Employers are always looking for ways to cut costs. Students or job seekers are always seeing work experience with an organisation. The logical solution for both parties? A short unpaid trial period to determine the person’s suitability for paid employment. Occasionally, a longer period of engagement – an “internship”- is sought or offered.
Before making the commitment to an internship, employers should recognise the legal parameters of such arrangements and the potential financial penalties of getting it wrong.
The primary focus of an internship is training and gaining knowledge and exposure into the real working environment. Unpaid placements are lawful when they form part of a vocational placement for a course of study.
However, if the “intern” is undertaking productive activities that employees in the workplace are performing for the benefit of the organisation, then that individual is more likely to be considered in an employment relationship with the employer. People in employment relationships are employees of a business and entitled to:
The more productive work that’s involved (rather than just observation, learning, training or skill development), the more likely it is that the person is an employee.
3 key questions are often used to determine the legitimacy of an internship:
1. Who’s getting the benefit?
The person who is doing the work should get the main benefit from the arrangement. If a business or organisation is getting the main benefit from engaging the person and their work, it’s more likely the person is an employee.
2. What’s the significance to the business?
Is the work normally done by paid employees? Does the business or organisation need this work to be done? If the person is doing work that would otherwise be done by an employee, or it’s work that the business or organisation has to do, it’s more likely the person is an employee.
3. Length of time of the arrangement?
Generally, the longer the period of the arrangement, the more likely the person is an employee.
Employers cannot avoid paying lawful entitlements to employees by labelling them as “interns”. If the person is performing productive work for the business, they are legally entitled to be remunerated as an employee.
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