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Unpaid internships: Career opportunity or exploitation? - Smart Company

By Alan J. McDonald

Unpaid internships: Career opportunity or exploitation? - Smart Company

The recent scores of reports relating to unpaid internships are indicative of the pressures on young people entering the workplace to gain industry experience. There was a survey commissioned by the Federal Department of Employment that revealed more than half of Australia’s young adults have completed unpaid work as part of an internship or job trial.

Many companies take advantage of the perceived ‘free labour’, exemplified in the recent case involving Fashion Box, which was fined $330,000 for exploiting young workers. Unfortunately, this is not an isolated occurrence. There has been a magnitude of cases whereby an intern has been expected to work, sometimes up to full-time hours, with little to no remuneration. In June 2016, a decision by the Fair Work Commission found media company AIMG BQ grossly underpaid a student, who was performing productive work that was not a formal part of her studies. The AIMG BQ student worked 180 hours over four months and was only paid at the conclusion of her ‘internship’ — at a rate far below the legal award rate.

Unfortunately, workplace exploitation is not uncommon. Muffin Break general manager Natalie Brennan’s comment “there’s just nobody walking in my door asking for an internship, work experience or unpaid work, nobody” signifies an industry expectation that interns should be privileged to work, albeit for free.

The laws in place that protect vulnerable workers from being taken advantage of are not always adhered to by the employer. Some companies will misclassify an employee as an unpaid intern in order to avoid paying the employee for their work.  Under this sham arrangement, the ‘intern’ contributes to the operations and profitability of the business without being remunerated for their work. If an intern is completing work, that could otherwise be done by an employee of the company, they should be entitled to at least the minimum wage and other employee benefits.

Fair work ombudsman Sandra Parker recently said: “Unpaid placements are lawful where they are part of a vocational placement related to a course of study. However, the law prohibits the exploitation of workers when they are fulfilling the role of an actual employee.”

In a wider sense, employers shouldn’t be hesitant to take on interns as long as they are observing work rather than contributing to profits. Their tasks should be limited to tasks that further their learning and work experience.  Such tasks include observation, training or learning and tasks that further their practical experience. An unpaid intern is permitted to perform productive activities, if such tasks are part of their learning experience, and they have not formed an employment contract (a contract does not need to be in writing and can be entirely verbal).

Whether a contract has been created depends on the facts of each case.  Some key considerations that point to an employment relationship are:

  • An intention to enter into an arrangement whereby the ‘intern’ does work for the employer (as opposed to merely observing work done by other people);
  • If the ‘intern’ is doing work for the benefit of the business this points to employment, especially if the business is charging for or making a profit from the work or otherwise saving costs due to the ‘intern’s’ work;
  • The more productive the work completed by the intern, the more likely it is that an employment relationship has been created;
  • If the purpose of the internship is to merely give the intern work experience and a taste and idea of the work completed at the business then it is less likely to be employment, whereas, if the intern is helping complete work that is part of the ordinary operation of the business, then this is more likely to be employment; and
  • Generally the longer the arrangement, the more likely an employment relationship has been created.

If an intern is concerned they have been misclassified and are in fact an employee, who is entitled to be paid a wage, it is advised that they seek legal advice.

Reference: ‘Unpaid internships: Career opportunity or exploitation?‘, Smart Company, Thursday 7th March, 2019