Fair Work Ombudsman puts the bite on media company as businesses warned to clarify employment arrangements

Businesses have been warned to have clear working arrangements with all staff, even those on work experience, or risk action by the Fair Work Ombudsman following court action against a media company.

The Fair Work Ombudsman has launched legal action against Melbourne media company Crocmedia for allegedly underpaying two workers, one of whom claims to not have been paid anything for seven months.

Crocmedia allegedly underpaid two radio program producers a total of $22,168.

It is alleged the workers were misclassified as volunteers or contractors, when they should have been treated as casual employees and paid more than $18 an hour.

The case represents a key question in the employment community – how is Fair Work dealing with unpaid internships?

This question is even more relevant given the fact the company involved, Crocmedia, has since rectified the underpayments – Fair Work wants to set the record straight about how these employees were classified.

TressCox Lawyers partner Rachel Drew told SmartCompany while for-profit companies are legally able to have volunteers, generally as work experience students, it’s uncommon for such a student to be at a business for up to a year.

Drew says it’s important for employers to document the arrangements.

“Employers need to have clear arrangements with their staff. They may have had full conversations about their entitlements, but if it’s not recorded in writing, eight to 12 months later you will be in a very difficult position trying to prove what was agreed,” she says.

“If a for-profit company has volunteers, they need to be very careful and define the working arrangements,” she says.

Drew says there is a distinction between a work experience student and an intern or a person working at the company as a trainee prior to commencing employment.

“If you’re at a company on work experience, it’s often lawful and common for this not to be paid.”

“There isn’t any legal limit on how long a person can conduct work experience for, but you would think a court looking at an arrangement which extends over such a longer period of time would think it was a relationship other than a volunteer one,” she says.

The case follows on from research released earlier this year by the University of Adelaide which found that unpaid internships and work experience was common, particularly in the media, fashion, law and hospitality industries.

The Fair Work Act states the people doing an internship or work experience linked to vocational training for an education institution don’t have to be paid.

Unpaid work experience places and internships which are arranged outside of a vocational places can be lawful too, but employers need to prove the participant is not an employee.

In order to prove this, employers must consider the purpose of the working arrangement, the length of time of employment (the longer someone is at an organisation, the more likely it is they will be viewed as employee), the person’s obligations in the workplace and who benefits from the arrangement.

SmartCompany contacted Crocmedia, but received no response prior to publication.

Crocmedia chief executive Craig Hutchison told The Age he was sorry for what had happened and the underpayments were immediately rectified.

“They’ve been really helpful with us.”

“We try to be a great employer and give people opportunities in an industry where there may not be many,” he says.

Crocmedia faces penalties ranging from $16,500 to $51,000 per breach of workplace law.