By David Bates

I frequently use this column to comment on the hopeless complexity of Australia’s archaic employment laws. This week, I’m going to focus on two particular practices that employers still haven’t realised are almost certainly unlawful under the current laws – engaging unpaid interns and paying people on a commission-only basis.

Unpaid interns

Let’s start with interns. It was once the norm for budding journalists, marketing professionals, designers, and others to seek out opportunities to volunteer at well-established and highly-regarded companies in order to get their foot in the door. In fact, we used to applaud those applicants for their initiative and dedication. How times have changed.

Just ask the operators of Crocmedia Pty Ltd – a Victorian-based business that develops TV and radio programs. Two interns were ‘lucky enough’ to be offered a few weeks of work experience at Crocmedia, after which the company decided to keep them on as casuals. 

For the interns, it was the break they had been looking for – an opportunity to learn all about the industry from inside a well-respected business. For Crocmedia, it was a great opportunity to harness the talents of two motivated and passionate interns. Unfortunately, the arrangement was also illegal.

In its judgment issued on 29 January, the Federal Circuit Court found Crocmedia had breached the law and imposed a penalty of $24,000. The two employees were also back paid the wages they had been denied as a result of Crocmedia’s failure to comply with the applicable ‘industrial instruments’. 

The moral of this story: unpaid work is almost always unlawful, even if the people performing the work approached the employer themselves, offering their services for free. Unless the workers are being sourced via a formal training or internship program (such as those offered by colleges, schools, and universities), it’s likely the apparent win/win arrangement will eventually end in tears.

Commission-only

So what about employing workers on a ‘commission-only’ basis? Surely that’s allowed, right? Wrong. Subject to some extremely rare exceptions (such as the real estate industry where separate and very strict rules apply), commission-only contracts are also likely to result in breaches of the current laws and very hefty penalties.

This is because workers are entitled to receive a salary that is at least equal to either the National Minimum Wage (if they are ‘Award-free’), or the applicable Modern Award minimum wage (if they are ‘Award-covered’). 

Paying people based on their performance sounds tempting – especially given the extremely generous, pro-employee laws we have here in Australia – but it will almost always end in an embarrassing judgment being handed down by a rather unimpressed judge at the Federal Circuit Court. 

Just ask the operators of the Adelaide-based Longridge Group Pty Ltd which, on 28 January, was ordered to pay a penalty of just under 30,000 for paying workers on a commission-only basis when they were, in fact, covered by the ominously named ‘Miscellaneous Award 2010’

This is yet another expensive reminder of the inflexibility – and complexity – of Australia’s employment laws.