Firms warned against abusing ‘work experience’ schemes

| January 24, 2018

The penalties awaiting companies which abuse ‘work experience’ schemes by using young people to perform unpaid labour are exemplified by a Brisbane labour hire business which will face court for allegedly underpaying 10 employees more than $14,000 through an unlawful unpaid work experience program.

The Fair Work Ombudsman has begun action in the Federal Court against Workforce Solutions, an employment agency based in Archerfield in Queensland, and its general manager Mathew Micallef.

It is alleged that Workforce Solutions supplied 10 workers, including two aged 19 at the time, to perform between three and 26 days’ work for three of its clients’ businesses but paid the workers nothing on the basis that it was ‘work experience’.

Despite not paying the workers at all, Workforce Solutions charged its clients $15 for each hour worked by each of the young people involved.

The Fair Work Ombudsman alleges the correct lawful classification of the workers was as employees meaning they were entitled to minimum hourly wage rates and entitlements under the relevant Modern Awards.

The 10 workers were allegedly entitled to have been paid a total of $14,376, with the largest alleged individual underpayment being $4,525.

The Fair Work Ombudsman investigated the matter after receiving requests for assistance from the workers.

It is alleged that Workforce Solutions initially invited the workers to apply for paid jobs via website advertisements, then told them they had been unsuccessful due to an absence of industry experience or a job reference. The firm then offered the workers the opportunity to gain experience and a reference through unpaid work.

The 10 workers performed a variety of low-skilled manual work at three businesses in the warehousing and manufacturing sectors in Brisbane. Nine of the workers were underpaid for work performed in 2015, while one was allegedly underpaid for work performed last year.

Workforce Solutions has now rectified the alleged underpayments but Fair Work Ombudsman Natalie James says a key factor in the decision to commence legal action was the need to deter employers from trying to profit by using unlawful unpaid work schemes as a source of free labour.

Ms James also notes the alleged exploitation of one of the 10 workers occurred after the Fair Work Ombudsman had issued Workforce Solutions a contravention letter making it clear that its unpaid work experience program for the nine other employees was unlawful.

Workforce Solutions faces penalties of up to $54,000 per contravention, while Mr Micallef faces penalties of up to $10,800 for each offence.

The Fair Work Ombudsman is also seeking a Court Order for Workforce Solutions to complete a retrospective audit of entitlements owed to any worker involved in their work experience program since the start of 2015 and to rectify any underpayments identified.

Ms James says legitimate internship and work placements can be a genuine way for people to further their learning or gain skills that assist in finding employment.

“Unpaid placements or ‘internships’ are legitimate in certain cases – for example, where they are part of an approved program, such as vocational placement related to a course of study,” she said.

“But the law prohibits the exploitation of workers by characterising them as ‘interns’ or as doing ‘work experience’ when they are fulfilling the role of an employee. Such workers must be paid minimum employee entitlements.”

The Fair Work Ombudsman offers a comprehensive range of resources for employers, employees and higher education institutions to promote a clear understanding in the community about what constitutes legitimate unpaid arrangements and vocational arrangements under the Fair Work Act.

The resources include fact sheets on topics including unpaid internships and work experience, unpaid trials, and vocational or student placements. There is industry-specific information for the print and broadcast media, professional services, hair and beauty and hospitality sectors. The unpaid work research report commissioned by the FWO is also available.

“With the range of resources available for employers, there is no excuse for mistakes or ignorance about their obligations to pay workers,” Ms James said.

Last year, the Fair Work Ombudsman began court action against a fashion industry start-up that appeared on the reality show ‘Shark Tank’ for allegedly running an unlawful unpaid internship program and underpaying three workers more than $40,000.

In 2016, Fair Work Ombudsman litigation resulted in the Federal Circuit Court imposing $272,850 in penalties against Sydney-based media company AIMG BQ Pty Ltd to send a “serious message” not to disguise employment relationships as unpaid internships.