“Eager workers can be free and easy,” was the headline of an article in The Sydney Morning Herald.

“Imagine running your business with an endless supply of free labour,” the article’s author, businesswoman and journalist Valerie Khoo continued, describing interns as “people who turn up at your office keen to learn, who are excited to contribute and enthusiastic about getting experience in your industry. They work in your business and when pay day rolls around … they don’t expect a cheque”.

This article both hinted at a trend (the rise in internships) and rang alarm bells. The bells rang loudest for the Fair Work Ombudsman (FWO) – the agency under the Fair Work Act 2009 that is charged with the role of monitoring, investigating and enforcing compliance with Commonwealth workplace laws – and for FWO’s statutory head, Nicholas Wilson.

Speaking at the National Personnel and Industrial Relations Conference, Wilson described the headline above as “outrageous”. He blasted the article for urging workers to try internships but not expect to get paid and encouraging business owners to “tap into” a skilled and eager workforce by putting workers on unpaid internship arrangements.

Wilson described this as “simply exploitation, and not acceptable”. The FWO’s options for action after the report could include prosecuting a test case or recommending reform of the Fair Work Act.

“Plainly, the Fair Work Act does not prohibit internships and work experience if there are genuine vocational placements and neither should it,” Wilson told his conference audience. “Masking valuable and ultimately profitable work as an unpaid work trial, work experience or volunteering does not change the fact that it should be work that is paid,” Wilson said. He expressed hope that the outcomes from the study would provide “visibility” on the issue.

It’s not so clear-cut at the moment

Simon Dewberry, workplace relations partner at law firm Allens-Linklaters, sounds a clear warning. He says that for someone to be on a vocational placement, “so that the Fair Work Act doesn’t apply to them”, the arrangement must have the following characteristics

• Don’t pay them a wage — care has to be taken because if you are paying them, they’re an employee and subject to the
  provisions of the Fair Work Act.
• The vocational placement must be a requirement under an educational or training course in Australia.
• The educational or training course has to be authorised either under a law or under an administrative arrangement with a government, state or federal.

According to Dewberry, if the arrangement fits within these criteria, the person is not entitled to the minimum wage and other entitlements under the National Employment Standards and Awards. And if not, he suspects “that there are a lot of people out there who might get caught”.

If the arrangement has the characteristics of employment, Dewberry says you can’t avoid employment obligations just by calling it volunteer work. “And the area where you face an even higher risk,” he
said, “is having someone work for a trial period, unpaid”.

Lisa Burrell, workplace relations manager at the Victorian Employers Chamber of Commerce and Industry (VECCI), echoes Dewberry’s statement: “As an employer association, VECCI is frequently involved in resolving individual queries from our members,” she says. “We often receive queries that indicate there is a disconnect between what may be seen as a lawful internship and what is actually taking place.”

While the Fair Work Ombudsman might be seeking “visibility” on this issue, Burrell is critical of the lack of clarity. She notes there is no single set of guidelines at present, which would say ‘your proposed arrangement meets the requirement for a lawful internship’.

“The current Fair Work Ombudsman factsheet gives broad guidelines, but doesn’t provide clarity as to where the boundaries are,” Burrell says. “For instance, it states that the length of time would be a factor, but does not provide examples in terms of what might be considered by the regulator to be an excessive time.

“Employers who do support internships are contributing to the labour market in a valuable and supportive way,” Burrell argues, “but these activities can be posing an inadvertent risk to business. In terms of the enquiry commissioned by the Fair Work Ombudsman, VECCI would like to see greater clarity so that both parties are aware of the parameters of any arrangement and can proceed with peace of mind.”

In Australia’s labour market, avoiding exploitation — and the threat of legal action — without dampening the potential for good, which the employer-intern relationship has, is a challenge facing participants and regulators alike.