Interns – to Pay or Not to Pay?

By Erin Kidd, McCabes

Employers need to understand the distinction between legitimate unpaid internships, which offer genuine work experience, and sham internships that exploit cheap (or free) labour, to ensure they do not fall foul of Australia’s workplace laws.

The Fair Work Ombudsman has recently said ‘Employers cannot simply choose to label an employee as an “intern” in order to avoid paying their staff according to their lawful entitlements’.

To be properly categorised as an unpaid intern, an individual must:

(a) be undertaking a ‘vocational placement’; and/or

(b) not be in an employment relationship with the business.

A ‘vocational placement’ is a placement that:

(a) does not entitle the individual to any remuneration;

(b) is undertaken as a requirement of an education or training course; and

(c) is approved. That is, the institution delivering the course that provides for the placement must be approved to do so under a law or an administrative arrangement of the Commonwealth, a State or a Territory.

Where an internship is not a ‘vocational placement’, it can only be unpaid if no employment relationship exists. This requires examination of the nature and purpose of the arrangement, the length of the arrangement and whether the work would ordinarily be performed by an employee.

Individuals such as company directors, senior managers and human resources personnel can be personally liable for contraventions, such as underpayment of wages or failure to provide other employment entitlements, in respect of workers they have incorrectly engaged as unpaid interns.

Erin Kidd

Erin Kidd

McCabes, Sydney, Australia
T.: +61 2 9265 3249
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McCabes is a multi-disciplinary law firm, providing astute and commercial legal advice. By emphasising technical excellence and commitment to quality, the firm offers clients pragmatic legal solutions tailored to current and future business objectives.

Erin Kidd advises on all aspects of the employment relationship. With qualifications in law, human resources management and industrial relations, Erin understands the complexities of people management and provides pragmatic, commercially astute advice.

Published: Winter 2017 l Photo: Giovanni -


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