McCabe Curwood’s Employment Team has published a three-part article series on unpaid internships. The article series explains the relevant law (Part 1), outlines how to set up a proper intern arrangement (Part 2) and highlights the importance of getting the arrangement right (Part 3).

The backlash over comments made by the General Manager of Muffin Break and a penalty of nearly $330,000 being ordered against a former Shark Tank contestant has thrust unpaid internships into the spotlight once again. The Employment Team is here to assist your business to get it right from the start, or assist in the clean-up operation!

Muffin Break’s GM criticises Millennials for attitude towards unpaid work

Muffin Break’s General Manager, Natalie Brennan hit the headlines when she criticised Millennials for having “an inflated view of their self-importance” and being “unwilling to perform unpaid work to get ahead”. News watchers from all over the world took to social media to express their disapproval of the comments.

Ms Brennan later sought to clarify her previous comments stating “I don’t expect anyone to work unpaid… The unpaid work I referred to was supervised programs run through schools, TAFEs or universities, which provide valuable gained experience to people before they enter the workforce full-time”. It seems that Ms Brennan was suggesting that her previous comments were in relation to “vocational placements”, which offer genuine experience and are permitted under the Fair Work Act 2009 (Cth). As this, and much of the commentary shows, there is still a lot of confusion around what constitutes a legitimate internship.

Former Shark Tank contestant fined nearly $330,000 for “internships”

On 28 February 2019, Her Fashion Box Pty Ltd (HFB) and its sole director and majority shareholder Kathleen Purkis were ordered to pay penalties of $329,133 for underpaying employees, one of which had been engaged under the guise of being an “intern”.

One of the employees, a graphic designer, was engaged on the basis of an “unpaid internship” despite the fact that she had completed her university studies and worked 2 days per week for almost 6 months. This was not a legitimate internship (as outlined further in Part 1 of our article series on unpaid internships) and, as such, the young worker was actually an employee who should have been paid for the work she performed.

Another two employees were also underpaid $15,511 and $18,119. Judge Manousaridis of the Federal Circuit Court found that Ms Purkis knew HFB was not paying the workers their entitlements and imposed the penalties to deter others from similar conduct.

FWO currently prosecuting Sydney childcare operator

At present, the FWO is also prosecuting a Sydney childcare operator that allegedly failed to pay two workers under the pretence that they were completing “unpaid work experience”.

Although the workers were undertaking a Diploma of Early Childhood Education, which requires participants to complete work experience and would, therefore, meet one of the vocational placement requirements of a legitimate internship, the FWO is alleging that the work performed went “well beyond” the requirements of the vocational placement and, as a result, the workers were entitled to be paid $54,752 for that work.

The matter is currently before the Federal Circuit Court, with a mediation scheduled to take place on 5 March 2019. The FWO is seeking orders that the childcare operator back pay the workers, complete an education course and pay penalties.

Threee-part series on unpaid internships

Our unpaid internship series covers the following topics, of which all businesses who engage interns should be aware:

Part 1 – We examine the relevant law to help you understand the legal requirements for an internship (click here to read Part 1).

Part 2 – We outline the clauses that you should include in an internship agreement to protect your business from the risks associated with engaging an intern (click here to read Part 2).

Part 3 – We explore what can happen if you fail to engage an intern correctly, including the personal and corporate ramifications such as the imposition of serious penalties (click here to read Part 3).