The risks of unpaid workOctober 9, 2020
By Ceri Hohner, Associate at FCB Workplace Law
Although some unpaid work arrangements are lawful, many are not, and a hostel chain is the latest employer to be accused of underpaying a group of workers that it classified as ‘volunteers’. The law firm organising the class action anticipates that the underpayment claim could be worth $15 million in lost wages.
Unpaid work is generally unlawful, other than in a few limited exceptions as outlined below. Employees have a right to be paid for all work performed for their employer.
Under the Fair Work Act 2009 (Cth), certain individuals are excluded from employment entitlements, including persons on a vocational placement. ‘Vocational placements’ are formal, regulated arrangements undertaken as a requirement of an education or training course, and authorised by law. As a result, not every period of ‘work experience’ will qualify as a vocational placement.
Unpaid work experience or internships may be undertaken where the person is not performing substantive or productive work to the business but is instead, obtaining meaningful value for themselves and their career or professional development. This may involve, for example, shadowing a professional while they perform their role.
A job candidate may also be asked to perform an unpaid trial for the purpose of testing or demonstrating their skills if this is necessary to evaluate their suitability for the role they are applying for, for example; a barista candidate making a cappuccino. However, the trial should last only as long as is necessary to test or demonstrate that skill, which will usually be less than one shift, and the person should be under supervision the entire time. It should be noted that an unpaid trial does not cover employee training.
The final exception in which a person may perform ‘unpaid work’ is where a person volunteers to help the beneficiaries of a cause or organisation, such as a charity or a religious group. It is important, for a genuine ‘volunteering’ relationship to be found, that the person does not have an employment relationship with the business: including that the person is not required or obliged to help, that they have no expectation of being paid, and that the arrangements are relatively informal.
The hostel chain referred to above had engaged up to 4000 backpackers as ‘volunteers’ to perform duties at its sites on the basis that it was a not-for-profit organisation and the guests staying at the hostel had volunteered to help out during their stay to “facilitate cultural exchange”. However, it was alleged that the type of duties the hostels required their ‘volunteers’ to perform included working as a desk attendant and performing cleaning, and that the individuals felt pressured to agree to the arrangement in order to offset the cost of their accommodation.
If the class action against the hostel comes to fruition, the Court will need to decide whether there was an employment relationship between the hostel and the backpackers. This will involve taking into account the intentions of the parties, the representations made by the hostel, and the expectations of the backpackers.
If an employment relationship is found, this will prove to be a costly mistake for the organisation, and they would have to backpay all of the individuals for all of their hours of work performed under the ‘volunteering’ arrangement.
Employers should be conscious of the laws around unpaid work whenever they consider engaging an individual without intending to pay them. Merely labelling an arrangement as ‘work experience’ or ‘volunteering’ is not sufficient to make it so under the law and getting it wrong can prove disastrous.
For more information on unpaid work and what it means for your business, contact Ceri Hohner, Associate, on 07 3046 2100.