Employers are asked at times to consent to take on employees as work experience. That can be by schools, in order to assist students learn about the workforce, or by employees off the street who may have qualifications but no work experience.

The second category may amount to unpaid work, which, in a commercial profit-making environment, does raise some questions about payment.

The issue is whether there has been a contract of employment entered into, and whether the consequences of creating an employment relationship apply to “work experience”.

Generally, in a commercial environment, potential employees cannot approach a business and ask to work without pay so they can gain experience. Where the person is contributing to the output of the business, then it is more likely that the person will be an employee who is entitled to payment.

An important issue in determining whether an employment contract has been formed is whether the parties intended to create a legally binding employment relationship.

Matters to be considered in looking at whether a person is on work experience or paid work are:

• Is a school or university formally involved;

• Whether the person is experiencing work, or whether the person is assisting contribute to productivity and money-making activities;

• Whether responsibility is placed on them for outcomes in the business; and

• Is the activity of work experience mainly to observe work and/or ‘try it out’?

If a business engages in unpaid work arrangements that are an employment relationship a breach of the Fair Work Act and could result in a maximum penalty of $10,200 for an individual and $51,000 for a company.

Modern award

The wages and conditions of employment for employees in the retail industry is the General Retail Industry Award. While the award has provision for trainees and apprentices, there is no explicit provision for unpaid work placements.

Other employment laws

Other laws will continue to apply to a person who is on work experience, including workers compensation laws, workplace health and safety laws, discrimination and other relevant laws.

Unpaid work trials

Trial work involves a person performing work in a business to assess whether they will be employed on a longer-term basis. If it is expected the person will be performing productive activities, the person would normally be an employee in these circumstances and entitled to be paid as such. This is even for a short time of a few hours.

If it is called work experience and is used to determine a prospective employee’s suitability for a job, the person would be considered an employee for the trial period and should be paid as such.

‘Probationary’ employees are paid for all hours worked.

Volunteers

Volunteering can be considered unpaid work where a person volunteers to help an organisation in its activities or to help achieve its goals. A person may offer to volunteer their services to gain work experience. These situations are mainly in the charitable or religious sectors, such as a religious organisation that runs horse riding activities for children.

A volunteer is defined as: ‘someone who enters into any service of their own free will, or who offers to perform a service or undertaking for no financial gain’.

A volunteer is generally donating their time because of altruistic motives, rather than for remuneration. Therefore, the relationship between the parties is a moral obligation and not a legal obligation. One of the key matters in deciding whether there is a contract of employment is whether the parties intended to create a legal relationship. If a volunteer was asked “Did you intend to create a legally binding contract?” the answer would be “No!”

Payment unrelated to hours of work or the actual performance of work does not of itself imply that a worker is an employee. In these circumstances, the payment can more aptly be described as an ‘honorarium’ or gift.

Court action – adverse action claim

If an employee is found to have been an employee rather than on work experience, not only will pay be ordered by the court, but an employer may be in breach of other laws. For example, if you have put someone on for ‘work experience’ and they ask to be paid, and you ‘terminate’ them, then they may be able to take you to court for ‘adverse action’.

What that means is because they claim a workplace right (the right to payment) and you do not employ them, then they may take a Federal Court action that they were ‘adversely affected’ in that their complaint led to them not being employed.

The fines for breaching this section of the Fair Work Act are astronomical and damages payable as well.