Paid Internships, Unpaid Internships & Work Experience: A Guide for Australian Small Businesses
Chances are you’ve thought about what it might be like to have an extra set of hands in your business, but before you post that unpaid internship ad or welcome a student into your workplace, you need to understand the rules. Perhaps like me, your first introduction to the term “intern” was via American TV shows, particularly those set in a law firm, and the “intern” was helping out (and probably also solving a big legal case).
In Australia, it’s a bit less glamorous and unpaid internships aren’t as simple as "free help for experience". That is a good thing, because we have strict Fair Work rules to protect workers here. As an employer, if you run foul of them, it could leave you facing serious penalties if you get it wrong. Consequently, internship arrangements must be properly structured and monitored.
This page unpacks what every small business owner in Australia should know about internships and work experience.
We’ll also answer questions like these:
Is there a difference between an internship and work experience?
What is the difference between paid internships and unpaid internships?
Are unpaid internships illegal in Australia?
How long is an internship or work experience placement?
How can I protect business and client/customer confidentiality?
What is an internship agreement, and what does it cover?
If you are contemplating whether to bring an intern into your business, or have previously had interns or uni students helping out, you are in the right place. While internships are often found in accounting and law firms, consulting and management businesses, agencies and allied health practices, internships can exist in all types of small businesses, provided they are compliant with Australian laws.
Interns & work experience placement in small businesses
In Australia, the terms “work experience” and “unpaid internship” are often used interchangeably. However, there are some important distinctions.
Work experience
Work experience is a short term workplace placement with the purpose of offering an individual broad exposure to what the workplace in an industry is like. It is mostly observation to gain an understanding of the workplace and everyday activities in that environment.
What is an internship?
An internship is a temporary workplace placement designed to expose the intern to everyday experience of working in a career they are training for. The purpose is to both observe and develop particular skills in an industry.
How long is an internship?
An internship may be a few weeks or a few months in duration, depending on the requirements of the course the intern is studying alongside the practical workplace training.
In general, an intern will also be studying a particular skill or working towards a qualification for their career.
Do you have to pay for internships?
In Australia, an internship can be either a paid internship or an unpaid internship.
Unpaid Internships & Vocational Placements
For an unpaid internship to be legal, there are requirements under the Fair Work Act and the National Employment Standards (NES) that all Australian small business owners must meet.
These requirements are that the arrangement is:
genuinely for the intern’s benefit (not the benefit of the business);
for the intern to learn. The intern must not be undertaking "productive work" that would normally be done by a paid employee;
a vocational placement (required by a course or education program); or
voluntary work experience (no obligation to perform or be paid).
If the intern’s work is covered in an Award (e.g., retail assistant, admin clerk, marketing officer), you may owe minimum wages, even if you didn’t intend this to be the case.
Modern Awards or Enterprise Agreements may still apply if the intern’s work resembles that of a paid employee. So, if the intern is undertaking productive work or contributing to profit in your business, they are to be employed.
Vocational placements
If the intern is enrolled in an Australian university, TAFE, or Registered Training Organisation (RTO) and needs the internship for their course, it's known as a vocational placement.
Vocational placements are expressly exempt from Fair Work's minimum wage laws. An example of a vocational placement is a law student completing Practical Legal Training and undertaking work experience (or a vocational placement) in a law firm, which is a requirement that law student must complete to be awarded their postgraduate legal practice certificate.
Conditions of a vocational placement
To meet the threshold of vocational placement, the education provider must authorise the placement, and the attendance should be assessable for a course or program. Without a formal link to a course, the individual is likely considered a worker who must be paid.
Opportunity or walking a fine line?
In scenarios like these, in businesses and industries of all kinds, having an unpaid person in your business can give you the benefit of access to a funnel of potential talent coming into the job market. While also beneficial for the individual, it can be easy for them to quickly become skilled-up and start to contribute to your business. When you reach that tipping point, they should become a paid employee.
For anyone looking to demonstrate their readiness for the workplace, and potentially be hired by your business in the future, it can be very easy for them to go from observing and participating in tasks to doing “productive work” to the benefit of your business. Effectively legally classifying them as a worker, and therefore making them eligible for all of the entitlements of a casual employee.
