Unpaid work placements are an established way for inexperienced workers to get a “foot in the door” of their chosen career. Especially when undertaken as part of a course of study or training, the benefits to the learner can be well worth the unpaid labour. However, with the rise in unpaid internships and work trials, there is potential for employers to exploit inexperienced workers. Workers and employers need to understand the line between opportunity and exploitation, especially given new case law and proposed government crackdowns.
The Legality Of Unpaid Work
It is standard for workers to be paid for their work in Australia. Employers must provide workers with the minimum conditions, awards and wages they are entitled to under the Fair Work Act 2009. If an employer breaches these conditions, they can be forced to pay unpaid worker’s compensation and incur federal penalties. However, there are occasions when an employer can engage someone for unpaid work.
Vocational Unpaid Work
It is very common for young people to undertake appropriate unpaid work through vocational placements, work experience and internships. A high school student may undertake unpaid work to see if a particular industry suits them. A university student may have to complete a certain amount of work experience or an internship as a requirement for a course of study. The worker receives both mentoring and valuable work experience in return for their unpaid work. These placements give students relevant skills that can help them transition from study to paid work and to build a relationship with a potential employer. In these circumstances, the unpaid worker benefits more than the employer, and therefore the worker does not need to be paid.
A work trial can be a legitimate stage in the recruitment process, where an employer evaluates the applicant’s suitability for a position. An unpaid work trial is legal as long as it is brief (typically between one hour and one workday), a necessary demonstration of a person’s skills, and the potential employer directly supervises the person for the entire trial. The worker should be paid at least minimum wage for a probationary period or as a casual employee for hours worked beyond this brief trial. Work trials are an area where exploitation is becoming more common. Some predatory companies offer illegal, unpaid work situations that include “training periods” that last for days or even weeks.
A volunteer contributes unpaid work to benefit a charity or not-for-profit, such as a church, sporting club, charity or community organisation. People can lawfully engage in unpaid volunteer work if the organisation makes the arrangement clear at the outset. A volunteer is not an employee as long as there is no legally binding employment relationship. A volunteer is not obligated to attend the workplace or achieve certain work targets and does not expect payment for their labour. Notably, the more formalised the volunteer arrangements become (such as regular rostered hours), the greater likelihood that it constitutes an employment relationship.
Determining Whether Unpaid Work Is Lawful
Whether an unpaid work arrangement is lawful depends on whether there is an employment relationship. Whether a person is an employee will depend on whether there was a contract of employment in place. A contract does not need to be written down, as it exists whenever:
- the parties reach an agreement on contract terms, and there was no illegality or other factor that would void the contract;
- the parties intend to enter into a legally binding arrangement;
- the person commits to perform work for the company’s benefit;
- the person receives consideration in return (even if only training or experience); and
- the person does not perform the work as part of their own business enterprise.
A recent case before the Fair Work Commission underscored the importance of the employment contract in establishing whether unpaid work constitutes employment. In Barbour v Memtaz Derbas T/A Derbas Lawyers , the applicant, Mr Barbour, worked at Derbas Lawyers unpaid, assisting with legal work. He chose his own hours, had no fixed workdays and was employed elsewhere. After about three and a half months, Mr Barbour asked his employer when he could transition over to paid employment. His employer informed him the next day that the firm could no longer offer him work, paid or unpaid. Mr Barbour filed a claim with the Fair Work Commission alleging that he was unfairly dismissed from his employment. Debras Lawyers responded with a jurisdictional objection on the basis that they had not employed Mr Barbour and therefore he had no grounds for unfair dismissal.
The Fair Work Commission emphasised that an employment relationship is predicated on the existence of an employment contract. Work experience is not employment if:
- the placement benefits the worker more than the business;
- the placement is relatively short;
- the person is not required to do productive work; and
- the person’s work contributes no significant commercial value or gain to the business.
In this case, the Commission found no employment contract between the parties and no employment relationship. Therefore, Mr Barbour was not entitled to make an unfair dismissal claim. In summary, the Commission pointed out the following.
- Derbas Lawyers was not short-staffed or actively advertising employment positions;
- Mr Barbour did not have set hours or days;
- Although Derbas Lawyers supervised and trained Mr Barbour, this did not denote consideration for work;
- Mr Barbour received significant benefit while Derbas Lawyers obtained negligible commercial gain; and
- Although there had been discussion of employing Mr Barbour in the future, there had been no agreement on a date when he would transition over from unpaid work.
This case demonstrates the problems that unpaid workers can face if they seek legal protection as an employee. You must understand your rights as a worker before you undertake unpaid work. The team at Armstrong Legal can provide you with employment law advice or guidance on your rights as an unpaid worker. You can phone us on 1300 038 223 or contact us via this online form.