Do you need to pay someone doing work experience?

We already know that it is illegal to hire someone as an employee without paying him or her the minimum wage to which they are entitled for the specific industry. The Fair Work Act is very clear on this point. But are those doing internships or work experience equally entitled to pay? For how long can someone do work experience, and to what extent can they be asked to do work that does not relate to their studies without being entitled to remuneration?

What is considered ‘work experience’?

If you have just recently taken on some university students after having advertised a role for ‘work experience’, and you do not intend to pay the students for their work, you should be sure that they are doing the kind of work that permits you not to pay them. This will depend on the role they have been given in the workplace. What is the student’s job going to be while working with the business? Are they learning new skills? Are they in some way expanding their knowledge? Is there any intention to hire the students at the end of their work experience? If you are unsure about how to define the role of those doing work experience, consult an employment lawyer before you proceed.

Meeting the Vocational Placement standard

Under section 15(1) of the Fair Work Act, the definition of ‘employee’ does not include ‘vocational placement’.

Vocational placement, which occurs when an educational institution requires work placement for certain courses, must meet a number of criteria before employers can take on unpaid students. These include the following:

1. There is a placement – the educational/training institution or the student can initiate contact with a business, provided this is permitted under the course requirements.
2. There is no entitlement to pay – If the student’s employment contract entitles them to get paid for the type of work he or she is doing, the relationship may have turned into an employment relationship. In the same vein, if the industry is covered by certain industrial rewards, it will not be vocational placement.
3. It must be compulsory placement – The course, or subject within the course (whether an elective or core subject), requires the students to do a work placement for work experience.
4. The institution must be approved – The TAFE College, school or university must be recognised as such under the Commonwealth or state laws (or an administrative arrangement of the Commonwealth/States). This requirement will also be met for bodies that are authorised to conduct training courses under the relevant state or Commonwealth legislation.

To pay or not to pay?

If these conditions of vocational placement can be met, the pay entitlements specified under the Fair Work Act will not apply to these students. That being said, the employer may choose to pay the intern on an obligation-free and discretionary basis.

If the placement falls short of meeting these requirements, it will not be considered a vocational placement under the Fair Work Act. This does not mean that the employee will immediately be entitled to pay. It must first be established whether the student and the organisation have an employment relationship.

How can I determine if there is an employment relationship?

Generally, an employment relationship will not be created if there is:

1. No intention to create a legally binding relationship between the intern and the employer, such as when work is entirely voluntary;
2. Neither party is required to service the other parties needs, i.e. the intern does not have to work, and the employer does not have to provide work; and
3. Nothing of value passes from one party to another.

Conclusion

Whenever an internship or work experience placement is part of a course, such as through a school, university or TAFE College, it is going to be less likely that an employment relationship exists. In these circumstances, you, as the employer, may advertise an unpaid position.

To ensure the law set out in this article applies, it may be prudent to formalise the relationship by reference to the particulars of the vocational placement in writing, and have that signed by both parties. An employment lawyer can assist with this.

If you are unsure whether you and a worker have an employment relationship, contact an employment lawyer to get some advice.

Our employment lawyers have extensive experience in assisting business small and large in getting their employment contracts in order.