Former marketing company owner fined $17,500 for underpaying three interns

The former operator of a Melbourne marketing company has been penalised $17,500 over the “brazen” underpayment of three young female interns who worked three months without pay in 2012.

The Federal Circuit Court imposed the penalty after the Fair Work Ombudsmancommenced legal action over the underpayments, which occurred in 2012.

Naomi-Jayne Aldred, the previous owner-operator of Melbourne-based Nexus Coaching Group Pty Ltd, previously rectified an underpayment of almost $10,200 in August 2014.

Nexus Coaching Group went into liquidation in 2013.

READ MORE: Melbourne business owner who called out internship ‘rorts’ faces court over employing unpaid interns

Judge Grant Riethmuller found Aldred has taken advantage of young graduates in an industry where employment was difficult to obtain, making claims in employment offers that were “simply false”.

“The effect of these letters, at best was misleading and deceptive if one accepts that the respondent was unaware that she was breaching the laws, if not completely reckless, and at worse formed part of a calculated and carefully executed fraud upon these three women,” the judge said.

Riethmuller also referenced the Crocmedia case, for which he imposed a $24,000 fine over the “exploitative” treatment over two interns in January last year.

Fair Work Ombudsman Natalie James said in a statement the decision is a warning to employers.

“The Fair Work Ombudsman is committed to protecting vulnerable young workers as they enter the workforce and will take action in cases of serious non-compliance,” she said.

Rachel Drew, partner at Tress Cox Lawyers Rachel Drew told SmartCompany this morning the decision shows the court is being clear on the responsibility employers have to interns.

“The court it seems wanted to send a message that first of all there should be no misconception that an intern is equivalent to work experience,” she says.

“If an employer is taking on an intern they need to treat them like an employee. They can offer work experience but that is a completely different case.”

Key tips for businesses taking on interns

Drew says employers need to be aware the label ‘intern’ is simply another word for an employment relationship.

Although typically a very junior role within an organisation, internships generally involve a level of training by the company and are considered an employment relationship, which means wages need to be paid.

“Interns are a very important part of many businesses because they do provide a very junior level of work to the organisation,” Drew says.

“Organisations are entitled to pay their interns at junior rates under the applicable award. If they’re under 21 years of age there are also reduced rates under the award.”

Drew says employers need to have a clear understanding of the difference between having a student work within the organisation and a standard internship.

“There are certainly programs for example through universities and high schools which provide students with an opportunity to get experience through the workplace,” Drew says.

“There may be occasion where those work experience programs are called internships, the reality is … they are quite different in nature.”

Drew all employers need to familiarise themselves with their obligations to any interns.

“If employers are after free labour, that can’t be done with an intern arrangement,” she says.

SmartCompany was unable to contact Aldred prior to publication.