The nature of volunteer programs and their implementation into businesses has come under increased scrutiny from the Fair Work Ombudsman and the penalties for getting them wrong can be severe.
Volunteer programs exist in many different shapes and forms, providing a great opportunity for people to gain valuable industry knowledge in their chosen fields and/or contribute to a not-for-profit cause of particular importance to them.
A government study indicates that one third of working age Australians have participated in some form of unpaid work experience in the last 5 years. Given the prevalence of volunteer opportunities in today's market, it is becoming increasingly important for employers to understand the nature of a volunteer relationship and how to legally implement these programs into their businesses.
What you need to know?
- Unpaid internships/work experience programs are only legal when they are a vocational placement.
- It is critical that employers are alive to circumstances that may give rise to an employment relationship.
- Programs of this nature have come under increased scrutiny from the Fair Work Ombudsman (Ombudsman) and the penalties for getting it wrong can be severe.
When is it lawful to offer unpaid work opportunities?
The Fair Work Act 2009 (Cth) (Act) provides that students completing vocational placements are not considered to be employees and are therefore not entitled to the minimum wage nor other entitlements provided under the Act.
The Act defines a vocational placement as a placement that is:
- undertaken with an employer for which a person is not entitled to be paid any remuneration; and
- undertaken as a requirement of an education or training course; and
- authorised by law or an administrative arrangement of the Commonwealth, a State or a Territory.
The most common type of a vocational placement is a formal work experience arrangement which forms part of an education or training course being undertaken by a registered training organisation (RTO).
When does an employment relationship arise?
If the volunteer is not engaged pursuant to a vocational placement, an employment relationship (as opposed to a volunteer relationship) may arise.
The main factors that will be considered when determining if an employment relationship has arisen are:
If there is an intention to create a legally binding employment relationship.
When the work undertaken is for altruistic purposes, as part of a community engagement initiative or in support of a particular belief in the not-for-profit sector, it is less likely to be found that the parties intended to create a legally binding employment relationship.
The volunteer is not under an obligation to attend the workplace or perform work.
The more formalised the arrangements become, the greater likelihood that the person's engagement will become akin to an employment relationship (for example when a person is required to work according to a regular roster).
Consideration is often also given to the length of the volunteer's engagement. Although, it is important to note that even a relatively short engagement does not preclude an employment relationship being found. However, generally the longer the period of engagement, the more likely that the engagement becomes formalised and such obligations arise.
There is no expectation that the volunteer will be paid for any of the work performed.
This does not extend to some out of pocket expenses. A volunteer may still be paid for some expenses including travel, meals or the like without changing the nature of this arrangement.
The nature and purpose of the arrangement is to provide a learning experience to the volunteer.
Consideration is given as to whether the role is primarily observational and meant to provide the volunteer with a meaningful learning, skills development or experience.
Whilst this can be difficult to ascertain, you should question if the work the volunteer is completing is:
- assisting with the ordinary operation of your business;
- productive and required to be completed;
- performed to the commercial benefit of your business; and
- would have otherwise been completed by a paid worker.
Consideration is also generally given to who ultimately benefits from the arrangement (i.e. the business or the volunteer?).
If the work performed is integral to the business and it does not aid in a specific learning outcome, the more likely it is that an employment relationship may arise.
Why it's important to get it right
Unpaid internships and voluntary work experience programs have recently come under the scrutiny of the Ombudsman and the Courts.
In Fair Work Ombudsman v AIMG BQ Pty Ltd & Anor , the Ombudsman sought to prosecute AIMG BQ (a media company) in relation to its engagement of two events coordinators on an unpaid internship program. The two 'interns' were also being sponsored by AIMG BQ to remain in Australia.
The Court was concerned that AIMG BQ had used unpaid internships "to exploit workers who are capable of performing productive work, and particularly those who are dependent on visa sponsorship".
Given the vulnerability of the volunteers, the Court sent a strong message that it would not tolerate breaches of the Act of this nature and ordered that AIMG BQ pay pecuniary penalties in the amount of $272,850.00 in respect of multiple breaches.
In addition, AIMG BQ's director was found personally liable for penalties in the amount of $8,160.00 and subjected to a three year injunction restraining him from being involved (either directly or indirectly) in any further conduct in contravention of the Act, the National Employment Standards or the Modern Awards.
The above case demonstrates that the Ombudsman is willing to pursue prosecution of employers in relation to misclassified volunteer programs.
As of 1 July 2017, the current maximum penalties that the Court can award for most breaches of the Act and/or Modern Award are in the amount of $63,000.00 for a corporate entity and $12,600.00 for an individual. These penalties can result in considerable liability for employers.
Whilst volunteers and work experience programs can be enriching experiences for individuals and businesses alike, the penalties for getting it wrong can be considerably costly and it is important to seek legal advice as to the nature of the relationship.
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. Madgwicks is a member of Meritas, one of the world's largest law firm alliances.