How to hire an intern without breaking the law

- May 21, 2015 2 MIN READ

For cash-strapped startups, bringing an intern on board can help, but it’s important to make sure they will actually be getting useful, relevant work experience rather than simply doing the boring admin tasks no one on the payroll wants to do.

99interns, the Sydney-based startup which helps connect startups with interns, has created a guide to help startups make sure they’re both on the right side of employment law and giving interns useful experience.

Dave Michayluk, cofounder of 99interns, said the company has found there are many misconceptions about internships in the startup community.

“When we were testing our business model by interviewing startups, founders kept telling us that unpaid interns were illegal. We know this isn’t true but the stories about lawsuits scared a lot of startups,” Michayluk said.

The company compiled the guide after meeting with Fair Work Australia to understand the legal requirements of hiring an intern.

The guide, titled ‘Everything a startup needs to know about interns and internships’, talks startups through the types of tasks that can be assigned to interns, whether an internship should be unpaid or paid, the minimum wage for a paid internship, how to write a job listing, and whether work insurance is needed.

To stay within the law with an unpaid intern, startups must ensure the internship is a worthwhile learning experience, doesn’t last more than 12 weeks, and that an internship agreement is signed.

Startups also need to know that the intern cannot replace an employee. Further, while an intern can work only on social media for the length of their internship, for example, they cannot be responsible for, or in charge, of one aspect of the business – they should always be shadowing and learning from someone.

Yvonne Lee, cofounder of 99interns, said that the most important thing for startups to remember is that unpaid interns can’t be considered free labour.

“Having an unpaid intern is a commitment to provide a learning environment for the intern so that they gain experience. The internship has to be set up in a way that benefits the intern and in Australia it cannot be an employment relationship,” Lee said.

As a rule, to quickly determine whether they have entered into an employee arrangement rather than an internship arrangement with someone, startups should consider:

  • Purpose of the arrangement: Was it to provide work experience to the person or was it to get the person to do work to assist with the business outputs and productivity?
  • Length of time: Generally, the longer the period of placement, the more likely the person is an employee
  • The person’s obligations in the workplace: Although the person may do some productive activities during a placement, they are less likely to be considered an employee if there is no expectation or requirement of productivity in the workplace
  • Who benefits from the arrangement? The main benefit of a genuine work placement or internship should flow to the person doing the placement. If a business is gaining a significant benefit as a result of engaging the person, this may indicate an employment relationship has been formed. Unpaid work experience programs are less likely to involve employment if they are primarily observational
  • Was the placement entered into through a university or vocational training organisation program? If so, then it is unlikely that an employment relationship exists.