Is not paying a worker legal?
Generally all workers must be paid for their work. However under the Fair Work Act certain unpaid work arrangements can be lawful. These arrangements can be valuable for both employees and employers for a number of reasons, including assessing a potential employee’s suitability or providing an opportunity for prospective employees to gain essential skills and experience to allow them to transition into new work.
A business is only allowed to provide unpaid work in a limited set of circumstances where either the arrangement involves a vocational placement or where there is no employment relationship created.
Unpaid work will only be lawful where the person is not an employee. Merely describing the arrangement as something other than an employment relationship will not avoid it being classified as such. There is no fixed definition of what an employee is, but an arrangement would look less like an employment relationship where:
- the arrangement was to provide a genuine learning experience rather than do work to assist the normal work of the business;
- the arrangement is primarily observational and does not involve significant productive work rather than just meaningful learning and training;
- the arrangement is short or for a fixed-term;
- the work done by the person is not done by paid workers or the business doesn’t gain some operational benefit over and above what would be necessary for the learning experience;
- the person undertaking the role takes the most benefit from the arrangement.
The most common arrangements where an employment relationship does not arise are:
- unpaid trials;
- unpaid work experience & internships; and
This is where a person is asked to perform work so the employer can evaluate them for a job. It is legal where it is no more than a demonstration of a person’s skills and suitability for the job, no longer than is necessary to make the assessment and the person is under direct supervision. Depending on the complexity of the work, a work trial will not usually be longer than 1 hour to one shift.
Unpaid Work Experience & Internships
This is similar to a vocational placement where a person is seeking to gain experience in a particular area to up-skill, except these will not involve a formal education or vocation course. These can often go on for several months, but must not be classified as an employment relationship. Importantly, it needs to remain clear that the person undertaking the role is deriving the greatest benefit and receiving a meaningful learning experience.
A volunteer is a person does work for the benefit of someone else. Commonly, this is for organisations like churches, sporting clubs, government schools, charities or community organisations. There is no intention between the parties to create a legally binding relationship, and importantly the worker has no obligation to attend and perform work and the worker does not expect to be paid.
To satisfy the Fair Work Act definition, a vocational placement must be a requirement of an educational (school) or vocational (TAFE, university) training course and be authorised under a law of the Commonwealth, a State or a Territory. A vocational placement can be lawfully unpaid, regardless of whether an employment relationship exists. Examples of vocational placements can be found in many industries, most commonly where a student is required to undertake work placement to complete their university degree. These placements, in fields such as education, law and engineering, can often span several months.
What if the worker is found to be an employee?
If an unpaid worker is found to be an employee, they will be entitled to conditions under the Fair Work Act including minimum wage provisions, the National Employment Standards, WorkCover, superannuation, the terms of any applicable award or enterprise agreement, and others. A breach of the National Employment Standards not only carry with them significant financial penalties for the company, but these penalties can also extend to directors and HR managers in their own personal capacity in certain cases.
Caution should always be taken when considering engaging an unpaid worker. If you are not sure about whether your work arrangements comply with the Fair Work Act, contact Harry McDonald on 07 5444 1022 for advice.