There is no such thing as a free worker!

- February 8, 2013 5 MIN READ

This article is a heads-up for those out there who think interns or “work experience” students are free labour.

The issue

A common theme with start-ups is the hunt for cheap (read: free) labour – and with a pool of eager-beaver workers (read: students looking for a CV-booster) putting their hand up to work for peanuts, it is very tempting for over-worked founders to get some “interns” to share the load.

Why not, you may ask? They get to see what the real world is like, and I will show them the ropes and introduce them to a few people. Hell, I’ll even give them a glowing reference! All they have to do is anything at all that I ask them to do (often the most menial, dirty and generally annoying tasks that we are sick of doing ourselves).

Well, it is actually pretty rare that you will want to have a genuine intern in your start-up as they should take up more of your time than they save you if you are doing it right, and if you are doing it wrong, then you will get into trouble.

How to do it right

It is technically possible for you to take on an “intern” and get away with not paying them, but only where the benefit of the relationship is in their favour and not yours. This is something that interns and decision makers (like Magistrates or Officers of the Ombudsman) are likely to look at very carefully, and it is worth some thinking time and planning BEFORE you make an offer to an intern to have the prestigious opportunity of working for you for free.

Things to think about when assessing whether you are going to embark on a genuine intern engagement are:

1.       Is this “work experience” relevant to a formal course that the person is undertaking – or better yet, is there a requirement for “work placement” as a part of the qualification?
Good examples of this include floristry and law, where you have to complete a minimum period of work experience in order to obtain your certification.

2.       Do you expect that the person will actually perform useful work for you, that will be to your benefit?
It is not an absolute “no-no” for the work provided by the intern to be useful, however, it is a strong indicator as to where the “benefit” of the relationship lies, and unless they are getting something really valuable out of the relationship this might be a clincher.

3.       What is your heart telling you? Seriously. Are you doing this so that you can share knowledge and give a leg-up to a young gun, and intend to spend time ensuring they are genuinely getting something out of the experience?
Giving the intern the opportunity to learn from you directly, and taking the time to enhance their understanding of what it is that you do and how they can achieve their goals (as relevant to what you can guide them to) will show a benefit that is in the intern’s favour.

4.       How long are you going to let the relationship go on for?
The shorter the better, if you are looking to ensure that the relationship is a genuine internship. It is obvious that a 5 year stint as an unpaid intern is iffy, but even one of a month or two could be risky, unless there are especially strong indicators that the relationship is in the intern’s favour.

It is clear from the above that an errand person, cleaner, filing assistant, shop worker or labourer is unlikely to be a genuine intern – and care should be taken for every intern as even those who are required to do some form of work placement (like people studying to be a florist or lawyer) can be entitled to minimum Award entitlements where they are being consistently useful and committed rather than just there to watch.

Cover your arse!

Do an analysis with each new intern you are considering, and where you honestly believe that it is in the intern’s benefit to work for you for free, then bash out an agreement setting out the reasons why. Be clear about what you expect from them, and what you propose to give in return. Put clear time limits in there, and be up-front about the potential for paid work in the future (or lack thereof in the majority of cases).

Invest in getting an agreement prepared or reviewed by an Employment Lawyer – like me.

The consequences of getting it wrong

All it takes is one call to the Fair Work Ombudsman for that trouble to turn into a big bill for underpayment of wages, and potentially a fine too – currently the fines for breach of certain provisions of the Fair Work Act 2009 (Cth) are up to $33,000 per instance of breach for corporations and $6,600 for individuals.

Thinking “oh bugger”?

There are things that you can do if you have read this far and your heart has sunk down to your toes. It is never too late to do the right thing, and it will be much better for you in the long run if you are the one who takes the initiative to fix a problem, rather than get caught out.

Conduct an analysis on each of your interns and determine where the benefit lies. If you genuinely do want to have an intern, and you are prepared to do the additional bits and pieces which will transfer the benefit of the relationship to the intern, then start actually doing those things. Lay off any pressure you place on them to produce work for you, and let them learn rather than assist.

Be realistic about the true nature of the relationship and how long it has gone on like that for, and know the limitations of these adjusted behaviours – if it is too far gone for you to remedy the relationship back into a genuine internship, then you will need to do some calculations to see what you will pay them in the future, and how much you may owe them in back pay. It is a good time to call your friendly Employment Lawyer for a chat J

If you do get caught out before taking pro-active steps, then it is VERY IMPORTANT that you cooperate with the Ombudsman. They are just doing their job, and are normal people, but you certainly won’t do yourself any favours by being defensive or difficult to deal with, or worse still, ignoring their attempts to contact you or providing false information. You don’t need a lawyer to hold your hand through this process, however in my experience it is best to have someone who knows what is important and what the true intentions were so that the right information can be emphasised and explained, and the chances of getting a fine are reduced.

Finally – don’t kid yourself. You are not special, you do not offer the secrets of the universe, and even though you think you have an amazing relationship with the sweet intern who would never do anything to ruin that or you can’t see them being greedy and later wanting back-pay, I remind you that all relationships start good, and all have to end somehow.