Do I Have To Pay An Intern?

Do I Have To Pay An Intern?

We get asked a lot by our commercial clients about engaging interns, work experience students and unpaid job placements.

Mainly the question relates do we have to pay them?

It really depends is the answer.

I know it is a lawyerly response. It does however depend on a variety of factors relating to how a business treats its interns.

One of the main factors hinges on whether they are really just doing the same work as an paid employee.

If this is the case, then the answer is pretty much likely to be, yes, you have to pay them.

This opens up the whole employment relationship gamut of benefits for the intern. This ranges from the payment of a minimum wage, compliance with the National Employment Standards and adherence to the relevant award and its benefits.

It can also open up the business to the issue of back payments, past super contributions and other leave entitlements. It further exposes it to Fair Work Ombudsman and/ or ATO scrutiny.

As you can see, you can go from zero liability to financial woe in a few steps.

Do I Have To Pay An Intern?

Early legal advice is prudent.

Foresight is always better then hindsight when it comes to engaging interns and unpaid workers.

Each case does really turns on its facts.

But just saying it is an intern arrangement in writing isn’t on its own sufficient. The arrangement can still be deemed outside the law.

Do I Have To Pay An Intern?

There are some factors that Courts have said over time in their decisions that do carry more weight.

Fair Work Australia says if the purpose of the unpaid work, vocational placement or internship is to give the person work experience it is less likely to be considered an employment relationship.

But if the person is doing work to help with the ordinary running of the business then it well may be an employment relationship that arises.  

The more productive the work that’s involved (rather than just observation, learning, training or skill development), the more likely it is that the person’s an employee.

The longer the internship or arrangement goes on for, the more it is likely to deemed an employee relationship.

If the person is doing work that would otherwise be done by an employee, it’s more likely the person is an employee.

Bottom line seems to be that the intern doing the work should get the main benefit from the arrangement not the business.

If a business is getting the main benefit, then it’s more likely the intern or unpaid worker is an employee.

Vocational placements that form part of educational institution course requirements are more likely to be deemed legitimate examples of unpaid work and internships.

This is qualified however subject to what has been said above already.

As you can see the facts of the case and the circumstances surrounding them really do matter.

Do I Have To Pay An Intern?

Do I Have To Pay An Intern?

Click here to read the Fair Work Australia information sheet on this topic.

Call us on telephone 9528 0235 to discuss your intern related employment issue.

Click here for a list of all the other employment related services we provide.

Otherwise come and sit down with us at a convenient location to you. We are located at Crows Nest office on Sydney’s lower North Shore. Or else you can visit us at Jannali in the Sutherland Shire.

Paul Ippolito is Principal of Ippolito Lawyers. He is an experienced commercial lawyer who enjoys working with employers, contractors and employees. He has lectures in commercial and corporate law including employment law at The College Of Law in NSW.

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