Internships or work experience placements can be a great opportunity for young people or those new to an industry to gain some of the necessary work experience needed to start a career. However, issues can arise if the companies or businesses offering such placements take advantage of the situation and start using their interns to do regular work that the company should be paying for.
The Fair Work Ombudsman (FWO) recently brought a case against Crocmedia Pty Ltd (‘Crocmedia’), a developer of television and radio programs in Victoria (Fair Work Ombudsman v Crocmedia Pty Ltd  FCCA 140). The company was fined $24,000 for failing to pay two university students who initially did a three week placement and then went on to continue doing what was essentially unpaid work for the company. Following their three week placement, the two students were paid approximately $75 a shift for ‘expenses’ which fell well short of the minimum wage and other entitlements that they should have received for the work performed.
Crocmedia cooperated with the FWO throughout the process and later provided the correct back pay to the students. The situation ended up costing the company considerably more than if they had paid the students their correct pay and entitlements from the outset. Although these factors were taken into account and the penalty was discounted, the Court still imposed a significant penalty on Crocmedia for breaching multiple sections of the Fair Work Act.
The decision referenced a study commissioned by the FWO last year to consider the issue of unpaid internships or work experience placements and their potential exploitation. Judge Riethmuller noted that the media industry is one in which it is difficult for young people to gain leverage into and there is a need to guard against the risk that companies will take advantage of work experience arrangements. Unpaid work arrangements have the potential to exploit the more vulnerable groups within our community and penalties such as those imposed in this case are intended to have a general deterrence and educative factor.
Lesson for Employers
Relevant factors in deciding whether a situation is genuinely a short term and defined internship or is in fact an unpaid work arrangement include the duration of the placement, the nature of the work being done and whether a paid employee would otherwise be completing those tasks. Generally speaking if productive work is being done, and the longer it is in duration, the FWO and the courts are likely to consider that the situation does not meet the very limited definition of a vocational placement and the employer is therefore in breach of one or more workplace laws.
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