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Unpaid Work Arrangements: Is it legal to work for free?

Victoria Quayle ||

When applying for a job a lack of experience is a definite drawback. If an employer doesn’t give you experience, how are you supposed to get experience?

One way that students or school leavers try to solve this problem is to take on volunteer work, job placements, internships or a work experience trial – often for free. So, is it legal to work or be employed for free?

Under the Fair Work Act 2009 (Cth) (FW Act), whether an unpaid work arrangement is lawful will depend on whether an employment relationship exists, or whether the work involves a vocational placement. Whether work experience, a placement or internship is in fact employment must be considered on a case-by-case, factual basis. Some questions (non-exhaustive) to ask yourself, as an employer, before engaging an unpaid worker are:

  1. What is the purpose of the arrangement?
  2. How long is the arrangement expected to last?
  3. Is the work being done by the worker also being done by someone else on a paid basis?
  4. Who gets the most benefit from the arrangement – the employer or the unpaid worker?
  5. What are the rights, obligations and duties of the unpaid worker?
  6. Is the work being performed by the worker productive and meaningful, or merely observational in nature?
  7. How crucial to the business is the work being performed by the unpaid worker?

Generally speaking, where a worker engages in productive and meaningful work, for more than a short period of time, and the business derives a benefit from the tasks or activities performed, then it is more likely that the arrangement will be considered an employment relationship and the employee should be paid.

For example, a qualified hairdresser is asked to perform haircuts and styling for customers between 9.00am and 2.00pm, Wednesday to Friday for two weeks, as a work trial, without receiving any payment. The hair salon charges those customers. While a short unpaid trial of that nature may be valid, six days’ work is probably not.

On the other hand, a student who is required, as part of their vocational placement for a course of formal study, to perform certain meaningful tasks, skills or activities relevant to their field of study, for say, a semester or term, is less likely to be viewed in law as an employee.

Some other examples of lawful unpaid work:

  • a prospective employer may ask a person to undertake a task or perform a short skills demonstration to assess their suitability for a position; or,
  • a person volunteers a couple of hours of their time to a not-for profit organisation on an ad hoc basis.

Care must be exercised before engaging a worker on an unpaid basis. If it is really an employment relationship, an employer can be exposed to significant risks, particularly with respect to back payment of minimum wages and other entitlements (such as annual leave, personal/carer’s leave) under the National Employment Standards, or any applicable modern award or enterprise agreement. If you are in doubt seek advice before the engagement starts.

If you have a query relating to any of the information in this piece, or would like to speak with a lawyer in Coleman Greig’s Employment Law team, please don’t hesitate to contact us.

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