Young people commonly look for unpaid work experience as a way to get their foot in the door of a prospective workplace. Unpaid work experience can also improve their CV and accustom them to the workplace environment more generally. The general rule is that unpaid work experience is lawful, provided it is a vocational placement or there is no employment relationship. This article will discuss:
- vocational placements;
- what constitutes an employment relationship;
- practical considerations when engaging someone through an unpaid arrangement; and
- certain risks of engaging in unpaid work experience.
As an employer, understand your essential employment obligations with this free LegalVision factsheet.
Vocational Placements
If the work experience is for a vocational placement, it can be lawfully unpaid.
Under the Fair Work Act, a lawful vocational placement requires the engagement to
- be undertaken as a requirement for an education or training course; and
- there must be no entitlement to pay for the work the student undertakes.
Additionally, the placement must be one that the law has pre-approved.
Vocational placements may be arranged by the educational or training institution. Alternatively, the student can arrange it directly, provided it aligns with their course requirements.
No Employment Relationship
Unpaid work experience or internships can also be lawful if there’s no employment relationship. Indicators of an employment relationship include:
What is the Purpose of the Arrangement? | The arrangement must be a genuine work “experience” where the unpaid worker experiences the work environment. If the unpaid worker is filling in someone else’s role or otherwise being productive, then they may be an employee. You should allow the unpaid worker to observe and experience the business, spend time with different employees and participate in various activities. |
Who Benefits from the Arrangement? | If you, not the unpaid worker, are the main beneficiary of the arrangement, then it may be an employment relationship. You should ensure the unpaid worker benefits from the arrangement. |
What are your Expectations of the Unpaid Worker? | You shouldn’t have the same expectations of unpaid workers as your employees. The following are suggestive that your expectations of them are akin to an employee:
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How Long Will the Arrangement Last? | The general rule is the longer the arrangement, the more likely that the person will be an employee.
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Risks When Engaging Unpaid Workers
As we’ve seen over the last few years, employers offering unpaid work may be breaching the Fair Work Act. This, in turn, means that the Fair Work Ombudsman may investigate their workplace and prosecute them for breaching the Fair Work Act.
There are potentially severe consequences for an unlawful unpaid work experience or internship. Your company can be fined up to $66,600 per breach and you will be liable to pay the worker their employee entitlements, such as a minimum wage and their entitlements under the National Employment Standards and any applicable modern award or enterprise agreement.
Key Takeaways
Unpaid work experience can be lawful when there is a student or vocational placement or no employment relationship. Employers should take care if they want to offer unpaid work experience opportunities or internships to minimise the risk of receiving a fine and being liable to pay employee entitlements.
If you’d like to talk through a potentially unpaid internship and what it means for your business, it’s a good idea to speak to our experienced employment lawyers, who 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 experience can be lawful when there is a student or vocational placement, or if there is no employment relationship.
Determining if there is an employment relationship involves considering several indicators such as the length of the work experience or internship, the purpose of it and who benefits from it.
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