A good internship program is great both for the host company and the student. It helps businesses gain fresh perspective and students with real-world exposure. However, before setting up an internship program and hiring your first intern you need to make sure you are on the right side of the employment law, especially if you are considering an unpaid internship program.
Unpaid Internship Landscape in Australia
While in America and many European countries internship programs (paid and unpaid) are a dominant feature of the employment industry, in Australia, it is still not as developed. Hence, there is a lot of apprehension and confusion around legalities and structure of a successful internship program. In 2010 only about 19% students enrolled in Australian Universities had completed some form of an internship program. (Ref. Clara Jordan-Baird, ‘Experience Essential, Remuneration: None,’, Centre for Employment and Labour Relations Law, The University of Melbourne, June 2013.) This number in 2015 had sharply risen to 58% according to a controlled study done by Internship Australia. Even though the sample size of the 2015 study was not large it gave a clear indication that Australian businesses and students were warming up to the benefits of internships.
At ECA Internships, we currently work with over 500 small and medium enterprises across various sectors and have helped them recruit 7500+ interns over the last couple of years. Internally, we have seen a spike in interest in small and medium businesses for setting up an internship program to recruit students from top Australian Universities.
Aika Kawasaki, Hotel Accountant at world renowned Surfers Paradise Marriott Resort & Spa, talks about her experience of working with ECA Internships
Why the steady rise in Internship seekers?
As internships are becoming a common feature of the Australian employment landscape, it has resulted in a widespread view that they provide an opportunity for a job seeker to connect with a potential employer, demonstrate value and leverage the internship to secure an offer of paid employment. With Australia’s jobless rate reaching 7.5% in July 2020 and Economist Sarah Hunter pointing out that the national effective unemployment rate is 9.3% an internship is being seen as a better alternative path to a job by many students. For host companies too it is an effective way of hiring fresh graduates as it gives them a chance to evaluate their, engagement levels, performance and several competencies while the student gains valuable job work experience. Hence, we believe internship programs will continue seeing growth in the years to come and companies will continue benefiting from an effective internship program.
Is Unpaid Internship legal in Australia?
- Unpaid Internship is allowed in Australia if it is a vocational practice or an employment relation doesn’t exist between the intern and the host company. Several criteria need to be considered to determine that an employment relation is not created (details in the section below)
- Internships should be of short periods of a definite length of time. Most ECA Internship managed host companies go with a 3-week or a 12 week program.
- A longer duration unpaid internship is possible if it a vocational placement. For the program to be considered as a vocational placement, it must be a requirement of an educational or training course. Such placements will also need to be approved. (where approval is under a law or an administrative arrangement of the Commonwealth, a State or a Territory, which will include courses offered at universities, TAFE, schools or other bodies authorised to offer registered training courses
What is an employment relationship?
It is important to note that there is no definitive test to what constitutes as an employment relationship and it will vary on a case to case basis. However, below are some key considerations that point to an employment relationship:
- A person to be considered an employee must be engaged under a valid contract.
- The purpose of the internship, what benefits does the host company obtain (in terms of productive work versus training and skill development) and what benefits does the intern obtain. The more productive the work the more likely an employment relationship has been established.
- The intern is directly involved in work that benefits the business, especially if the business is charging for or making a profit from the work done by the intern.
- The length of the relationship plays a key role, the longer the term the more likely that an employment relationship has been formed.
- Whether the intern is receiving meaningful learning experience, training or skill development from the program. If not, then an employment relationship has been formed.
- The business offering internship has several interns performing the same task. In such cases even if single internship does not constitute of forming an employment relationship, the business could be seen as an employer due to the number of interns. To avoid the situation your internship program will require to have clearly defined activities for each of your interns.
Interns who are not remunerated should be limited to tasks that further their learning, such as observation, training/learning and tasks that further their practical project experience. An unpaid intern is permitted to perform productive activities as long as such tasks are part of their learning experience. If you require further assistance setting up your internship program and hire quality interns fill out the enquiry for an ECA Internships expert will reach out to you for a free one-on-one consultation session.
Checklist for Hiring Unpaid Interns
- Ensure intern understands it is voluntary experience, i.e. freedom of choice to take up internship (and no guarantee of any outcome, including employment, if do/do not take up internship)
- Ensure intern understands is unpaid (confirm in writing, and make sure that any promotional/advertising makes it clear up front the position is not paid). ECA Internships has clear and transparent process in place for both host companies and students to ensure both hosts and students understand the training plan and agreement.
- Work performed by intern not work usually performed by a paid employee/member of staff
- Ensure that the program provides a genuine training opportunity
- Ensure that the program includes close supervision and observation, particularly in a structured manner for supervision
- Ensure that supervision is by a person appropriately qualified/suitable professional
Information provided in this article is general only, ECA Internships provides no assurance as to its accuracy, reliability or completeness. It is advisable to get in touch with our team for advise on structuring your internship program that is both beneficial and within the law.