2017 Recap on the Positives and Perils of Unpaid Work Placements

A recent study undertaken by UTS, QUT and the University of Adelaide reviewed the prevalence of unpaid work placements within the current Australian labour market.

The study, reported in ‘Unpaid Work Experience in Australia: Prevalence, nature and impact[i], revealed that almost 60% of respondents aged 18-29 and over 25% of respondents aged 30-64 had participated in at least one episode of unpaid work experience in the last five years with 60% agreeing that an unpaid work placement would be helpful towards securing paid work in the future. However, only 27% of respondents actually secured paid employment by their host employer or organisation after completing an episode of work experience.

The report noted that exposure to the working world through well-designed work experience programs may assist in the transition from education to employment. Federal government initiatives like the National Work Experience Programme and PaTH (Prepare-Trial-Hire), to be introduced in April 2017, are also placing increasing reliance on unpaid work experience in an attempt to address the needs of the long-term unemployed.

However, on the flipside, many arrangements do not fall within permitted “intern” practices under the Fair Work Act 2009 (Cth) (Act), exposing businesses to potential penalty for failure to provide interns with minimum benefits. The Fair Work Ombudsman has successfully prosecuted a number of businesses over unpaid intern schemes, asserting that interns were in fact employees (see previous posts on this topic at Recapping Australian Workplace Regulator Trends for 2016, January 2017 and Unpaid interns leave $24,000 hole in organisation’s pocket, February 2015)

Organisations seeking to allow unpaid work experience must continue to be mindful of restrictions on genuine intern arrangements under the current drafting of the Act.

Unpaid Work Providers beware

Unpaid work placements can be lawful – provided that the arrangement is a “vocational placement” within the meaning of the Act or alternatively, no employment relationship can be said to exist. Under the Act, a vocational placement is lawfully unpaid if:

  • the placement is either arranged by an educational or training institution or a student;
  • there is no entitlement under contract, industrial award or agreement for the organisation to pay for the work the student undertakes;
  • the placement is done as a requirement of the student’s education or training course; and
  • the placement is approved under a Commonwealth, State or Territory law or administrative arrangement (courses offered at Australian universities, TAFE colleges and schools will generally satisfy this requirement).

If the placement does not meet all of the above criteria, it may still be a lawful unpaid work arrangement provided no employment relationship exists. Unpaid work arrangements are less likely to be considered employment relationships if:

  • they are mainly for the benefit of the person (not the organisation);
  • the periods of the placement are relatively short;
  • the person is not required or expected to do productive work; and
  • there is no significant commercial gain or value for the organisation derived out of the person’s work.

[i] “Unpaid Work Experience in Australia: Prevalence, nature and impact” by Dr Damian Oliver (UTS), Professor Paula McDonald (QUT), Professor Andrew Stewart and Associate Professor Anne Hewitt (University of Adelaide), Department of Employment, December 2016.

Paying the Price: Employee required to pay employer’s legal costs after losing unfair dismissal case

The Fair Work Commission has ordered a former cabin crew supervisor to pay his ex-employer’s legal costs after rejecting settlement offers and then losing his unfair dismissal claim. The case provides a useful illustration of an employer successfully recouping costs under Fair Work Act provisions where an employee has rejected a reasonable offer to settle. Continue reading