Internships – are they legal?

When discussing Industrial relations, an issue that has often fallen through the cracks is that of internships.  In many sought after and prestigious professions (including law – see my previous post on this here) it has become commonplace to expect prospective employees to give their time to employers without remuneration.  Generally, other than in specific circumstances,  this practice is unlawful.

While there is no question that a young person volunteering their time to further their knowledge and experience in a certain industry is a good idea, there is currently enormous scope for employers to unlawfully exploit high levels of competition at career entry levels. It would seem that the more lucrative and prestigious a certain career appears to graduates, the more this exploitation is possible. In a recent finding of the Federal Circuit Court a media company, Crocmedia Pty Ltd, were found liable for breaches of the Fair Work Act in failing to recognise that their “interns” were actually employees.  Pecuniary penalties were imposed, in spite of the fact that the employer had already agreed to repay the employees their missing entitlements.    High levels of competition between prospective employees often create a willingness among them to provide services or to ‘prove themselves’ for free.  However the important  fact that employers need to keep to remember is that the statutory entitlements provided by the Fair Work Act and the Modern Awards cannot be waived by employees, even those seemingly desperate for career advancement.    For those employers for whom ‘internships’ are an essential part of their industry, the exceptions contained in Fair Work Act in respect of ‘Vocational Placements’ should be read carefully.  The Fair Work Ombudsman has published the following guidelines on their webpage:

Generally, the longer the period of placement, the more likely the person is an employee…

Although the person may perform some productive activities during the placement, they are less likely to be considered an employee if there is no expectation or requirement of productivity in the workplace…

The main benefit of a genuine work experience placement or internship should flow to the person doing the placement. If a business is gaining a significant benefit as a result of engaging the person this may indicate an employment relationship has been formed…

Unpaid work experience placements and internships are less likely to involve employment if:

    • they are mainly for the benefit of the person
    • the periods of the placement are relatively short
    • the person is not required or expected to do productive work
    • there is no significant commercial gain or value for the business derived out of the work.

In summary, if the internships are short,  primarily for the benefit of the person, and contain no expectation of productivity or commercial gain to the employer, then they are likely to be offered by anyone in industries that are highly competitive for jobs.

Ironically, a genuine internship is only likely to be offered by  the genuinely altruistic employers, or those for those industries that are experiencing skills shortages, or struggle to recruit employee interest.  Those careers genuinely perceived as lucrative or prestigious are firmly outside this category.

* Helen Carter is the Director and founding solicitor at PCC Lawyers, a team of employment practitioners based in Sydney, with many years of combined knowledge and experience in workplace law, industrial relations, workplace investigations and training.  They provide a high standard of excellence and an exceptional level of personal service to a variety of clients in the Sydney metropolitan area, Central Coast, regional NSW and interstate.

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Brian is an employment lawyer, who has had many years experience in employment and business strategy. Formerly an award winning chef and restaurateur, he built two successful restaurants from scratch, and has advised numerous other business owners on employment, change management, leadership, and adapting to technology. Contact him here.

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