In order to build their resumes, gain experience working in an office setting, or get a foot in the door at a potential company, young individuals trying to break into the profession often opt for unpaid work experience opportunities or internships. This article will explore if unpaid internships are lawful and what businesses should consider.
What is the Purpose of the Arrangement?
The arrangement must be a genuine work “experience” where the individual is unpaid. If the unpaid worker is filling in someone else’s role or otherwise being productive and contributing to the business, the law may consider them an employee. A genuine unpaid intern typically observes and experiences the business, spends time with different employees and participates in a variety of activities.
Does an Employment Relationship Exist?
Unpaid work experience or internships are lawful if:
- they are a student or on a vocational placement; or
- an employment relationship does not exist.
If the employer, not the unpaid worker, is the main beneficiary of the arrangement then it may be an employment relationship. Make sure the unpaid worker clearly benefits from the arrangement.
When examining the nature of the working relationship, factors to consider include:
- What was agreed upon?
- What was the reason for the arrangement?
- How long was the arrangement?
- How important is the role to the business?
- What duties is the person performing?
- Who is receiving the greatest benefit?
3. What are Your Expectations of the Unpaid Worker?
As an employer, you should not have the same expectations of unpaid interns as employees. Unpaid interns are meant to be the main beneficiary of the relationship. The expectations of your interns should be that they are observing, learning and being supervised closely.
To learn, train, or enhance their skills, the intern may perform various tasks that contribute to the business’ productivity. However, they are less likely to be employees if the employer does not demand or expect the intern to perform tasks essential to the business’ productivity and targets.
An Example: Lawful Unpaid Internship
A local marketing agency has advertised an unpaid internship program for high school and university students interested in marketing activities and processes.
Students can choose their hours at the marketing office over a six-week period. The agency ensures the role is mainly observational and that the students get the main benefit.
In this example, there is no employment relationship and the agency does not have to pay the interns.
An Example: Unlawful Unpaid Internship
Max is a penultimate-year architecture student. He agreed to do an unpaid internship with an architectural design firm. The firm has promised him a job once he graduates.
Max comes into the firm four days a week, preparing sketches for client projects, answering client queries and providing quotes for work. The firm charges clients for the work Max completes.
Although Max agreed the business does not need to pay him, he does work that a paid employee usually does. This reflects a typical employment relationship, and the employer should pay him for the hours he works.
Key Takeaways
Employers should take care if they are considering offering unpaid work experience opportunities or internships. If you carefully consider your business’ unpaid work experience opportunities and structure them as genuine learning experiences, they are more likely to be lawful.
For more information about offering unpaid internships, our experienced employment lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
Frequently Asked Questions
Unpaid work is illegal in certain circumstances. These circumstances depend on the nature of the work that the employee is engaged in. Unpaid work is more likely to be lawful where no employment relationship exists, or the worker is in a vocational placement.
Unpaid work is only lawful if there is no employment relationship between the person and your organisation (except for vocational placements). When determining whether an employment relationship exists, consider whether there is an employment contract, the nature and purpose of the agreement, the length of the arrangement and who benefits from the arrangement.
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