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Should you be paying your interns?

In order to know whether you need to be paying interns, you first need to establish the nature of the internship that you have advertised. This is because the term “intern” in isolation does not provide you with the answer. Depending on the type of internship you are offering, the intern could be entitled to pay and further entitlements.

What is an internship?

Almost everyone has heard of internships. Perhaps you have even been an intern at some point in your life. But a varied approach to the employment practice over the years has skewed the definition for some. If your own internship was based on photocopying, taking lunch orders and not getting paid, you could be forgiven for thinking that’s normal.

An internship is a fixed period of work experience. It is typically of interest to students, graduates or those seeking a career change. It should provide an insight into a specific field or industry and typically offers on-the-job training. If an intern has performed well during their internship, you might think about offering them permanent employment when the internship ends.

An internship is not intended to be used to increase labour or resource by means of little to no budget. A falsely advertised and poorly implemented internship is exploitative and illegal. Some employers have found this out the hard way. Earlier this year a fashion start-up made famous for its Shark Tank investment deal was fined hundreds of thousands for underpaying workers, including an unpaid intern.

Even with the above explanation, we know that employment relationships can be confusing. So to make sure you remain on the right side of the Fair Work Obudsman (FWO) we recommend a refresh on the rules for offering internships at your business.

When an intern should be paid

The FWO states that whilst each case must be considered in isolation, there are key identifiers that establish if the internship should be paid.

If the intern is carrying out productive work that benefits your business, they have likely entered into an employment relationship with you and will be entitled to the minimum wage and National Employment Standards. This is especially true if they are expected to do so for an increased period of time.

Exceptions to paid internships

Whilst most internships these days will qualify to be paid, there are some exceptions. Students who are in education and partaking in a vocational placement as part of their course or training do not have to be paid. The student must come from an approved educational institute for this to apply.

Although in this instance pay is not a legal requirement, it could be a good incentive.

Other types of internships that don’t require pay include flexible work experience where the intern decides their hours and conducts minimal productive work for the business. Or shadow work which is purely observational training. It has been known for employers to confuse these types of internships with one which should be paid. But be warned, the FWO will be quick to correct you.

Do interns need a contract?

We believe it is best practice to have a contract for each person who works for your business, including interns. This is because a professionally drafted contract sets out the employment relationship and entitlements.

Additionally, contracts are a great way to communicate rules and expectations to workers. If any questions or doubts arise, they should do so before work begins.

If you’re preparing for an intern and have questions about the process, contact your local HR Dept today. We’ll help you legally recruit your new hire and advise on a comprehensive induction and training plan that is unique to your business.