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Interns are not free labour: are your interns really employees?

Interns are not free labour: are your interns really employees? (Last Updated On: January 31, 2014)

Unpaid internships and work experience have become particularly popular in Australia. Graduates and job seekers alike are looking to differentiate themselves in today’s competitive labour market by gaining hands on work experience. For employers, internships provide an opportunity to attract new talent.

However, there is a misconception that if a worker undertakes some form of work integrated learning, he or she is not an employee and falls outside the protection of the Fair Work Act 2009 (the Act) and can be unpaid. This is not the case.

Employers should ensure that unpaid placements are only offered when it is legitimate to do so, or face penalties of up to $51,000 for failing to meet their obligations under the Act to true employees.

Types of unpaid placements

  • Vocational placements are formal placements that are an authorised mandatory part of a training or educational course. Students are not entitled to be paid or to other minimum employment entitlements.
  • Other forms of unpaid work experience or internships can be lawful provided the worker is not an employee in reality.

Determining the employer/employee relationship

Employers should ensure they establish the legitimate nature of the relationship from the outset. Whether an individual is an employee is a question of fact in each case, but some useful indicators to consider when engaging interns are set out below.

  • If the primary reason for the placement is for the individual to contribute to business productivity (rather than to gain training or work experience), they are likely to be an employee.
  • Generally, the longer the placement the more likely the individual will be deemed an employee.
  • If the individual is accountable for completing tasks by set deadlines or providing output, they are likely to be deemed to be an employee.
  • Is the employer, rather than the intern, gaining the main or a significant advantage as a result of the placement? Usually internships are primarily to observe and learn and not to undertake activities which require extensive training or experience.

Recommendations

When engaging interns, you should ensure that you:

  • provide an engagement agreement which outlines the true nature of the relationship;
  • specify the length of the arrangement; and
  • consider the purpose of the arrangement and any obligations that should be met by both parties.

It is important to also consult any applicable modern award for specific provisions regarding internships. In addition, remember that other obligations such as Workplace Health and Safety and workers compensation are still relevant to interns.

By Adam Tsui – Employment Relations Consultant

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