When is it vocational placement or internship and when is it employment?

A vocational placement is a formal work experience arrangement that is part of an education or training course.

Vocational placements can give students important skills to help them transition successfully from study to work, while giving industry and business the opportunity to enrich student learning experiences and increase the number of work-ready graduates.

Vocational placements that meet the definition under the FW Act are lawfully unpaid, regardless of whether an employment relationship exists or not.

Is there an employment relationship?

Where an unpaid work arrangement is not a vocational placement, the arrangement can only be lawful if no employment relationship exists. If there is an employment relationship, the person is actually an employee and entitled to conditions under the FW Act including:

  • a minimum wage
  • the National Employment Standards
  • the terms of any applicable award or enterprise agreement.

To work out whether or not a person is an employee each case must be considered on its own facts. There is no definition of employment under the FW Act. Instead, it is a matter of working out whether the arrangement to work involves an employment contract. That contract does not have to be in writing; it can be a purely verbal agreement.

For an employment contract to exist it must be clear that:

  • the parties intend to create a legally binding arrangement
  • there is a commitment to perform work for the benefit of the business or organisation
  • the person performing the work is to get something in return (which might be just experience or training)
  • the person must not be performing the work as part of a business of their own.

When looking at whether an employment relationship exists, the nature of an arrangement should be considered, not just how the parties have chosen to describe it. The following factors should be considered:

What is the nature and purpose of the arrangement?

Was it to provide a learning experience or was it to get the person to do work to assist with the ordinary operation of the business or organisation? Where the arrangement involves productive work rather than just meaningful learning, training and skill development, it is likely to be an employment relationship.

How long is the arrangement for?

The longer the period of the arrangement, the more likely the person is an employee. Although even relatively short engagements can still be an employment relationship.

How significant is the arrangement to the business?

Is the work normally performed by paid employees?

Does the business or organisation need this work to be done?

The more integral the work is to the function of the business, the more likely it is that an employment relationship could be found.

What are the person’s obligations?

In some cases a person might do some productive work to aid their learning. An employment relationship is unlikely to be found in these circumstances if:

  • the role is primarily observational and,
  • the expectation or requirement to perform such activities is incidental to that learning experience and not primarily for the operational benefit of the business or organisation.

Who benefits from the arrangement?

The main benefit from a genuine unpaid work arrangement should flow to the person undertaking the role. If the business or organisation is gaining a significant benefit from the person’s work, an employment relationship is more likely to exist.

While a person is not prevented from taking up employment with a business or organisation after completing an unpaid work arrangement, each situation should be carefully considered to determine if an employment relationship had been formed earlier.

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