A recent case heard before the FWC should encourage employers providing internships to consider whether their programs are being carried out lawfully.
AMIG, A Chinese Media Company, received a huge $270,000 fine for failing to pay the basic minimum entitlements to two workers, including an intern who was required to complete 180 hours of unpaid work. During this time, the intern was expected to carry out productive work expected of a normal employee but without any pay cheque in return. It was found that AMIG mischaracterised the employment relationship and exploited the university student in order to avoid paying proper wages.
In this day and age, having relevant industry experience on your resume is practically a requirement for many students on the verge of graduating. The job market is as competitive as ever, and young people are doing what they can to get ahead. This has translated to a high level of willingness for young people to obtain internships so they can get their foot in the door. According to a report commissioned by the FWO, some workers even pay agencies to place them in unpaid internship programs. One Australian law firm has actually invited students to pay $22,000 to work as an intern at their company, probably in the hope that one day that internship will lead to ongoing employment.
Under the FWA, unpaid working arrangements are lawful only where there is a legitimate vocational placement as part of a formal education or training course, and where there is no employment relationship. In determining whether a worker is an intern or actually an employee, factors to consider include:
- the type of work the person is doing
- whether they are performing tasks and duties normally done by a paid employee
- the length of time of the arrangement
- significance of their work to the business.
If the arrangement is found to be ‘employment’, they will be entitled to all the benefits and conditions under the FWA and the NES including a minimum wage or the terms of any applicable award or enterprise agreement.
There is no doubt that internships can be extremely useful and are particularly prevalent in print and broadcast media, legal services, advertising, marketing and PR. However, employers are reminded that there are legal boundaries that must be followed and that no intern should be exploited. After all, internships are opportunities for observation, learning and skill development. Therefore, the benefit of this arrangement should mainly flow to the individual and not the business.
Lessons for employers
· Keep your intern programmes simple. The purpose of these programmes is to allow for learning and observation in a training environment. The benefit of the programme should primarily extend to the intern and not your business.
· Carefully consider the level of work given to the intern. Merely classifying individuals as an intern does not negate an employer’s obligation to pay wages if they are completing a level of work equal to a normal employee.
· Ensure that no undue stress is placed upon the intern to perform tasks. An intern should not be expected to meet any production targets or deadlines or do any work that is integral to the function of the business.
· Managers/ Supervisors should not overlook the intern. Regular check-in’s to see how everything is going is recommended. Also, requiring a normal employee to supervise in a mentor-like capacity can help the intern feel at ease.
· You may wish to offer formal employment after the intern programme has finished.
Fair Work Ombudsman v AIMG BQ Pty Ltd & Anor  FCCA 1024 (31 May 2016)
Fair work Ombudsman, Experience or Exploitation? Report summary - key findings, case studies, recommendations and responses, Report.
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