Unpaid work – Fair Work Ombudsman

Unpaid work can occur in the workforce in different forms – from vocational placements to unpaid job placements, internships, work experience and trials. They are entered into for a number of reasons. These include:

  ○ to give a person experience in a job or industry
  ○ to provide training and skills and/or work experience as part of formal programs to assist people to obtain work
  ○ to test a person’s job skills, or
  ○ to volunteer time and effort to a not-for-profit organisation.

Not paying the person doing the work in some of these arrangements can be lawful.  For example, for defined vocational placements, or where a job seeker is not an employee, but rather is receiving benefits from the government and undertaking a work placement as part of a Commonwealth employment program.

In cases where the person is actually an employee, they are entitled to pay and conditions under the Fair Work Act.

If a person is an employee, they may also need to complete formal or informal training to make sure they have the right skills and knowledge to perform their job. This can include on-the-job training, online or formal training courses or team training.

If an employee has to do training as part of their job, they have to be paid the right pay for those hours worked.

Employees also have to be paid the right pay for time spent in team meetings or opening and closing the business, if their employer requires them to be there.

Example: Payment for training
Joe just started as a sales assistant in a shop. Before his first shift, he had to complete an online course that showed him how to use the cash register and explained all the company policies. This took him 2 hours. When he finished the course he worked 3 hours on the shop floor.Because the training was compulsory, Joe had to be paid for the 2 hours he spent doing the online training as well as the 3 hours he worked on the shop floor.

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Unpaid trials

Sometimes an employer might ask a person to do an unpaid trial while they evaluate them for a vacant job. This is used to determine if the person is suitable for the job by getting them to demonstrate their skills, and is sometimes called a work trial.

Unpaid work trials may be unlawful where:

○ it isn’t necessary to demonstrate the skills required for the job, or has continued for longer than is actually needed. This will be dependent on the nature and complexity of the work, but could range from an hour to one shift
○ it involves  more than only a demonstration of the person’s skills, where they are directly relevant to a vacant position, or
○ the person is not under direct supervision for the trial.

Any period beyond what is reasonably required to demonstrate the skills required for the job must be paid at the appropriate minimum rate of pay. If an employer wants to further assess a candidate’s suitability, they could employ the person as a casual employee and/or for a probationary period and pay them accordingly for all hours worked.

Example: Lawful unpaid trial
Jack applies for a job as a trades assistant at a local panel beaters.  As part of the applicant screening process, Jack is advised by the owner that on the day of the interview he’ll need to show he knows his way around a car and a workshop, because it’s a minimum requirement of the job. Jack agrees.To do this, after the interview, Jack is asked to follow one of the tradesmen doing body repairs. The tradesman watches Jack to make sure he knows how to work safely and use the right tools. Jack shows he meets the minimum criteria for the role and the owner offers Jack the job.Jack’s brief trial was reasonable to demonstrate his skills and he does not need to be paid for the trial.

Example: Unpaid trial that should be paid
Jessica sees an advertisement on her university notice board for a job as a barista at a campus café.The position was advertised for Monday, Tuesday and Thursday mornings from 7am to 12 noon. The successful candidate needs to have at least 3 years’ experience and be able to make a wide range of coffees.At her interview, Jessica is advised that she will need to work the first week unpaid to give the café manager time to see whether or not she is suitable for the job. She is also advised that if she isn’t able to work any of the shifts in the first week, she needs to advise the manager the night before and arrange someone to cover her shift.The duration of the ‘trial’ and the requirements placed on Jessica suggest that the arrangement is an employment relationship, meaning that she should be paid for all hours worked at the appropriate minimum rate of pay.

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Student placements

Student placements give learners the opportunity to apply the theory and skills they gained while studying in a professional workplace.

The placements can give students the chance to get the skills they need to transition successfully from study to work. At the same time, industry gets the opportunity to enrich student learning experiences and increase the number of work-ready graduates.

Placements that meet the definition of a vocational placement under the Fair Work Act 2009 (the FW Act) are lawfully unpaid.

What is a vocational placement?

Under the FW Act, a vocational placement is lawfully unpaid if it meets all the following criteria:

There must be a placement

This can be arranged by the educational or training institution, or a student may initiate the placement with an individual business directly, in line with the requirements of their course.

There must be no entitlement to pay for the work the student undertakes

Where a student’s contract with the host business or organisation entitles them to receive money for the work they perform, the vocational placement will likely have turned into an employment relationship. Similarly, work arrangements covered by industrial awards or agreements are not vocational placements.

The placement must be done as a requirement of an education or training course

The placement must be a required component of the course as a whole, or of an individual subject or module of the course. It doesn’t matter whether that subject is compulsory or an elective chosen by the student.

The placement must be one that is approved

The institution delivering the course which provides for the placement must be authorised under an Australian, state or territory law or an administrative arrangement of the Commonwealth or a state or territory to do so. Courses offered at universities, TAFE colleges and schools (whether public or private) will all satisfy this requirement, as will bodies authorised to offer training courses under state or territory legislation.

