Unpaid and voluntary work can be invaluable to both the organisation offering the work and the person doing it. However, organisations need to be aware of the difference between a lawful and unlawful arrangement.

Fair Work Ombudsman v AIMG BQ Pty Ltd & Anor [2016] FCCA 1024

A recent case in the Federal Circuit Court clearly demonstrates the risk of getting this wrong.

The Federal Circuit Court fined a media company, AIMG BQ, over $270,000 for (amongst other things) making a university student work 180 hours as an unpaid “intern”. During this time, the student performed productive work including administrative tasks, organising events, magazine editing and office cleaning without receiving any pay.

The Court found that the student should have been treated and paid as an employee. The Court considered that by engaging the student as an intern, the media company intended not to pay her anything at all for the productive work that she was required to perform, and exploited her in order to reduce its wage costs.

In setting the penalty, the Court identified that there was a “need to send a serious message … that the Court will not countenance attempts to disguise employment relationships as unpaid internships and thus deny employees their required minimum entitlements”.

Lessons for employers

Organisations that offer work experience, internship programs, volunteer and other unpaid work should review their arrangements to ensure that they are not inadvertently exploiting people who should actually be treated as employees.

Under the Fair Work Act 2009 (Cth), unpaid work is only lawful if:

  • the worker is a student undertaking a “vocational placement”, as defined in the Act; or
  • there is no employment relationship (for example, where an employee is a true unpaid intern or volunteer).

If these criteria are not met, the worker may be considered an employee. If that happens, the worker will be entitled to the usual employment conditions including a minimum wage, entitlements in accordance with the National Employment Standards, and the terms of an applicable award or enterprise agreement.

What is a vocational placement?

A vocational placement is a formal work experience arrangement that forms part of an approved educational or training course. The placement must be done as a requirement of the course and there must be no entitlement to pay.

Is there an employment relationship?

If an unpaid work arrangement is not technically a ‘vocational placement’, it will be unlawful unless an organisation can prove that the arrangement does not give rise to an employment relationship.

Whether or not a person is an employee depends on the facts and circumstances of their working arrangements. A court will look at a variety of matters, including the nature and purpose of the arrangement, the length of time a person works, whether or not they do productive work, and whether it is the worker or the organisation that receives the most benefit from the arrangement.

What about unpaid work experience or internships?

The main benefit of unpaid work experience or an unpaid internship should be a meaningful learning experience, training or skills development. If the output of the work experience or unpaid internship is productive work, then the arrangement begins to look more like an employment relationship.

What about volunteers?

A volunteer is someone who does work mainly for the benefit of others. An employment relationship may exist even if a person is described as a “volunteer”.

Three key features of a genuine volunteering arrangement include:

  • there being no intention between the parties to create a legally binding employment relationship;
  • the volunteer being under no obligation to actually perform work; and
  • the volunteer not expecting to be paid for their work.

A person is also less likely to be considered an employee if they are performing the work specifically for altruistic purposes, or to further their support of a particular cause.

Organisations should also keep in mind that even if an unpaid work arrangement is lawful under the Fair Work Act 2009 (Cth), there are other laws that may still apply to the arrangement (including occupational health and safety and equal opportunity laws).