The recently decided case of The Fair Work Ombudsman v
Crocmedia Pty Ltd provided a hard learned lesson for employers
about the importance of correctly classifying and remunerating
employees. The case highlights the importance of understanding that
employment relationships have a legal definition and employer's
cannot simply dressed up employment as an unpaid internship or work
experience in order to escape any obligation to remunerate pursuant
to the Fair Work Act 2009
The report identified the main group of workers who are
susceptible to risk are younger people looking to get a start in
employment (including university graduates and migrant workers).
The two main potentially exploitative unpaid categories of work
were identified as work experience placements and internships.
The Fair Work Ombudsman is the body that investigates and
commences proceedings against businesses that breach their
obligations under the FWA. Although there are some legitimate
exceptions permitting unpaid arrangements, for example genuine
vocational placements. These exist when the placement is undertaken
as a requirement of an educational or training course through an
institution such as a TAFE, or university at the instigation of the
educational provider or student. However, employers must carefully
assess every placement against a range of factors to ensure
compliance with the FWA.
Ultimately, a flawed placement could result in a legally binding
employment relationship, which entitles the worker to minimum wage
and other benefits typically associated with employment. Employers
are encouraged to consider at a bare minimum the following, prior
to entering into a work experience internship or voluntary
the purpose of the relationship – is it the relationship
truthfully tailored to providing work experience to the person or
is it to get the person to do work to assist with the business
outputs and productivity? An example would be a work experience
placement being asked to do universal mailing while undertaking a
marketing placement post university qualification;
the length of time the placement continues over is also a
guiding litmus test for employment. Generally, the longer the
placement, the more likely the person is considered a statutory
does the person have productivity obligations imposed upon
them? Although the person may do some productive activities during
a placement, they are less likely to be considered an employee if
there is no expectation of productivity in the workplace;
does the person benefit or the business from the arrangement,
if the main benefit of a genuine work placement or internship is
not considered as flowing to the person doing the placement and the
business is gaining a significant benefit as a result of engaging
the person, this may indicate an employment relationship has been
As previously mentioned, if the placement was a vocational
placement (as defined) then it is less likely that an employment
relationship can be shown to exist. Another factor that may guide
employers is considering whether the unpaid work experience
placements are primarily observational.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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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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