A PhD candidate argued his scholarship was really a wage - the Full Court wasn't buying it
A PhD candidate's push to have research students reclassified as university employees has hit a wall at the Federal Court.
The Full Court on September 23 dismissed the appeal in Burt v University of Sydney [2026] FCAFC 129, finding that the contractual arrangements between the university and its scholarship-funded research students did not amount to employment under the Fair Work Act 2009.
The case was a representative proceeding - the legal equivalent of a class action - meaning the outcome reached well beyond one student. It covered domestic students at the University of Sydney who had received Australian Postgraduate Award or Research Training Program scholarships between September 2015 and September 2021.
The appellant enrolled as a full-time PhD candidate in 2016 and received a Commonwealth scholarship paying a fixed stipend of $26,288 per year, paid fortnightly. The university expected him to spend 35 to 40 hours a week on his candidature, with at least two-thirds of that time on research. He completed his doctorate in December 2019.
His argument was simple: the university controlled where, when, and how the work got done. It set hours, imposed supervision, required progress meetings, directed the location of work, and could pull the scholarship if progress fell short. That, he said, looked a lot like a job.
The university and the Commonwealth disagreed. So did the court.
The central problem, the Full Court found, was the absence of what the law calls "mutuality of obligation" - essentially, the foundational deal at the heart of every employment relationship where one side promises to do the work and the other promises to pay for it.
Here, the court found no such deal existed. The stipend was not a wage for research services. It was financial support to help students cover living costs while they pursued their education. The Commonwealth scheme under the Higher Education Support Act 2003 said as much: scholarship grants were made to universities to pay students "for the purposes of the students' education."
And there was no enforceable obligation to do the research. If the appellant had stopped making progress on his thesis, the university could have withdrawn his scholarship or his enrolment - but it could not have sued him for breach of contract. The court drew a clear line: meeting progress requirements was a condition of keeping the funding, not a promise to serve the university.
As the judgment put it, the diligent progression of his research was "a contingency upon which was conditioned his continued entitlement to payment" - not a contractual promise to perform work.
The appellant also pointed to features of the arrangement that looked like standard employment conditions: 20 working days' paid recreation leave per year, 10 working days' paid sick leave, a 20-hour cap on outside work, and structured supervision. The court was unpersuaded. Those features came from the Commonwealth legislative scheme, not from an employment bargain, and their purpose was to keep students focused on their studies. None of the leave was payable on termination - a telling distinction from a genuine employment entitlement.
The court accepted that the university clearly benefited from its research students' work. It enhanced the institution's reputation, supported its research mission, and attracted funding. But benefit alone did not convert academic effort into employment service. The work was done because it was necessary to earn the degree - not as payment for the stipend.
The primary judge had put it sharply, and the Full Court adopted the same language: the notion that a research degree was "not primarily for the educational benefit" of the students simply because at least two-thirds of the time went to research "does not withstand analysis."
The court also flagged an awkward circularity in the appellant's case. If scholarship recipients were employees, they would be entitled to salaries exceeding the income limits that qualified them for the scholarship in the first place - immediately disqualifying them from the very payments they were trying to characterise as wages.
The appeal was dismissed. No costs order was made.
For HR teams in higher education, the decision reinforces that Commonwealth research scholarships sit outside the employment relationship - provided the arrangement is genuinely structured around education and not dressed-up labour. Universities relying on research students for output that might otherwise require paid staff will want to ensure their scholarship frameworks can withstand the tests the court applied: mutual obligation, the work-wage bargain, and control exercised as educator rather than employer.
The decision has not been tested in the High Court.
