Course Name

Recommendations for Organisational Policy on Internship Hiring Practices

Student Name

Student ID

Professor Name

University Name

Due Date:
Table of Contents

1.0 Introduction................................................................................................................................1

2.0 Legality of Internships...............................................................................................................1

3.0 Benefits of Internships...............................................................................................................2

4.0 Internship as an ‘Exploit’...........................................................................................................3

5.0 Conclusions and Policy Recommendations...............................................................................3

References........................................................................................................................................5
1.0 Introduction

Internship, according to the Fair Work Ombudsman (2017), is an individual is required or asked
to work for an organisation for gaining experience in a particular industry or occupation. A
report commissioned by the Commonwealth Department of Employment (2016) found that
unpaid internships are highly prevalent in Australia: 58% of respondents from a sample size of
3800 had at least participated in an internship during the past five years (Oliver et al. 2016). Taha
(2019) highlighted several issues related to the empowerment of Australian young generation,
most importantly that the unemployment rate for young people is 11.3% compared to the
national rate of 5%. Oliver et al. (2016) argue that well-design internships have the potential of
enhancing employment prospects of young people while enabling them to synchronise their
‘human capital profile’ with that of the labour market demands. However, internships do not
have any legal status which opens the door for the exploitation of young people under the
umbrella of ‘internships’. With that being said, this report will be analysing the legality of
internships in Australia, the benefits of it and the risks for exploitation. Based on the author’s
experience in Centrelink and iD Collective this report will discuss the policy implications of
internships and some suggestions through which these can be utilised for the benefit of all
involved.

2.0 Legality of Internships

Also referred to as a work experience arrangement, internships do not carry with them a legal
status (Wilson and Pender, 2017). The Fair Work Act 2009 (Cth) has developed various
industrial relations regulatory landscapes and neither these landscapes not the common law has
any meaning for ‘internships’ (Wilson and Pender, 2017). An intern has either no legal
relationship with the organisation or is an employee, based on certain conditions highlighted by
Fair Work Ombudsman (2017). Oliver et al. (2016) highlighted that depending on the discipline
and national context, the characteristics and definition of internships are often overlapping,
blurred and sometimes are not articulated at all, see for example the report by Parliament of
NSW Children and Young People Committee (2014) which failed to differentiate between
internships, volunteering and unpaid work. However, Oliver et al. (2016) have emphasised that

1
internships are unpaid work experience are often used interchangeably as almost 71% of the
3800 respondents participated in unpaid internships during the past five years (2011-16).

Most of the questions raised on the legality of internships are whether they are lawful
considering they are unpaid 90% of the time (Interns Australia, 2015). Fair Work Ombudsman
(2017) highlights that unlawfulness of unpaid internships under the Fair Work Act 2009 (Cth) is
evaluated by considering the existence of the employment relationship and evaluating if the
arrangement is vocational – formal work experience required by training or education. The report
continues to explain that if an employment relationship exists and the internships are unpaid,
then it is unlawful. Before discussing the exploits through internships, this report will first
highlight some benefit of internships to employees and employers.

3.0 Benefits of Internships

Certain skills cannot be learned in the classrooms and internships enable young people/students
to acquire and enhance skills including team-working skills, customer management experiences,
interpersonal skills and professionalism while also improving their self-efficacy, communication
and confidence (Maertz et al. 2014; Holyoak, 2013). Saniter and Siedler (2014) argue that those
with one or more internships are likely to find a job early in their life. This is further emphasised
by Dobratz et al. (2014) who highlighted that the probability of finding employment after
graduation is highly increased after internships; 58% of students who completed internships
found employment immediately after graduation compared to the 30% with just university
education. Holyoak (2013), for instance, found that various accounting organisations consider
students with internship better entry-level accountants. Vélez & Giner (2015) added that
internships also increase the student’s prospects for higher earnings.

McKenzie et al. (2015) mentioned that for employers interns are considered as an efficient
source of low-cost labour. Interns can be helpful in finishing value-added or back-burner projects
which might not be completed otherwise (Ismail, 2018). During the busy period, employers can
utilise interns as effective resources and can further reduce recruitment and training costs if they
hire an intern immediately after the internship (Holyoak, 2013). Dobratz et al. (2014) highlighted
that internships also assists in the development of social networks which are seen as an
advantage in the entrepreneurship sector. Through the increased knowledge from these social

2
networks, entrepreneurs can identify opportunities in the market while also gaining access to the
resources for acting on potential opportunities (Ismail, 2018).

4.0 Internship as an ‘Exploit’

Wilson and Pender (2017) highlighted that internships are often used as exploits by employers
where the intern is not paid despite being in an employment relationship. Recent cases of Fair
Work Ombudsman v Crocmedia Pty Ltd [2015] FCCA 140 and Fair Work Ombudsman v Aldred
[2016] FCCA 220 illustrates the exploitation of internships where employers were engaged in
unlawful practices and were fined by the Fair Work Ombudsman. Oliver et al. (2016)’s
interviews of individual interns indicate that employers do not implement internships with the
business framework rather the interns were given menial and repetitive jobs – jobs no permanent
employee would consider doing. Many interns highlighted that were exploited and did jobs for
free that generated financial profits for their host organisations – illegal as per Fair Work
Ombudsman (2017). Ismail (2018) adds that companies often time dodge their liabilities through
unpaid internships where the interns accept internship for no wage just to survive the duration of
the internship. Some also highlighted that the work was not safe and was over-regulated
(Insurances, WorkCover) (Oliver et al. 2016). Another important issue raised was the issue of
inequality. Binder et al. (2014) argue that students with less academic background and low socio-
economic background often find it hard to obtain internships in reputed organisations.

