By Hannah Hurst
In 2017, the Coalition Government launched the Youth Jobs PaTH internships program initiative, to reduce the number of unemployed youths by allowing businesses to trial job seekers for up to 12 weeks without incurring a cost.
Under the program, the Government will pay eligible job seekers aged 17 to 24, a $200 fortnightly incentive, in addition to their income support payment, to participate in the internships for 30 to 50 hours per week. Employers who engage with the initiative will receive a payment of $1,000 to assist in covering the costs of hosting a trial employee and may be eligible to receive a wage subsidy of up to $10,000 if the intern is subsequently hired.
The Government has designed the program to assist unemployed young people to obtain employment by mitigating the risks for businesses that are associated with taking on a new employee. The Government has committed to creating 250,000 additional jobs through the initiative for young Australians over five years from 2019 to 2024.
But not everyone is happy about this initiative; political parties, the ALP and the Greens view the program differently and say that it fosters a perverse incentive for businesses to exploit young workers by churning through interns to benefit from free labour and obtain government handouts. Despite the initial heavy criticisms expressed by these parties, the program has delivered real results. From inner-city suburbs to regional towns, more than 119,100 young people have participated in the program, with over 74,200 (62.3 per cent ) of those individuals receiving a job.
In addition, the COVID-19 pandemic has wreaked havoc on the job market, with many businesses looking to save on costs by engaging volunteers or interns, however, businesses should we warned against unpaid work unless an exemption
Unpaid Work: your employer obligations
Generally, there are three particular circumstances where employers can engage an unpaid worker or unpaid interns, these include:
1. Vocational placements
A vocational placement is where there is a link between the placement, and study, such as mandatory placements for university courses or a high school work placement. The placement must be a requirement of a specific module or subject of a course as required by an educational institution. The educational institution must be ‘authorised under an Australian, state or territory law or an administrative arrangement of the Commonwealth or a state or territory. This means that an employer can’t engage a high school worker and not pay them on the basis it is forms a vocational placement or other form of work experience.
2. Unpaid work trials
An unpaid trial may be lawful so long as it involves no more than a demonstration of the candidate’s skills and abilities. This should generally be no more than one shift, or only enough time for the employee to determine if the potential employee possesses the skills for the job. The candidate should also be under direct supervision and must not be performing any meaningful work.
3. Unpaid work experience or internships
Unpaid work experience or internships that don’t fall within the exception for vocational placements are risky. For such an arrangement to remain lawful, an employment relationship cannot exist. Thus, the worker must not be performing work for the company that would ordinarily be performed by an employee. If they are, it’s likely that the individual will be deemed to be an employee and therefore should be appropriately paid for their time. An internship may include, for example, shadowing a professional while they perform their role.
The price for getting it wrong
The Fair Work Ombudsman (FWO) places significant focus on underpayments.
In 2016 the FWO ordered a Japanese fast-food retailer in regional NSW to repay more than $51,000 to three Korean workers after exploiting them to come and work in Australia on an ‘internship program’ where they were paid flat rates of between $12 and $13.50 for all hours worked.
As well as ordering a back payment, the company and its director faced penalties of up to $51,000 and $10,200 respectively.
The store owner organised for the three students to come to Australia on an ‘internship’ arrangement which was not authorised under any Australian law or administrative arrangement. The work the employees undertook was not a requirement of their college course.
In a more recent case from 2020, a childcare operator was fined more than $30,000 for failing to backpay two migrant workers who worked under the guise of a volunteer arrangement. The business failed to comply with two compliance notices issued which required it to backpay the workers, who had been paid nothing despite being entitled to a total of $54,752 in wages for work performed in 2016 and 2017. The workers had contacted the FWO for assistance. Upon investigation, FWO investigators found that the volunteer arrangement was not legitimate as the workers performed productive work under little supervision that was not a formal part of their tertiary studies.
These cases are a strong warning for employers who engage ‘volunteers’ in their business that the FWO does not ‘go easy’ on those exploiting workers and contravening workplace laws.
Have a question about engaging with an intern? It’s a good idea to consult with a workplace expert before acting. If you’re an HR Assured client, you can contact our 24/7 Telephone Advisory Service.
Not an HR Assured client and need some advice? The team at HR Assured can support your business on a range of workplace matters. Contact us today to arrange a confidential, no-obligation chat.
Hannah Hurst is a Workplace Relations Consultant at FCB Group (our parent company) and HR Assured. She regularly provides advice to a wide range of businesses in respect to compliance with workplace laws and has a special interest in the retail industry. Hannah is also a fourth-year law and commerce student at Macquarie University.