Smells Like Teen Spirit: Unpaid Internships

Load up your [enthusiasm]

bring your [Microsoft Excel skills]

 — and leave your invoice at home?

Smells like Teen Spirit by Nirvana

When someone works for you, they should be paid.

Unless….It’s an unpaid internship.

Employees vs unpaid interns?

Every year, undergraduates and graduates arrive full of spirit (teenage or otherwise), told that working for free is a rite of passage. A few weeks of “experience”. A foot in the door. Making contacts.  Building your network.  Character building.  But is it?

In Australia, “unpaid internship” is not a magic phrase that makes wages disappear.  Calling someone an intern doesn’t determine whether they should be paid. What matters is the substance of the arrangement — not the label, not the vibe, not the promise that it’ll all be worth it.

If the intern is:

• Doing real, productive work that helps your business

• Your business is able to charge for that work

• Contributing to your output

• Filling a gap you’d otherwise pay someone to fill or

• Working regular hours under direction…

  
  

Then congratulations — you may not have an intern. You may have an employee.  Who is entitled to wages, the National Employment Standards as set out in the Fair Work Act 2009 (Cth) and the terms of any applicable award or enterprise agreement.

Australian law allows unpaid work in very limited circumstances — mainly genuine vocational placements or short, observational experiences where the primary benefit is to the individual, not the business. Once the scales tip the other way, so does your legal risk.

What factors are relevant?

Firstly, what was agreed to in the engagement? Were wages discussed? What expectations did each party have?

Secondly, what was the purpose of the engagement? To give someone work experience? Are they just observing what is happening in the business or doing actual productive work? How long is the engagement – the longer it goes for, the more likely it is to be an employment relationship.

Thirdly, how important is the work to the business? Is it work that someone would normally be paid to do? Are the tasks actually productive for the business? Can the business charge for the tasks completed?

Finally, who is actually getting the main benefit from the engagement? If the business is getting the main benefit, it is more likely to be an employment relationship.  If it is the individual and their learning, it is more likely to be an internship.

Why does this matter to employers?

Unpaid internships that actually turn out to be employment relationships can create compliance exposure such as:

• Underpayment claims (often years later and backdated);

• Fines; and

• Reputational damage.

Unlike Kurt Cobain, having “the lights out” doesn’t make it “less dangerous”.  It doesn’t matter “how low”, if your teen (or older) intern is actually an employee, they need to be paid.  Otherwise the Fair Work Ombudsman will be at your door saying “entertain us” or more likely “please provide relevant documents on your supposed unpaid intern.”  Just doesn’t quite roll off the tongue in the same way.

Hello, hello, hello, how low?

Hello, hello, hello, how low?

Hello, hello, hello, how low?

Hello, hello, hello

With the lights out, it's less dangerous

Here we are now, entertain us

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This blog is general advice only.  Please obtain legal advice in relation to your specific circumstances.  This blog was written by a human so please seek permission if you wish to copy any of it.