Modern Awards or Enterprise Agreements may still apply if the intern’s work resembles that of a paid employee.
Legal Tip: If your intern is productive or contributing meaningfully in your business, they are to be employed and paid.
Getting clear on the terms of an unpaid internship or work experience placement
If someone has come to you independently seeking work experience or an unpaid internship, you will need an agreement in place to ensure they aren’t exposing you to the risk of having to back pay them wages from their activities while with you.
If they have been placed by a school, college or university, you will likely receive a placement letter or some other kind of agreement detailing the terms of the arrangement between your business and the intern. However, those placement letters, while they may cover the expectations of the intern while with you and the feedback you need to give about the intern, aren’t written with the protection of your small business in mind, they are largely focused on helping the intern meet the requirements of the education provider or the qualification.
That’s why a supplementary Agreement is essential. One that protects you and your small business.
Misclassifying an intern as an unpaid worker when they should be paid, is now a criminal offence (as of January 1, 2025). So while penalties can include a prison sentence and/or fines, there is also the risk of damage to your business's reputation. That and every small business owner could do without the stress of having to deal with a scenario like this!
If your intern truly is an unpaid intern, you must have them commit to the terms of the internship with an Unpaid Intern Agreement. We will unpack this in more detail below.
Paid Internships
While it is common for people to use the terms “law internship”, “marketing internship” or “allied health internship”, amongst others, be wary of using the term ‘paid internship’.
A paid internship could infer payment that is less than the Award rate. A paid internship is the same as hiring a casual or part time employee, just paid at a junior Award rate (at a minimum) as they learn. For example, a law student would be hired as a paralegal, graduate at law or administrative assistant under the Legal Services Act rather than a “paid intern”.
If your intern is doing regular hours, has Key Performance Indicators (KPI’s) set, or is adding commercial value to your business, the reality is that you need to pay them according to the level of work they are doing - whether that is under an Award will depend on the industry you are in and their classification. In this case they become a casual employee and should be hired as such (see our casual employee agreement here).
What is an Internship Agreement, and what should it cover?
Unpaid Internship Agreements
To protect your business and the unpaid intern, you should have a clear, written agreement documenting your internship arrangement. It should spell out the following at a minimum:
that no employment relationship exists between the parties;
that there is no promise of a paid employment role once the internship finishes;
the intern will not be paid wages or other entitlements;
the expected outcome (e.g. learning outcomes);
the length of the placement - it cannot be open- ended;
the responsibilities of the intern;
obligations relating to business confidentiality; and
any insurance requirements (very important!)
If the intern is genuinely an unpaid intern, while workers' compensation might not apply, you must ensure that your public liability insurance covers volunteers like unpaid interns. If the intern suffers an injury during the internship, your business may make a claim under the relevant insurance policies.
Our Unpaid Internship Agreement Template covers the items above, including clauses specifically detailing the educational benefit of the internship, the obligations of the intern, and an indemnity clause (releases business from claims). It also details the terms of what is to occur if you or the intern wishes to terminate the arrangement.
Paid Internship Agreement (employment agreement)
If you have someone you are paying and calling an intern, the reality is that they are an employee. You should have a clear, written agreement documenting your employment arrangement. It should make them aware of the terms of their internship (employment), including the following information:
Casual hourly rate & superannuation
Hours of work
Initial training
Duties
Performance review methods
Restraints (if any)
Probationary period
Notice period (termination)
Leave entitlements
Our Employment Agreement (for full-time, part-time & fixed-term employment) template and our Casual Employee Agreement template cover the items above, including clauses specifically detailing the responsibilities and the obligations of the intern and an indemnity clause (releases the business from claims). It also details the terms of what is to occur if you or the intern wishes to terminate the arrangement.
With all of these agreements, whether they are in isolation or as a vital add-on to any Agreement provided by an RTO or educational provider, you must keep a record of the signed agreement in case a dispute ever arises.
Unpaid internships can be a fantastic way for students and new entrants to an industry or profession to gain experience, but only if you follow the rules. If you’re thinking about bringing on an unpaid intern, don’t leave it to chance. Protect yourself and your business with a properly drafted agreement.
Unpaid Internship/ Work Experience Agreement template
Template Agreement for full time, part time & fixed term employees (interns)
Casual Employment Agreement template
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