The line between lawful and unlawful unpaid work is not always clear.
Many companies are contacted by people offering to work on a voluntary basis. It is often pitched as a "win-win" because the person is willing to work for free in exchange for experience and contacts, particularly in high demand industries such as sports, entertainment, media or fashion.
Unpaid work remains lawful provided the person is a genuine volunteer and not an employee. However, an error of judgment can have serious consequences.
What should a responsible employer do? When is it OK to say yes and when do they need to say no?
In the last few years, we have seen an increasing number of cases in which employers have been criticised, investigated, sued and (in some instances) fined for relying on volunteering or training arrangements to defend claims that they have not provided the legally required employment benefits. For example:
- A media company that agreed to provide unpaid work experience to two people (at their request) was fined. Although the volunteering was found to be legitimate at the outset, it continued for over 6 months and resulted in the two workers essentially being treated as part of the regular workforce. The Court found that the relationship had changed; meaning the workers were employees and were entitled to be paid.
- Another media company was fined after recruiting workers to perform unpaid internship positions instead of employing them as employees. The Court ordered penalties for breaching the relevant award.
- At least one company has entered into an enforceable undertaking with the regulator after the Fair Work Ombudsman found that its "volunteers" were actually employees.
- A farmworker claimed employment benefits under the applicable award. The company successfully resisted the claim by demonstrating that it had always been a volunteering arrangement, and that she had applied for and accepted the role on this basis.
- A fashion start-up and its director were fined for engaging a graphic designer as an unpaid "intern" despite having completed a university degree and working 2 days per week for almost 6 months.
Unfortunately, the line between genuine volunteering and exploitative arrangements remains controversial – with brand risks for any company that is accused of exploiting inexperienced workers.
Recent headlines have alleged that paying reduced wages to trainees can be an exploitative way of cutting costs.
In the sporting arena, a young footballer provided with an unpaid trial has sued his club saying “You don’t trial for over three months, that is ridiculous". The club is defending the claim on the basis that the unpaid work was a genuine volunteering opportunity.
A different football club also experienced an online backlash after advertising for a nine month 'voluntary' assistant role. In that case, although there was some suggestion that the ad wording hadn't reflected the intention of the role, the CEO also made the point that many full-time club staff had started out as interns.
This raises a valid question: Is volunteering becoming too high risk?
Although each case is different, for employers wanting to support people seeking experience in their chosen field, there are a number of key questions that are useful to consider:
- If the placement is to provide work experience or learning, what training, learning experience or other benefits will the worker receive? If it is a longer placement, is this because they will spend some time in different teams or be exposed to different kinds of work? Are they shadowing someone on a project?
- If the placement is to provide a 'trial' period, how long is reasonable to demonstrate the skills required for the job? What length is appropriate? (Workers and regulators may be less likely to dispute the legitimacy of a shorter placement.)
- How does the worker fit into the business? The risk of a claim increases if the volunteer is essentially acting as free labour as part of a paid workforce, filling a role that would otherwise be given to a paid employee.
- What additional administrative and legal protections are needed? There are a number of duties – safe work arrangements, for example – that employers owe to volunteers as well as employees and contractors. When dealing with staff who do not have industry experience, additional safeguards should also be considered.
- What are the terms of the volunteering arrangement? Setting out the details in writing can clarify the boundaries, ensure everyone is on the same page about what is being proposed and agreed, and help avoid misunderstandings.
Everyone has an interest in ensuring inexperienced workers are protected from exploitation, while genuine volunteer opportunities are provided for those who want them. Despite the trend of increasing claims and the complex regulatory framework, the good news is that the law does not block legitimate volunteering. With careful management, this can still be a "win-win" scenario that provides benefits for both a person seeking to volunteer and a company that wants to help them out.
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.