Lawful Unpaid Work Arrangements

13 Oct Lawful Unpaid Work Arrangements

ARE YOU AWARE OF WHEN AN UNPAID WORK ARRANGEMENT MAY NO LONGER BE LAWFUL?

Unpaid work arrangements may include volunteers, student placements, internships, work experience, work trials or other.  

What is an “employment relationship”?

An employment relationship is the relationship that exists between the employer and the employee whereby an employee performs work in return for remuneration from the employer.

This is best known as casual, part-time, full-time, permanent, maximum-term or fixed-term employment.

What is an “unpaid work arrangement”?

Where an employment relationship does not exist, a business may not be required to pay the worker for work performed.  This is known as an unpaid work arrangement.

Work arrangements that may not necessarily result in an employment relationship include volunteering, student placements, internships, work experience, work trials, and more.

Where an unpaid work arrangement occurs, the business should clearly outline to the worker the purpose for the work and that they are not considered an employee.

This type of work may include observation, learning, training, shadowing or skill development which may be provided to the worker by the business.  In these types of arrangements, the worker should mainly benefit from the experience.

For example, an unpaid work arrangement may occur to give the worker experience in an industry or occupation, such as a student or someone developing skills and knowledge for a career change.

If the work performed by the worker is productive and beneficial to the business or would generally be performed by a paid employee, the work arrangement may be considered an employment relationship.

If an employment relationship is determined, the worker may be entitled to wages as well as other employment entitlements.

Why are “vocational placements” different?

A vocational placement under the Fair Work Act 2009 “means a placement that is:

– undertaken with an employer for which a person is not entitled to be paid any remuneration; and

– undertaken as a requirement of an education or training course; and

– authorised under a law or an administrative arrangement of the Commonwealth, a State or a Territory”.

Therefore, if factors of an employment relationship exist during a vocational placement, at law, the business may not be required to pay the worker for work performed.

Should there be an agreement in place for “unpaid work arrangements”?

An employment contract will not be required for unpaid work arrangements; however, an agreement clearly outlining the nature, purpose, duration, benefit and other factors of the arrangement may be helpful.

Vocational placements often require an agreement between the student, the education organisation and the business.

There may be the opportunity for workers to become employed by the business following an unpaid work arrangement, however, the business should continually consider each arrangement to ensure an employment relationship has not formed earlier throughout the working engagement.

Where do businesses stand with unpaid work trials?

Businesses may be able to lawfully ask an individual to undertake a supervised unpaid work trial to assess the individual’s skill and suitability for the position.

For a work trial to remain lawful, the trial should not extend beyond what would be considered a reasonable time frame to assess the individual as they demonstrate their skills to perform the position.

Otherwise, the worker may be entitled to payment at the appropriate minimum rate for the duration beyond what was reasonable.

Businesses should consider each work arrangement, whether paid or unpaid, to ensure they understand their legal obligations.

Contact us

Contact the team at HR Business Assist for further information or assistance.

Phone:  1300 138 551 | Email:  info@hrbusinessassist.com.au

Resources

For more information, visit the Fair Work Ombudsman website here.