There are a number of circumstances under which an organisation may engage a worker in an unpaid employment relationship, and many employers are approached by interested students or graduates seeking to gain industry experience.
For organisations planning on inviting someone to participate in a volunteer or work experience placement, it is important to consider the workplace rights of your business, and unpaid workers.
According to the Fair Work ombudsman, a common issue that can arise in these arrangements is whether or not an employment relationship has actually been created. Each individual case requires a consideration of its own particular facts, and employers who fail to meet their obligations under the Fair Work Act 2009 (FW Act) can be liable for penalties for as much as $33,000 per breach. Importantly, there are significant differences between the employer obligations related to vocational placements as opposed to work experience and internships.
The Fair Work Act recognises formal work experience arrangements that are a mandatory part of an education or training course. These arrangements are referred to as vocational placements, and are defined as being:
Undertaken as a requirement of an Australian based educational or training course, and
Authorised under a law or an administrative arrangement of the Commonwealth, a State or Territory, and
Undertaken with an employer for which a person is not entitled to be paid any remuneration.
If all of these criteria are met, the person will not be covered by the Fair Work Act and is therefore not entitled to the minimum wage and other entitlements provided in the National Employment Standards and modern awards.
Work experience & internships
Unpaid work experience placements and internships that don’t meet the definition of a vocational placement can be lawful in some instances. To be lawful, businesses need to ensure that the intern or work experience participant is not an employee.
One key issue in determining whether an employment contract has been formed is whether the parties intended to create a legally binding employment relationship.
When assessing whether the parties intended to form a legally binding employment relationship some key indicators would be:
Purpose of the arrangement. Was it to provide work experience to the person or was it to get the person to do work to assist with the business outputs and productivity?
Length of time. Generally, the longer the period of placement, the more likely the person is an employee
The person’s obligations in the workplace. Although the person may do some productive activities during a placement, they are less likely to be considered an employee if there is no expectation or requirement of productivity in the workplace
Who benefits from the arrangement? The main benefit of a genuine work placement or internship should flow to the person doing the placement. If a business is gaining a significant benefit as a result of engaging the person, this may indicate an employment relationship has been formed. Unpaid work experience programs are less likely to involve employment if they are primarily observational
Was the placement entered into through a university or vocational training organisation program? If so, then it is unlikely that an employment relationship exists.
*Source: Internships, Vocational Placements & Unpaid Work fact sheet, Fair Work Ombudsman