When is it OK to have an unpaid internship?


Many employers will host an intern as part of the person's course of study. In such cases, the Fair Work Act says that an unpaid placement can be lawful if the rules applying to 'vocational placements' are met. This means that the placement has to meet the following criteria:

  • The placement must be done as part of the requirements of the person's education or training course;
  • The work that the student undertakes must not be such that they are entitled to be paid under an industrial award or agreement (so it's not permissible just to have the person perform the work of a regular position in the business - it has to be a properly-structured vocational placement);
  • The education institution involved must be authorised  to make the placement (if the institution is a university, TAFE college or school, this requirement will be satisfied).

If these criteria are met, the host organisation will not have to pay the student entitlements under the Fair Work Act (although you are allowed to if you wish).

If the placement doesn't meet these criteria, then it won't be a 'vocational placement', but it might still be able to be considered a legitimate unpaid work experience trial or internship. In this case, you  need to be sure that the person is not in an employment relationship. The Fair Work Ombudsman suggests that you consider the following indicators to ensure that the work experience participant or intern is not an employee:

  • The reason for the arrangement (i.e. you are not getting the person to help with ordinary business operations)
  • Length of time (longer arrangements suggest the person is really an employee rather than an intern)
  • Significance to the business (if the work the person is doing is a necessary part of the business operation then it is more likely they are an employee);
  • What the person is doing (although the intern may do some productive work, if this is an expectation or requirement then it is more likely they are an employee);
  • Who gets the benefit (if the business benefits from engaging the person - rather than the intern getting the benefit of the arrangement - then it is more likely they are an employee).

It's important to remember that even if the intern agrees not to be paid, the business will still be liable under the Fair Work Act if the relationship is found to be that of an employer and employee.

Further information is available from the Fair Work Ombudsman at the following links: