Case review - when does unpaid work constitute employment?

When does unpaid work constitute an employment relationship?

In Australia, certain protections are only afforded to workers if they were part of an employment relationship. For example, an employment relationship must have been entered into by a worker before the Fair Work Act will afford that worker protection from unfair dismissal. Given this, unpaid workers often ask: Am I actually in an employment relationship?

A recent decision of the Fair Work Commission has again considered whether unpaid work constitutes employment. It is a timely reminder of the factors that workers must consider when determining whether they are entering into, or have entered into, an employment relationship.

Background

In Barbour v Memtaz Derbas, Mr Barbour was engaged by Derbas Lawyers to assist with legal work on an unpaid basis. Mr Barbour had no fixed days of work, chose his own hours and breaks and worked other jobs when he was not working for Derbas Lawyers.

After approximately 14 weeks, Mr Barbour asked a representative of Derbas Lawyers when he could transition from being an unpaid worker to being paid for his work. The following day, Derbas Lawyers informed Mr Barbour that the firm was no longer able to offer him any further work, whether it was paid or unpaid.

Mr Barbour filed a claim alleging that he had been dismissed from employment. Derbas Lawyers objected on the basis that Mr Barbour was not an employee and therefore could not be dismissed.

When does an employment relationship exist?

In the decision, the Fair Work Commission stated that an employment relationship exists only if a contract of employment has been formed. A contract of employment, the Fair Work Commission said, exists when:

  1. the parties have reached an agreement as to the terms of the contract;
  2. the agreement involves provision of ‘consideration’ by each party (such as payment for hours worked);
  3. the agreement is intended by the parties to be legally enforceable; and
  4. the terms of the agreement are certain and complete and there is no element of illegality or any other factor that would render the contract void.

The Fair Work Commission indicated that unpaid internships and work experience do not constitute employment when:

  1. the placement is mainly for the benefit of the worker rather than the business;
  2. the periods of placement are relatively short;
  3. the person is not required to or expected to do productive work; and
  4. there is no significant commercial gain or value for the business, derived out of the work performed by the person.

In Mr Barbour’s case, the Fair Work Commission found that no agreement on the terms of the contract had been reached. Further, factors against there being an employment relationship included that:

  • although the parties may have discussed the employment of Mr Barbour in the future, the parties had not agreed on a future date for Mr Barbour to be paid or payment to commence;
  • Mr Barbour was not expected by Derbas Lawyers to work on any particular day;
  • Derbas Lawyers did not need or advertise for staff;
  • although Derbas Lawyers trained and supervised Mr Barbour, this was not sufficient to equate to consideration for work;
  • Mr Barbour’s behaviour in wearing attire appropriate in Derbas Lawyers’ office could be indicative of work experience and not necessarily employment; and
  • Mr Barbour received the significant benefit of the relationship and Derbas Lawyers did not obtain any significant commercial gain.

For those reasons, the Fair Work Commission held that no employment relationship had been formed. Mr Barbour was thus not entitled to the protection he sought by lodging an unfair dismissal claim, as he had not been dismissed from employment.

Conclusion

Although the Fair Work Commission acknowledged that as Mr Barbour’s experience grew “there would come a tipping point at which he morphed from a volunteer to an employee”, that point had not occurred, despite Mr Barbour working for fourteen weeks.

This case demonstrates the difficulties unpaid workers may face in seeking protection from unfair dismissal. Unpaid workers are often excluded from such protection, particularly if they have not agreed to work on particular days and the business they work for does not obtain a significant commercial gain from their work.

Even if unpaid workers wear appropriate business attire and discuss the possibility of future paid work with their supervisor, this will not necessarily mean that they will be classified as an employee.

Get help

For these reasons, it is essential that you are clear about the terms of a working engagement that you are entering into or are currently in. We would be happy to provide you with advice in relation to your working engagement and help you understand whether you are part of an employment relationship.

Today's article was researched by Research Clerk, Billy McEvoy and written by employment lawyer, Tim Grellman.

You can contact us by phone or email to arrange your consultation; either face-to-face at one of our offices, by telephone or by videoconference consultation.

Phone: 1800 659 114
Email: general@hallpayne.com.au

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  This article relates to Australian law; either at a State or Federal level.

The information contained on this site is for general guidance only. No person should act or refrain from acting on the basis of such information. Appropriate professional advice should be sought based upon your particular circumstances. For further information, please do not hesitate to contact Hall Payne Lawyers.


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Get in touch with today's blog writer:
Tim Grellman

Solicitor in Industrial & Employment Law

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