The Fair Work Ombudsman has announced an investigation into the
way Australian businesses and organisations are approaching work
experience placements, internships and unpaid 'trial
periods'. There is concern that many young people undertaking
these arrangements are actually performing the roles of
'employees' and should be entitled to be paid for their
services. The investigation may result in changes to the Fair
Work Act 2009 (Cth) (FW Act).
Who is an employee?
Any person, whether engaged as an intern, work experience
student or volunteer, should be paid a wage if that person can be
defined as an 'employee' of the business.
The FW Act does not define who is an employee, but does
expressly exclude from the definition of an employee any person
undertaking a 'vocational placement'. Vocational placements
are unpaid placements undertaken as a requirement of an education
or training course (section 12 of the FW Act).
If you receive a request from a university, TAFE or individual
student to complete a work experience or internship placement for
academic credit or as a prerequisite to graduation, then in most
circumstances it will be a vocational placement and the student
will not be considered to be an employee under the FW Act.
For all other prospective interns, employers must ensure the
arrangement does not give rise to an employment relationship at
common law or they will be legally entitled to employee benefits. A
number of factors will need to be considered.
If the employer and intern intended the arrangement to be
unpaid, then this will be relevant, but not determinative. It may
be outweighed by factors such as the duration of the arrangement
and the type of work performed.
For example, the longer the internship, the more likely the
intern will learn skills and be able to produce sophisticated work
rather than simply observing and trialling tasks. A full-time
internship compared to a part-time internship may also indicate the
intern is engaged to perform productive work. If an intern is
engaged in a professional services firm and the intern's work
is charged out to clients, then this will be indicative of the
intern undertaking normal employee work.
Failing to pay an intern who would be properly defined as an
employee constitutes a breach of the civil penalty provisions of
the FW Act, which can result in penalties being imposed for the
breaches and orders requiring the business to back pay the intern
for time worked at an appropriate wage rate for the work
The challenge for businesses is to properly categorise the
relationship before commencing the internship to ensure that both
parties are clear about why the student or young person is taking
on the internship and what the parties expect from each other...
and then stick to it. Shorter period internships are less likely to
be challenged as interns should not be used as a substitute for
work that might otherwise be performed by employers.
Additionally, in many Australian states and territories paid and
unpaid interns are also considered to be employees for the purpose
of equal opportunity legislation, including prohibitions on sexual
harassment in the workplace. Businesses will also have occupational
health and safety obligations towards interns and work experience
students under the new model work health and safety laws or the
relevant state or territory health and safety laws.
This publication is intended as a general overview and
discussion of the subjects dealt with. It is not intended to be,
and should not used as, a substitute for taking legal advice in any
specific situation. DLA Piper Australia will accept no
responsibility for any actions taken or not taken on the basis of
DLA Piper Australia is part of DLA Piper, a global law firm,
operating through various separate and distinct legal entities. For
further information, please refer to www.dlapiper.com
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Long experience representing many of Australia's leading employers has taught us that in employment litigation the identity of an employee's representative is a major factor in how employee litigation runs.
Australian employees receive certain entitlements (such as annual leave and superannuation) where contractors do not.
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