The legal requirements of unpaid work

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EI gives the small business community the opportunity to ask our employment experts their burning employment questions. This month Claire Boulton, Director of Threads and Style, an Australian online shopping and styling website for women, got the opportunity to ask her question.

Last year Claire took the plunge by leaving her full time job behind to start researching and planning her dream online shopping site. Since its launch, Threads and Style has been hugely successful and has even made a profit in its first year of operation.

Claire receives hundreds of requests from university students and graduates who are keen to get into the workforce and are looking for an internship at Threads and Style to get their foot in the door.

Claire asked: “What is the legal process with interns, volunteers and work experience [students]? And what are their rights/ entitlements?”

The Answer

Students can make fantastic interns especially if your company is one that values experience over academics. You will find that it is usually a win-win situation if you appreciate gaining new insights and ideas from someone with a fresh perspective.

The Fair Work Ombudsman has looked at a range of circumstances where unpaid work may be suitable for those seeking to gain valuable work experience. However, with penalties of up to $51,000 per breach, it is vital that you are confident that any unpaid work arrangements are legally compliant.

Additionally, in order to run an internship program you may need specific insurance and an internship agreement in place regarding expectations, responsibilities and intentions of those taken on board.

The Fair Work Ombudsman defines the following three circumstances and whether the person is entitled to payment:

Vocational Placement:  Formal work experience that is a requirement of an education or training course and which is arranged by a State of the Commonwealth. This can be unpaid.

    1. Assisting the Business – if the key motivator is to give your business a helping hand for a set period, it is likely that an employment relationship will be created and the worker should be paid.
    2. Gaining Experience from the Business – If the key motivator is for the worker to observe and gain first-hand experience of your business, it is more likely that it will be genuine work experience and can be unpaid.
    3. 2 Weeks  Vs. 2 Months – the length of the placement will be important. The longer the placement, the more likely that an employment relationship will be created, and the worker should be paid.

Work Experience/Internships: If this work is not part of a formal vocational placement, then the terms of what has been agreed between the yourself and the person performing the work experience or internship will need to be analysed including the following:

Trials: If your business requires a person to come in for a period to ‘trial’ their ability and suitability to perform a role, this will be deemed as an employment relationship being created, and they should be paid for such time spent on the trial.