62 - The legal risks of unpaid internships

Unpaid Internships in Australia: When Work Experience Becomes Employment

Melissa Bush explains that the Fair Work Act doesn’t define "intern", so unpaid arrangements may be treated as employment if they look and function like work, triggering minimum wage, award entitlements, superannuation, back pay and penalties. She outlines two lawful pathways: a vocational placement under s12 (unpaid, required by an authorised course, and documented by the institution) or a non-employment arrangement where the person does no productive work, receives meaningful training, and the main benefit flows to them. She details key indicators used by courts and the Fair Work Ombudsman (purpose, duration, control, benefit, and payment expectations) and cites enforcement examples (Croc Media fines and back pay; D.Studio Architects underpayment recovery). She also covers higher civil penalties after the Feb 2024 reforms and the Jan 2025 criminal offence for intentional underpayment and provides a checklist: verify vocational status, keep placements short/observational, document and review, and when in doubt, pay.

00:00 The Internship Trap

01:54 Show Intro and Roadmap

04:17 Why Internships Matter

08:02 Two Legal Pathways

08:21 Vocational Placement Rules

11:11 When It's Not Employment

13:43 The Employment Line Tests

18:21 Case Study: Croc Media

21:46 Case Study D Studio

24:17 New Penalties and Crimes

29:47 Practical Compliance Checklist

34:31 Wrap Up and Resources