Company fined $272,850 for unpaid internships

by L&D06 Jun 2016
A media company has been fined $272,850 by the The Federal Circuit Court for disguising employment relationships as unpaid internships.

The Sydney-based AIMG BQ Pty Ltd is linked to the Ostar International Media Group and operates websites and publications for Australia’s Chinese community.

Judge Tom Altobelli handed down the penalty against the company after an investigation and legal action by the Fair Work Ombudsman.

The company admitted in Court that it underpaid two event co-ordinators a total of $18,767 between October, 2013 and June, 2014.

AIMG BQ required one of the employees – a 24-year-old international student from China - to complete an extended period of unpaid work.

The ‘internship’ included 180 hours of work over four months, with duties ranging from administration and office cleaning to event organising and magazine editing - before they started paying her wages.

It was unlawful for the internship to be unpaid because the student was completing productive work that was not a formal part of her studies (a Master of Event Management degree at the University of Technology in Sydney).

Following the internship period, AIMG BQ paid the worker an unlawful flat rate of $50 a day (or just $6.56 an hour). In total, the student was underpaid $8387.

The second worker was paid a low flat rate of less than $14 an hour, resulting in underpayments amounting to $10,380.

The company director Zhao Qing Jiang was also penalised $8160 over his failure to comply with a Notice to Produce documents for Fair Work inspectors.

Judge Altobelli added there was a need to send a “serious message” to AIMG BQ that “the Court will not countenance attempts to disguise employment relationships as unpaid internships and thus deny employees their required minimum entitlements”.

He also said there was a need to deter other companies from similar actions.

A report released by the Fair Work Ombudsman in 2013 found that increasing numbers of Australian employers are using unpaid work schemes to avoid hiring paid staff.

“Employers should be in no doubt that they have a positive obligation to ensure compliance with the obligations they owe to their employees under the law,” Judge Altobelli said.

The Fair Work Ombudsman Natalie James added that the Court’s decision sends a clear warning to employers considering unpaid internships as a source of cheap or free labour.

“We are committed to protecting vulnerable young workers as they enter the workforce and we will take action employers against employers who seek to exploit young workers,” she said.

“The system allows for unpaid work in some circumstances, as part of a structured learning program, for example. But the law prohibits the exploitation of workers by characterising them as ‘interns’ or as doing ‘work experience’ when those individuals are fulfilling the role of an employee. Such workers must be paid minimum employee entitlements.

“We don’t want to stifle genuine learning opportunities that help young people get a foot in the door, but we also don’t want to see young people being treated unfairly through unlawful unpaid work schemes.

“We want to educate employers and workers about what genuine learning opportunities look like.”

The Fair Work Ombudsman has created resources for employers, employees and higher education institutions (www.fairwork.gov.au/unpaidwork). 

The goal of the information is to promote a clear understanding in the community about what constitutes legitimate unpaid arrangements and vocational arrangements under the Fair Work Act.

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