A university research team, led by South Australia’s Professor Andrew Stewart, recently found that more than 500,000 Australians have been unlawfully employed in unpaid work over the past 5 years.
Their survey also found that:
- ¼ of unpaid work arrangements lasting for 6 months or more were likely to be unlawful; and
- 20% of unpaid work arrangements lasting between two days to a week were likely to be unlawful.
The survey acts as a wake-up call for industry and is likely to lead to increased Fair Work Ombudsman focus on the use of unpaid working arrangements.
When can I use unpaid work?
There are limited circumstances when employers can legitimately use the services of a worker without paying them. These include:
- the use of genuine volunteers, working for charitable or other not-for-profit organisations;
- unpaid placements undertaken as a requirement of an education or training course which has been authorised under Commonwealth or State law; or
- short-term work experience placements.
However, whether an employment relationship arises will ultimately depend upon all of the circumstances. A Court will ultimately need to determine whether the work and the relationship between the parties is of such a nature that ordinarily gives rise to an intention to create a contractual employment relationship. In one of the leading cases on the topic, Kim v Witton (1995) 59 FCR 258, the Federal Court ruled as follows:
“The test is not whether the individual performing the activity receives remuneration for it, nor whether he or she performs the activity for commercial motives or for some other reason. The test to be applied is an objective one, namely, whether the activity performed by the individual normally attracts remuneration in Australia.”
When will I get into trouble?
Any unpaid working arrangement that falls outside the categories identified above is more often than not going to be unlawful.
The types of practices that often land employers in trouble include:
- using volunteers or work experience placements to do work that is usually carried out by employees;
- using volunteers or work experience placements to do work that generates a profit; and
- using long term work experience placements.
These types of practices can expose your business to underpayment claims as well as fines of up to $54,000 per breach for companies and fines of $10,800 for individuals involved in engaging unpaid workers.
What should I do?
As an employer, the message is simple:
- don’t engage volunteers or interns to perform work that would ordinarily be performed by employees in your business; and
- keep any unpaid work experience placement short.
As always, if there is any issue within your business that might give rise to a claim, early intervention is the best protection. Feel free to contact us on 1300 565 846 if this raises any questions.