—we provide end-to-end offshore operations support:

• Recruitment & Onboarding: Access skilled talent without navigating local hiring regulations alone.

• Payroll & Benefits Administration: End-to-end support, including tax compliance and government-mandated benefits.

• Legal & HR Compliance: Reduce exposure to litigation, fines, or disputes.

• Flexible Office Solutions: Provide your team with fully serviced high-performance office spaces across the Philippines.

The Pascua case is a wake-up call for companies engaging overseas talent. Worker classification is no longer a paperwork issue—it’s a compliance risk with real financial and legal consequences.

With KMC Teams, you get:

• A proven EOR model that prevents misclassification.

• On-the-ground compliance and labor law expertise.

• Talent sourcing and infrastructure support built for scaling.

We make offshore hiring secure, compliant, and people-first—so you can focus on growing your business without risk.

Don’t let worker misclassification disrupt your global strategy.
Partner with KMC Teams to build your offshore operations the right way.