30/03/2015

A company has been fined $24,000 by the Federal Court after failing to pay wages for two employees who were incorrectly classed as unpaid interns.

The Federal Circuit Court of Australia has fined Crocmedia - a radio and television program developer in Victoria - $24,000 after failing to pay two producers' wages over 'an extensive period of time'.

Crocmedia had incorrectly categorised two employees as unpaid interns, when in fact the two workers undertook unpaid work experience for three weeks before commencing employment on a casual basis for six months and 12 months, respectively.

In Fair Work Ombudsman v Crocmedia Pty Ltd [2015 FCCA 140] it was held that Crocmedia had breached the Fair Work Act by failing to pay minimum wages and casual loadings or provide payslips to the employees. The company's failure to review the work experience arrangements, and subsequent failure to pay the employees for up to a year, led Judge Riethmuller to warn that "profiting from volunteers is not acceptable conduct within the industrial relations scheme in Australia".

Crocmedia was held to have sufficient resources to ensure their company was complying with workplace laws, however their exploitation of the workers was found to be a misunderstanding of the relevant workplace Award rather than a deliberate breach. The company's cooperation with the Ombudsman and prompt payment of wages owed to the employees meant the company received a 30% discount in the financial penalty to be imposed against them.

This case serves as a warning to employers who take on interns or volunteers to ensure proper policies and procedures are in place to regularly review work arrangements and ensure no breaches of the Fair Work Act are occurring.  

Whilst there are a limited range of exceptions that allow for workers to undertake work without being paid, each arrangement needs to be considered on its own merits to ensure compliance with workplace laws. Employers should particularly consider:

•    the length of time of the arrangement;
•    the purpose for which the person is undertaking the arrangement- for example, as an educational requirement, for their own benefit, or for the benefit of the employer;
•    whether the person is doing productive work or work usually done by paid employees; and
•    whether the person has been asked to undertake an unpaid trial to be skills tested for an upcoming paid position.

The recent decision of the Court is a reminder to employers to stay informed of relevant workplace laws, particularly as penalties are likely to increase as public interest and media coverage in this area continues to rise. As Judge Reithmuller warned, employers may face greater difficulty in the future in arguing the exploitative workplace arrangement was a genuine error.

If you have any questions regarding any information contained in this article, please contact Townsends Business and Corporate Lawyers on (02) 8296 6222.