If you employ a worker without the intention of paying them, you must ensure that you are not in breach of employment laws that regulate unpaid work. To avoid participating in illegal business practices, you must understand the legal circumstances under which you can engage someone for unpaid work. This article will take you through when unpaid work is legal.
Is Unpaid Work Legal?
Unpaid work is lawful in certain circumstances. These circumstances depend on the nature of the work that the employee is engaged in.
A vocational placement is a work experience arrangement as part of a course or degree. This placement gives students industry experience to help transition students into the workforce. In the case of vocational placements, unpaid work is lawful regardless of an employment relationship.
Is There an Employment Relationship?
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, you must consider several factors. Some of these factors include:
- whether there is an employment contract;
- the nature and purpose of the agreement;
- the length of the arrangement;
- the significance of the arrangement; and
- who benefits from the arrangement.
Where an employment relationship does exist, you must provide your employee with benefits according to the minimum wage, the National Employment Standards and any terms applicable under an applicable award or enterprise agreement.
Continue reading this article below the formUnpaid Trials
You likely want to trial a potential employee before hiring them for a vacant position. It is lawful to not pay someone for a trial only if you must conduct a trial to evaluate their suitability for the position. Further, you should conduct the trial:
- to test the person’s skills;
- only for a suitable length of time required to see the person’s ability to perform the skills necessary for the job; and
- under supervision from the potential employer for the entirety of the trial.
If you decide to continue trialling an employee beyond a short period, you will need to either hire the worker as a casual employee or for a probationary period.
Internships and Work Experience
If an internship or work experience placement involves ‘productive’ work, then it may be considered employment and will need to be paid. Productive work is different from work done for training or skill development. Students often undertake a work experience program as part of their training or take on a primarily observational role. Therefore, you will need to consider each worker on a case-by-case basis.
It is important to note that unpaid internships are lawful where they are in connection with a vocational placement. A vocational placement means the internship must be completed as a requirement of an education or training course. For example, lawyers must complete their practical legal training, and an aspect of this course is work experience. The work experience aspect of the course can be unpaid as it is a vocational placement.
In What Circumstances Should I Pay Interns?
You should pay an intern where an employment relationship exists. If an employment relationship exists, the intern is entitled to at least the national minimum wage and other entitlements under any applicable industrial instrument.
Whether or not an intern is an employee for legal purposes may depend on what working following work arrangements you fall into. For example, an intern might be an employee if you engage them:
- for an extended period of time;
- to complete work that assists your business in meaningful ways; and
- to redeem a benefit that mostly flows to your business and not the intern.
Volunteer Positions
Volunteer positions are usually unpaid due to their nature. However, this is not the case where an employment relationship exists. It is not possible to call someone a volunteer to avoid paying them. Instead, you will need to assess whether the worker is a genuine volunteer.
Some key characteristics of a genuine volunteer include where:
- there was no intention to create an employment relationship;
- the volunteer does not expect payment; and
- the volunteer is under no obligation to complete the work.
The nature of the workplace will also be considered when assessing if a volunteer is genuine. For example, if your workplace is a not-for-profit organisation, it is more likely that a worker will be found to be a volunteer.
Key Takeaways
To avoid participating in illegal business practices, you must understand the legal circumstances under which you can engage someone for unpaid work. Unpaid work is more likely to be lawful where the work is:
- an unpaid trial;
- an internship or work experience placement; or
- a volunteer position.
If you need assistance understanding if you need to pay your workers, 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.
As an employer, understand your essential employment obligations with this free LegalVision factsheet.
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 considered lawful where no employment relationship exists, or the worker is involved 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, several factors should be considered. Some of these factors include 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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