The law on unpaid work experience: Is the benefit worth the “cost”?

The prevalence of unpaid work experience in Australia is staggering, especially in regards to young adults. A study published by the Commonwealth Department of Employment found 58% of people between the ages of 18 and 29 had completed a period of unpaid work experience. 61% engaged in work experience lasting less than a month, while 36% was longer than a month. 10 respondents said the duration was 6 months or more.

The struggle for a ‘good’ job in the competitive market is perhaps a reason for the high prevalence of unpaid work. This is especially true for young people who are trying to gain a foothold in the labour force, where a degree is no longer enough to secure a well-paid position. The requirements of high university marks and work experience are pressuring young people into unpaid positions. The question on many people’s minds is whether this kind of unpaid work is legal.

Vocational Placements

Vocational placements refer to formal work experience that is required for completion of an education or training course. As the law currently stands, students on vocational placements do not need to be paid.

To qualify as a vocational placement, the work experience must be required to complete a course and the student’s institution must approve the placement. It is important to recognize that while electives are not necessary to complete a course, if work experience is required to complete an elective undertaken by a student, then the associated work experience may be classified as a vocational placement.

Unpaid Trials

Perhaps contrary to popular belief, unpaid trials can be legal. However, there are strict criteria for such a trial. Most prominently, the worker must be under the direct supervision of an appropriate individual for the duration of the trial and they should not be trained in the skills needed for the job. The trial should only be used to demonstrate the experience required by the employer.

For example, if a worker applying for a job as a secretary is taught how to answer and transfer calls, and other skills needed for the position and are only supervised for one hour out of a 7 hour “trial”, it is likely they should have been paid for these hours worked.

Unpaid work experience/unpaid internships

Work experience can be unpaid if it is a vocational placement, however work experience that does not meet these requirements can still be unpaid.

If no employment relationship exists between the worker and the employer, then the worker does not need to be paid. Key indicia of an employment relationship are as follows:

Intention to enter into an arrangement to perform work for the employer;
The worker helps with the ordinary operation of the business;
The placement is for a long period of time;
A paid worker would usually perform the work undertaken by the worker;
The worker is expected to perform productive activities;
Expectation of payment; and
The employer is receiving the main benefit of the arrangement.

Not all of these indicia need to be fulfilled to establish (or disprove) the existence of an employment relationship.

An interesting case dealing with these issues is Klievens v Cappello Row Lawyers [2017] FWC 5126. In this case, the Fair Work Commission found 10 weeks of unpaid work did not constitute an employment relationship. While Mr Klievens was working full-time, he was given the liberty of working on cases he found interesting, shadowing employees, and performed research that contributed little value to the firm. Further, Mr Klievens received the main benefit of the relationship as it was required to obtain a certificate to practice law. Although his work was covered under a vocational placement (Practical Legal Training or PLT), the case highlights an important consideration – who is receiving the main benefit, and are the tasks normally performed by paid employees? As the majority of Mr Klievens tasks were not billed to clients and added little value to the firm, he was not in an employment relationship.

Volunteering

Volunteering encompasses any work where the main purpose of performing the work is to help another person or entity, such as a school or sporting club. Volunteering is legal (and unpaid) if the parties did not intend to create a legally binding employment relationship, there was no obligation for the volunteer to attend the workplace or perform work, and the volunteer did not expect to be paid.

It is important to remember that just because work is labelled a “vocational placement”, “unpaid trial”, “unpaid work experience”, “unpaid internship” or “volunteering” does not necessarily make it legal for the worker to be unpaid. The criteria of the relevant category must be met.

Further, even if a worker is lawfully unpaid, other workplaces laws, such as those relating to health and safety and discrimination, still apply.

So it’s legal, but is it right?

Clearly, some forms of unpaid work are legal. Whether they are acceptable merits further consideration.

Work experience has clear and definite benefits. Workers gain skills, insight into the industry, and connections. A structured learning environment within the workplace is invaluable and such environments reasonably do not pay workers as they are primarily there to learn and gain experience rather than contribute as a paid employee.

However, some employers are using the safety net of vocational placements and work experience to thrust young people (and individuals new to an area or company) into what are essentially employee positions. These positions are not paid and are without the associated benefits, and do not have the training or education unpaid work experience and vocational placements were designed to have.

Further, unpaid work experience is often limited to individuals from high income families. Where some placements or internships require full-time, unpaid work, or even 2 or 3 days unpaid while studying, it is difficult if not impossible to achieve this without financial support during this period. As a result, industries requiring, or normalising, unpaid placements are limiting a section of the population from being successful in that industry. Fostering a culture that provides opportunities for the wealthy at the expense of the disadvantaged is not something Australia should be promoting.

Paid only internships do run the risk of preventing individuals, and students without experience, from establishing employer connections and being exposed to opportunities. Fewer companies and workplaces may be able to provide paid opportunities than those that provide unpaid opportunities. However, the overall benefit in removing, or even more highly regulating, unpaid placements and internships is the reduction of exploitation in the workplace, and assisting in creating a more even playing field.

