The fashion and textiles industry is highly competitive and employs thousands of people nationally. To ensure successful entry into this industry it is vital to have some work experience under your belt.
Luckily, it seems to be industry practice for many employers to provide students with work experience placements, which are regularly unpaid. The benefits of this experience are usually mutual. It allows students to gain professional exposure and experience in a broad range of business operations while providing employers with the opportunity to discover new talent and be the first in line to offer these students full-time job opportunities.
Additionally, the experience gained through these placements is seen as essential in providing the seamless transition from student to employee.
However, employers may not appreciate that providing work experience opportunities has a number of risks. In particular, legal requirements regarding unpaid work placements means that employers hiring students outside formal work placement programs may be exposing themselves to potential underpayment claims, despite the student agreeing to “work for free” for the benefit of gaining experience.
The Law
The Fair Work Act 2009 (Cth) (Act) applies to the employment of all employees of trading and financial corporations Australia-wide and to most other employers and employees in all states and territories except Western Australia. The Act defines an employee as a “national system employee”. All national system employees are entitled to the minimum terms and conditions in the Act contained in the National Employment Standards (NES). The NES covers things such as maximum weekly hours of work, requests for flexible work arrangements, paid and unpaid leave provisions, notice and redundancy entitlements.
Additionally, national system employees are entitled to pay and other benefits contained in applicable modern awards, for example the General Retail Industry Award 2010.
Importantly however, the definition of national system employee excludes an individual on a “vocational placement”. Such an individual is not entitled to the provisions in the NES or the pay and other benefits in an applicable modern award.
What is a “vocational placement”?
So how does an employer ensure that a student is hired as part of a vocational placement?
An employer must ensure that each of the following three criteria are met:
• The work placement must be undertaken by a person who is not entitled to be paid any remuneration.
• The work placement must be undertaken as a requirement of an education or training course.
• The work placement must be authorised under a law or an administrative arrangement of the Commonwealth, a state or territory.
The first criteria ensures that those who are validly entitled to be paid for the work they do, are paid. For example, an employee working at David Jones is entitled to be paid for the work he or she undertakes.
Unpaid work experience will be a “requirement of an education or training course” where it is necessary for the completion of the student’s qualification or enables them to receive credit towards the completion of their qualification. To ensure this second requirement is met, an employer should seek advice from the student’s educational provider or should request documentation from the prospective student confirming whether or not work placement is part of a curriculum before offering any placement.
While the first two criteria are generally understood by employers, it is the third one which can be confusing and is commonly overlooked. Employers can get information about this requirement by speaking to experts or Fair Work Australia who can assist in identifying whether this requirement has been met.
The risks
Employers who do not meet these criteria when engaging work experience students face the risk of exposing themselves to claims for wages, superannuation and leave entitlements during the student’s placement.
The employer will also be exposed to investigation by the Fair Work Ombudsman who has broad powers to investigate a complaint about an alleged contravention of these requirements and the ability to prosecute an employer that is found to be in breach.
As most employers appreciate, employees have an entitlement to be paid for the work they undertake. The only exception to this is where work is performed as part of a vocational placement or is classified as voluntary work. If a work experience student undertakes work experience for the employer and the vocational placement criteria are not met, then it is likely that the student will be entitled to be paid for the work they performed. Employers should also be wary of keeping work experience students beyond their initial placement period. This increases the risk of the student going from genuinely being on a vocational placement to becoming an employee.
Tips for employers
Despite the risks involved, it is important for employers, especially in this industry, to keep in mind the mutual benefits that arise from industry training for new and junior workers.
Here are some tips to ensure a hassle-free engagement:
• Employers should be mindful to keep written records of any offer, or vocational placement if one is undertaken, so if they are ever requested to establish that the necessary criteria identified above have been met, they can do so.
• Employers should talk to their workers compensation insurer or broker about whether they have in place relevant insurances, such as workers compensation, to cover students on vocational placement.
• Employers should consider specialist OH&S induction for vocational placement students bearing in mind that junior workers are at a significantly higher risk of injury than experienced workers.
• If the criteria for a vocational placement cannot be met, the employer should consider offering the student payment for the work performed to reduce any prospect of prosecution by the Fair Work Ombudsman.