Scott Morrison’s first Federal Budget announced the creation of the ‘Youth Jobs PaTH’ (Prepare-Trial-Hire) program – a program designed to encourage up to 120,000 unemployed youth into the workforce through skills training programs, paid internships and incentive payments for prospective employers. While further details will come to light over the course of the Federal Election campaign, employers who want to participate will need to look before they leap, to make sure their participation in the program doesn’t lead them, later on, to fall foul of the minimum wage provisions in awards and legislation.

The Budget papers suggest that the Youth Jobs PaTH will involve three-stages:

  1. six weeks of skills and job hunting training;
  2. internship placements of between 4 to 12 weeks duration, in which interns will work between 15 to 25 hours per week. During these placements, jobseekers will receive $200 per fortnight (on top of their income support) from the Federal Government, while businesses who take on interns will receive an upfront payment of $1,000; and
  3. larger subsidies paid to businesses who take on Youth Job PaTH jobseekers on an ongoing basis, with accelerated wage payments to prospective employers forecasted to be between $6,500 and $10,000.

We’re yet to see how the program will interact with the minimum wage provisions in awards, but social media has lit up at the suggestion that jobseekers under this scheme will be paid as little as $4 per hour (excluding the unemployment benefits these jobseekers will retain during this time) during stage 2. The ACTU has even described the scheme as ‘ripe for abuse’.

It seems unlikely to us that the Youth Jobs PaTH will give employers carte blanche to escape from all obligations relating to interns.

However, what will be important for businesses wanting to minimise the risk of claims is how they engage with jobseekers both during the internship program and (more importantly) after it is completed – and that there is a clear line between those involved in the internship program and those who have moved into an employment relationship.

This is particularly so where the vulnerability of young workers to ‘intern’ arrangements has been a key concern for the Fair Work Ombudsman (FWO). This was highlighted in the recent decision in CrocMedia, where the Court looked at minimum wage obligations for relationships that were described as ‘internships’ or ‘vocational placements’. The Court decided that two radio producer ‘interns’ had actually been engaged as employees, rather than unpaid volunteers. The Court placed emphasis on the fact that the company had derived a profit or productive work from the contribution of the interns and the length of their engagement.

What does this mean for businesses participating in the Youth Jobs PaTH program and for using internship arrangements more generally?

A few things:

  • comply with the program requirements while the internship placements are under way, and ensure the jobseekers understand that they are being engaged as part of the internship program;
  • make sure it is clear when the internship placement ends;
  • make sure that, if a jobseeker transitions to an ongoing basis or out of an internship arrangement, their terms and conditions of employment meet the minimum employment standards under any applicable awards or legislation; and
  • make sure that, at all times, you comply with workplace health and safety obligations regarding all workers in your business (including interns and unpaid volunteers).

The Youth Jobs PaTH programme raises some interesting questions about the dynamic between employers, employees and interns. These are arrangements that need to be tightly managed to minimise exposure to underpayment claims and FWO prosecution.