There are many types of unpaid work including vocational placements, internships, work experience and trials. For some of these arrangements it may be lawful for the work to be unpaid, but in other situations it may not be.

Ultimately, it all hinges on the nature of the working arrangement. The Fair Work Act 2009 allows for unpaid work where the arrangement is a vocational placement or where there is no employment relationship.

This article looks at the factors that indicate whether unpaid work is lawful or not.

Employment relationship

Unpaid work is only lawful if there is no employment relationship between the person and the organisation. If an employment relationship can be shown to exist in the circumstances, the person is considered an ‘employee’, which makes them entitled to certain conditions that are set out in the Fair Work Act.

These conditions include the entitlement to receive minimum wage, the National Employment Standards, and the terms of the relevant industrial award or agreement.

Is there an employment contract?

An employment contract exists in the following situations, whether written or verbal:

  • Where there is an intention to create a legally binding arrangement;
  • Where there is a commitment to performing work for the benefit of the organisation;
  • If the person receives something in return for his or her work; or
  • If the person is not doing the work for his or her own business.

Nature and purpose of the agreement

If the work involves productive work as opposed to training or skill development, then it is likely to be an employment relationship.

Person’s obligations

However, it is not always the case that an employment relationship exists solely because a person is doing productive work. For example, no employment relationship will necessarily exist if:

  • the productive work is incidental to the individual’s training and learning experience; or
  • where they are participating in productive work but in an observational role.

Length of the arrangement

Employment relationships can be for a short amount of time, but the longer the period, the more likely it will be that there is an employment relationship.

Significance of the arrangement

Where the person is doing work that is significant to the business and the business needs the work to be done, it is likely that the individual may be an employee. If the person is doing work that is also done by paid employees, it will be even more likely that there is an employment relationship.

Benefits of the arrangement

In an employment relationship, the organisation will be receiving a significant benefit from the person’s work. In an arrangement where the person is developing and learning skills, it is the person that benefits the most.

It is important to apply these considerations to the various employment arrangements, such as work trials, internships and volunteer positions. Just because a role is called or advertised as ‘unpaid’ does not mean it is lawful for it to be so. Roles also develop and positions that start off as lawfully unpaid may evolve into an employment relationship that attracts other entitlements.

Conclusion

This article has considered unpaid work under the Fair Work Act. There may be other laws which affect what responsibilities and obligations host organisations have in relation to people who undertake unpaid work arrangements. If you are unsure whether or not your workers need to be paid, get in touch with the employment lawyers at LegalVision on 1300 544 755

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.
Dhanu Eliezer

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