When all of the above criteria are satisfied, hosts are not required to pay students entitlements under the FW Act. However, a host can choose to pay the student at their own discretion if they wish.

If the placement doesn’t meet all of the above criteria, it won’t be a vocational placement under the FW Act. However, this doesn’t automatically mean that the person is an employee and entitled to payment. The next step is to determine whether or not the person is in an employment relationship.

For information to help you tell whether someone is in an employment relationship see Work experience and internships.

Example: Vocational placement
Mitchell is choosing electives for his undergraduate degree. One of the electives is a 3 month placement organised by his university at a host business. The placement counts as credit towards finishing his degree.As the placement is part of his course, it meets the definition of a vocational placement. This means he’s not an employee and not entitled to be paid wages or get other conditions of employment.

Example: Not a vocational placement
Stuart recently finished a Bachelor of Journalism and is looking for work as a journalist. He responds to an advertisement to write for his local paper for 3 months as an ‘unpaid intern’.He wants to get experience and increase his chances of employment. Since Stuart has already finished his degree and the placement wasn’t required by his course, it isn’t a vocational placement.The paper tells Stuart that he’ll be given specific tasks with deadlines and that he’s expected to be at work in normal business hours. This suggests Stuart has been engaged as an employee and entitled to wages and other conditions.

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Work experience & internships

Internships – paid or unpaid?

Employers can’t avoid paying lawful entitlements to employees by labelling them as ‘interns’. If they are performing productive work for the business, they are legally entitled to be paid minimum award rates.Unpaid placements are lawful when they’re part of a vocational placement for a course of study. But the law prohibits the exploitation of workers when they are fulfilling the role of an actual employee.Learn more about the rules for work experience and internships below.

Unpaid work experience, job placements and internships that are not vocational placements will be unlawful if the person is in an employment relationship with the business or organisation they are doing the work for. People in employment relationships are employees of a business and entitled to:

○ a minimum wage
○ the National Employment Standards
○ the terms of any applicable award or registered agreement.

To work out whether or not a person is an employee each case must be considered on its own facts. It is a matter of working out whether the arrangement involves the creation of an employment contract. That contract does not have to be in writing; it can be a purely verbal agreement.

An employment contract can arise even where the parties call the arrangement something else, say it is not employment, or if a person agrees not to be paid wages for work they do.

There are a range of indicators that an employment relationship exists, and it needs to be assessed on a case by case basis.  Key indicators are:

○ an intention to enter into an agreed arrangement to do work for the employer
○ a commitment by the person to perform work for the benefit of the business or organisation and not as part of a running a business of their own, and
○ an expectation that the person receive payment for their work.

It is not intended that people are employees while receiving benefits from the government and undertaking work placements/internships as part of Commonwealth employment programs.

The indicators below will help you work out whether an employment relationship exists and an unpaid work experience, job placement or internship is likely to be unlawful:

Reason for the arrangement

If the purpose of the work experience, placement or internship to give the person work experience it is less likely to be an employment relationship. But if the person is doing work to help with the ordinary operation of the business or organisation it may be an employment relationship arises. The more productive work that’s involved (rather than just observation, learning, training or skill development), the more likely it is that the person’s an employee.

Length of time

Generally, the longer the period of the arrangement, the more likely the person is an employee.

Significance to the business

Is the work normally done by paid employees? Does the business or organisation need this work to be done? If the person is doing work that would otherwise be done by an employee, or it’s work that the business or organisation has to do, it’s more likely the person is an employee.

What the person is doing

Although the person may do some productive activities as part of a learning experience, training or skill development, they’re less likely to be an employee if they aren’t expected or required by the business or organisation to come to work or do productive activities.

Who’s getting the benefit?

The person who’s doing the work should get the main benefit from the arrangement. If a business or organisation is getting the main benefit from engaging the person and their work, it’s more likely the person is an employee.

Example: Unpaid internship
A local council has advertised an internship program for high school or university students interested in government processes. The internships have been advertised as unpaid positions and students are allowed to select the hours they spend at the council office over a 2 week period.The council is careful to make sure that the role is mainly observational.  The students are getting the main benefit from the arrangement.In this example there’s no employment relationship and the interns don’t have to be paid.

Example: Paid internship
Jonathon is a final year accounting student. He agreed to do an unpaid internship with an accountancy firm and was promised a job once he graduates.Jonathon attended the firm for 3 days a week.  He prepared customer tax returns and company financials.  The firm charged clients for the work he did.Although Jonathon had agreed not to be paid, he did work that would have otherwise been done by a paid employee. This indicates an employment relationship existed. As such he should be paid for all the hours he worked.

Youth Jobs PaTH internship

If you’re aged 17 to 24, on income support and have been registered with jobactive, Transition to Work or Disability Employment Services for at least six months, you may be eligible to take part in a Youth Jobs PaTH internship external-icon.png. This allows you to gain work experience and show an employer what you can do.

※ Source ☞  Fair Work Ombudsman