Internships: How to hire within the law

Internships sound like a win-win situation; employers get the benefit of a productive worker while the intern gains valuable workplace experience. But what do you need to know to ensure you are engaging an intern within the bounds of the law?

What is an intern?

The words internship and work experience are often used interchangeably. According to the Fair Work Ombudsman an internship is a vocational placement – that is, a placement that is required by an educational institution or training course.

Principal lawyer at employment law firm McDonald Murholme, Trent Hancock, says the law is primarily concerned with whether an employment relationship has been created between the intern and the employer.

“If the nature of the agreement creates an employment relationship, then the ‘intern’ will be an employee for the purposes of the law, albeit on a short-term contract,” he says.

“However if the nature of the agreement created no employment relationship, then the intern is not an employee for the purposes of employment law.”

What is an employment relationship?

According to Hancock, key considerations that point to an employment relationship are:

  • an intention to enter into an arrangement whereby the intern does work for the employer (as opposed to merely observing work done by other people);
  • the intern is doing work for the benefit of the business, especially if the business is charging for or making profit from, the work or otherwise saving costs due to the intern’s work;
  • the more productive the work completed by the intern, the more likely it is that an employment relationship has been created.

Another indicator that an employment relationship has been created is that of the length of the relationship – typically, the longer the arrangement, the more likely that the individual should be considered as an employee, rather than an intern.

As a general rule of thumb, if an intern is only observing and learning then there is no employment relationship.

“If the intern is performing work that confers a benefit on the employer or assists with the work that the business performs, then an employment relationship will have been created,” says Hancock.

What tasks can an intern do?

Hancock says that the tasks an intern can undertake depend on whether the intern is being remunerated.

“If the intern is being remunerated, they are effectively an employee for the duration of their internship,” he says.

“Therefore the intern can be given any reasonable task that any other equivalent employee could be given.”

If the intern is not being remunerated, then their tasks should be limited to tasks that further their learning and work experience. Hancock suggests that these tasks include observation, training / learning and tasks that extend their practical experience.

“An unpaid intern is permitted to perform productive activities as long as such tasks are part of their learning experience,” he adds.

“In essence, unpaid interns should only be given tasks which benefit the intern in terms of learning and experience, rather than merely being given work that benefits the business.”

Trial periods

“A trial period is used to determine a prospective employee’s suitability for a role, as opposed to merely providing them with experience or learning,” says Hancock.

“Often, an internship also functions concurrently as a trial.”

The law is not concerned with the labelling of the arrangement, but Hancock says the law is concerned with whether the arrangement creates an employment relationship.

“It is almost always the case that a person in their trial period will be performing productive work therefore trial work should be remunerated,” he says.

Before you hire an intern…

  • Know whether the prospective internship will create an employment relationship (The Fair Work Ombudsman has detailed information about this)
  • Identify what tasks the intern will perform throughout their internship (is it merely observing and learning, or will they be providing a benefit to the business?)
  • Consider if these tasks would usually be carried out by an employee – if so, then it’s likely you’ll be entering into an employment relationship
  • Understand that the person carrying out the work should be getting the main benefit from the arrangement.