5.0 Conclusions and Policy Recommendations

There exists a paucity of clarity and understanding regarding the legitimacy and legality of
unpaid works as also highlighted by Stewart and Owens (2013). This lack of understanding and
clarity opens the door for exploitation by employers through not paying the interns and asking
them to do tasks which generate business value and financial outcomes. Considering the risks
posed by internships, certain policy recommendations are made in this report.

Considering how unpaid internships are exploited, the government should work with companies
to render unpaid work illegal. If it is, however, not probable then the government should
consider the provision of financial aids to students participating in internships (Oliver et al.
2016). McManus and Feinstein (2014) recommend the use of adequate resources for structuring

3
and monitoring internships where the interns should have a sense of autonomy. Internships
should comprise of four key components: question generation, self-reflection, intentional
learning, and metacognitive skills for them to be successful (McManus and Feinstein, 2014).
This suggests that internships should be developed around the business framework where the
interns are required to perform meaningful work. Binder et al. (2014) suggest the development of
special policies for the disadvantaged. This was evidenced in Centrelink where students from
low socio-economic backgrounds were provisioned a Youth allowance which enables them to
overcome the financial hardship and stress through paying for their studies.

Stewart and Owens (2013) suggest that organisations should implement a contract with their
interns that will highlight the terms of the internship. If the internship is unpaid, the development
of the contract should ensure that the intern should participate in meaningful activities for the
enhancement of skills, their internship should not violate the laws of an employment relationship
under the Fair Work Act 2009 (Cth). If the internship is paid and consists of activities which
promote financial outcomes and financial value, the employer should ensure that the intern
receives the minimum wage (Stewart and Owens, 2013).

4
References

Binder, J, Baguley, T, Crook, C & Miller, F 2015, "The academic value of internships: Benefits
across disciplines and student backgrounds", Contemporary Educational Psychology, vol. 41, pp.
73-82.

Dobratz, C, Singh, R & Abbey, A 2014, "Using Formal Internships to Improve Entrepreneurship
Education Programs", Journal of Entrepreneurship Education, vol. 17, no. 2, pp. 62-76.

Fair Work Ombudsman 2017, Unpaid Work, Fair Work Ombudsman, Canberra, ACT, viewed
February 7 2020, <https://www.fairwork.gov.au/how-we-will-help/templates-and-guides/fact-
sheets/unpaid-work/unpaid-work>.

Holyoak, L 2013, "Are all internships beneficial learning experiences? An exploratory

study", Education + Training, vol. 55, no. 6, pp. 573-583.

Interns Australia 2015, Interns Australia: 2015 Annual Survey, Interns Australia, Sydney, NSW,
viewed February 7 2020, <https://internsaustralia.org.au/wp-content/uploads/2017/08/6b-Interns-
Australia-2015-Annual-Survey.pdf>.

Ismail, Z 2018, Benefits of Internships for Interns and Host Organisations, UK Department for
International Development, London, UK, viewed February 7 2020,
<https://assets.publishing.service.gov.uk/media/5b3b5de3ed915d33c7d58e52/Internships.pdf>.

Maertz, C, Stoeberl, P & Marks, J 2014, "Building successful internships: lessons from the
research for interns, schools, and employers", Career Development International, vol. 19, no. 1,
pp. 123-142.

McKenzie, D, Assaf, N & Cusolito, A 2015, The Demand for, and Impact of, Youth Internships :
Evidence from a Randomized Experiment in Yemen, World Bank, viewed February 7 2020,
<https://openknowledge.worldbank.org/handle/10986/22888>.

McManus, A & Feinstein, A 2014, "Internships and Occupational Socialization: What are
Students Learning? Developments in Business Simulation and Experiential
Learning", Proceedings of the Annual ABSEL Conference, vol. 35, no. 2008, pp. 128-137.

5
Oliver, D, McDonald, P, Stewart, A & Hewitt, A 2016, Unpaid Work Experience in Australia:
Prevalence, nature and impact, Commonwealth Department of Employment, Sydney, NSW,
viewed February 7 2020, <https://www.ag.gov.au/industrial-relations/industrial-relations-
publications/Documents/unpaid_work_experience_report_-_december_2016.pdf>.

Parliament of NSW Children and Young People Committee 2014, Volunteering and unpaid
work placements among children and young people in NSW, NSW Parliament, Sydney, NSW,
viewed February 7 2020,
<https://www.parliament.nsw.gov.au/committees/inquiries/Pages/inquiry-details.aspx?
pk=2121>.

Saniter, N & Siedler, T 2014, Door Opener or Waste of Time? The Effects of Student Internships
on Labor Market Outcomes, IZA Institute of Labor Economics, Bonn, Germany, viewed
February 7 2020, <https://ideas.repec.org/p/iza/izadps/dp8141.html>.

Stewart, A & Owens, R 2013, The Nature, Prevalence and Regulation of Unpaid Work
Experience, Internships and Trial Periods in Australia: Experience or Exploitation?, University
of Adelaide, Adelaide, South Australia, viewed February 7 2020,
<http://www.fairwork.gov.au/ArticleDocuments/763/UW-complete-report.pdf.aspx>.

Taha, I 2019, "The rise of internship culture in Australia’s work landscape", National Youth
Commission into Youth Employment and Transitions, viewed February 7 2020,
<https://nycinquiry.org.au/the-rise-of-the-internships-in-australia/>.

Vélez, G & Giner, G 2015, "Effects of Business Internships on Students, Employers, and Higher
Education Institutions: A Systematic Review", Journal of Employment Counseling, vol. 52, no.
3, pp. 121-130.

Wilson, J & Pender, K 2017, "Intern or Employee? A Potentially Expensive Question", Legal
Updates | Employment Law, vol. 1, no. 33, pp. 84-85.