When work experience becomes less experience and just work

The employment landscape is becoming ever more competitive. This is good news for employers, because employers are able to choose from higher quality candidates. However, in light of the recent decision of Fair Work Ombudsman -v- Crock Media Pty Ltd, where the Court ordered a fine of $20,000 against Crock Media Pty Ltd (“Crock Media”) because they failed to pay two interns who performed work for periods of six and twelve months respectively, employers need to be cognisant of a few things before they take on individuals for internships or work experience placements.

In this case, two young students approached Crock Media to obtain work experience in the sports and media sector. They obtained work placements with Crock Media for a period of approximately three weeks. After the work experience placements ended, the students continued to perform work for Crock Media on a casual basis. This casual work did not result in wages being paid, but they did receive expense payments from between $75 to $120 per shift.

Crock Media was investigated by the Fair Work Ombudsman following a complaint, and the Ombudsman determined that the students who had been kept on a casual basis where actually entitled to outstanding wages totalling $22,168.08, because they were in fact employees.

In a further twist, even though wages had been calculated the payments made by Crock Media as “expense payments” were not able to be set-off against the wages the Ombudsman had determined were owed. Unfortunately for the employer, this meant that they ended up paying the casual staff more than if they had been paid pursuant to the minimum award payments.

After its investigation, the Fair Work Ombudsman pursued Crock Media through the Courts to seek penalties under the Fair Work Act. The penalties related to the following:

1.   Failure to pay an amount at least equal to the Federal minimum wage.
2.   Failure to pay casual loading.
3.   Failure to pay wages in full at least monthly.
4.   Failure to provide pay slips.

Sections 30C and 30M of the Fair Work Act provide an exemption to the rules regarding minimum terms and conditions of work for those undertaking a vocational placement. Unhelpfully the term “vocational placement” is not clearly defined, but the Fair Work Ombudsman did submit that some factors ought to be considered in determining what vocational placements are, and those factors include:

• The length of employment, because the longer the placement the more likely the worker is to be an employee.
• The productivity expectations during the employment, because as expectations increase, the volunteers are also more likely to be deemed an employee.
• The commercial gain to the business, because if there is great commercial gain to be expected from the volunteers, then they are also likely to be deemed an employee.

Lessons to be learnt

This case highlights a number of important lessons that employers ought to be cognisant of.

Firstly, when engaging individuals to be interns or taking a vocational placement, any payments or reimbursements or remuneration offered to the volunteers should be kept to a minimum, so that they are not deemed a wage.

Secondly, the time for which they are employed should also be kept to a minimum, so as to not create the impression that they have ongoing work.

Finally, the productivity expectations and commercial gain to the business must be kept to a minimum otherwise it could be deemed that the expectations on the individual would be those of an employee and not just a volunteer.

This case is also a timely reminder to employers to check whether they are paying in accordance with the award for employees and/or whether they should be adjusting their payment advice.

If you have questions regarding workplace bullying, creating a workplace policy or workplace investigations, please contact Chris Morey (Principal, Director of Business Law) or Adam Foster (Lawyer, Business Law) on (03) 9629 9629.