A report prepared for the Fair Work Ombudsman by Adelaide University Law School in January 2013, examining whether unpaid work engagements are considered experience or exploitation, found that employers may be, perhaps unknowingly, engaging in illegal work practices contrary to the requirements of the Fair Work Act 2009 (FWA).
The report also notes that various forms of unpaid work arrangements are on the rise in Australia.
The report identifies two main groups of workers who are susceptible to risk: 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 office of the Fair Work Ombudsman investigates and commences proceedings against businesses that breach their obligations under the FWA. Although there are some exceptions permitting these arrangements, for example genuine vocational training, employers must carefully assess the placement against a range of factors to ensure compliance with the FWA.
A flawed understanding of the placement could result in a legally binding employment relationship, which entitles the worker to minimum wage and other benefits normally associated with employment. Employers are encouraged to consider the following, prior to entering into a work experience internship or voluntary arrangement:
(a) 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;
(b) 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 employee;
(c) 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;
(d) 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 formed.
If the placement was entered into through a university or vocational training arrangement then it is less likely that an employment relationship can be shown to exist. Furthermore, unpaid work experience placements are less likely to be considered employment if they are primarily observational.
Although, this article is designed to highlight the traps that employers may unwittingly find themselves in, it is by no means intended as a general guide for one size fits all. If you are in doubt as to whether your work experience or intern placements are legal or exposing your business to possible prosecution, please contact Peta Tumpey, Nicholas Duggal or Rachel Drew for further advice.