While unpaid placements, trials and internships can be legal, determining whether they are legal in specific situations can be as much of a headache as deciding, for many people, whether the experience is worth the “cost”.

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March 2

The Legal Education Shakedown – who is footing the bill?

As a legal practitioner, business owner and parent, I am often asked to comment on the current state of affairs regarding the interaction between the legal services industry and tertiary education. We are close to crisis point – and it is now widely recognized that there has been an oversupply of law graduates for a number of years, with 12,000 graduates each year entering a market that at present can only sustain 60,000 practitioners. Two thirds of students indicate that they intend to practice law, but the reality is that only half of them ever will. But fixing this may be difficult, given the large number of discrete stakeholders in the Legal world. Universities, Practitioners, Law Firms, Publishers, the Law Society as well as those offering Practical Legal Training, all have an interest in this issue, and often little interest in cooperating with each other.

The origin of the problem is in the myth that legal study is an automatic pathway to wealth and prestige. It is true that for many hundreds of years, legal education has been highly venerated in society. Some of history’s great leaders, thinkers and scholars have been lawyers. But while in academic and social circles Law Graduates have been held (and have most notably held themselves) in high esteem for centuries, the idea that law as a profession is lucrative financially is fairly recent, and already firmly in decline. It was only in the late 1970s and 1980s that ‘Law’ in the western economies became synonymous with wealth and prestige, and there is no question that the ship has already sailed. In the modern world, Law is now like any other profession: there are exceptions for exceptionally talented (or exceptionally lucky) people, but generally speaking the incomes are inline with other professionals.

But there is still a faint cultural perception that a Law degree at university will inevitably lead to financial and career success. School leavers and mature age students flock to institutions to study law with little regard to the content of the degree, merely for these perceived vocational guarantees. Once it was announced in 2009 that the cap on University places would be lifted for the 2012 year, Universities began the process of targeted recruitment. For these Universities, now run as competitive commercial entities, Law degrees are profitable and cost little to deliver. Full time students spend as little as 8 hours per week in the class room, and up to 50 hours per week pouring over text-books, case-books and online databases – but contribute as much as $1,000 per week in fees, some from the tax payer, but mostly from their HECS debt. With competition between Universities at unprecedented levels, there is little incentive for them to ensure that applicants are suitable, or even capable, of studying the degree. In my opinion, if Universities are to be run as competitive commercial institutions, then they too should face the consumer controls that other commercial entities face. Section 18 of the Australian Consumer Law for example, prohibits ‘misleading and deceptive conduct in trade or commerce’. Is it not misleading to recruit law students to expensive degrees in a manner which is so divorced from the vocational reality they face? Alternatively, the Australian Consumer Law also provides consumer guarantees that services be ‘reasonably fit for any purpose that the consumer, expressly or by implication, makes known to the supplier ‘. Law firms now report that in order to be considered for a role a graduate must be achieving a Distinction or High Distinction Average, have volunteered their time for worthy causes, been involved in impressive extra-curricular activites, be well presented, charming and (basically) better than the other 10 candidates that have those qualities. Is a P / C average degree from a Law School ‘fit for this purpose’?

But the story for most law students is not over yet. Those who finish, most of whom by that stage are burdened with close to $40,000 debt after 5 years of study, are then required by the Law Society to complete Practical Legal Training (also known as a “Graduate Diploma of Legal Practice”) before they can be admitted as a solicitor. This is yet another highly competitive tertiary education marketplace, which will cost graduates roughly another $8,000 in fees for 13 weeks of study, and very probably involve them concurrently working in a law firm without remuneration for up to 75 days. From an academic perspective PLT offers law graduates virtually nothing they either don’t know, or should already know from many years of studying law. In terms of practical skills, as far as many practitioners are concerned PLT offers them nothing at all – certainly nothing that they need to know to face the realities of legal practice. It is just yet another way for tertiary institutions to perpetuate the ‘shake down’ of ambitious prospective lawyers – to squeeze another $10,000 out of them before their aspirations run dry.

It should also be understood that for at least the first two years, a new solicitor is in supervised practice in any case. To ensure clients are protected the most important threshold , in my view, is when a practitioner seeks their unrestricted practicing certificate. In my opinion the PLT should be abandoned completely prior to this stage. We should allow the graduates be admitted as solicitors as soon as they have graduated from their degrees. They can then be in supervised practice for two years. When a solicitor seeks their unrestricted certificate, it would be highly appropriate for the Law Society to see them at this stage jump through some more hoops relating to ethics, confidentiality, trust accounting etc. Further exams have far greater purpose, and are better served as part of this more significant gateway. It would also give the graduate a long overdue opportunity to earn some actual money to pay all of these fees.

And if we really want interns in law firms working for free, perhaps this should happen between high school and university. If the school leavers were given a dose of the legal industry in advance of University, we might just save some of them 5 years and $50,000 – and potentially send them in the right direction in the first place.

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