Regulating for Decent Work Experience: Meeting the
Challenge of the Rise of the Intern
Rosemary Owens* and Andrew Stewart**
An important (if under-researched) feature of modern labour markets has been the growth of
unpaid ‘internships’ and other forms of ‘work experience’. These arrangements, which may
sit at the boundary between work and formal education or training, often reflect an
understandable desire by job-seekers to gain a foothold in a highly competitive job market.
But they also open up the possibility of exploitation, as businesses and non-profit
organisations replace what might previously have been paid entry-level jobs. In this paper we
review some of the legal and policy responses around the developed world to the rise of
unpaid work experience. These include the imposition of legislative restrictions (as in France);
more stringent enforcement of existing labour laws by public authorities (Australia) or groups
of workers themselves (United States); and the development of guidelines or codes of
practice for ‘ethical’ forms of work experience (United Kingdom). We also note the role of
groups representing interns, in increasing awareness and building pressure for change in this
area. In doing so we hope to lay the foundation for a more effective response to what has
become a clear challenge to the objective of securing decent work.
1. Introduction: The Nature and Spread of Internships
There is no precise or universally accepted definition of the term ‘internship’. It originated in the
context of medical education, where it is still used to denote a period early in the postgraduate
training of doctors in which they work in hospitals for relatively low pay (and often for very long
hours). From the 1930s in the United States, it was adopted to describe programs that gave young
people the opportunity to work in government and (later) political organisations. But in recent
decades there has been what Ross Perlin terms an ‘explosion’ of such arrangements around the
developed world, so that now interns can be found in a wide range of industries and occupations,
working for businesses, not-for-profit organisations and government agencies alike.1
*
Professor Emerita, University of Adelaide Law School, rosemary.owens@adelaide.edu.au.
**
John Bray Professor of Law, University of Adelaide Law School, andrew.stewart@adelaide.edu.au.
We express our thanks to Kim Owers for her research assistance in the preparation of this paper, which is part
of a larger study on ‘Work Experience: Labour Law at the Intersection of Work and Education’ and for which
we gratefully acknowledge the support of the Australian Research Council. This paper has been prepared for
the purposes of discussion at the Regulating Decent Work Conference, Geneva, July 2015.
1
Ross Perlin, Intern Nation: How to Earn Nothing and Learn Little in the Brave New Economy, rev ed, Verso,
London and New York, 2012, ch 2; and see also Andrew Stewart and Rosemary Owens, Experience or
Exploitation? The Nature, Prevalence and Regulation of Unpaid Work Experience, Internships and Trial Periods
in Australia, Fair Work Ombudsman, Melbourne, 2013, from which some parts of this paper are drawn.
The kind of arrangement with which we are principally concerned in this paper typically sits at the
boundary between work and formal education or training. It involves a student, graduate or other
job-seeker spending anywhere from days to months at a business or other organisation, gaining
experience of what is involved in working in a particular job, profession or industry. The older and
more established notion of an apprenticeship typically today means a structured combination of
practical work experience at a workplace and periods of theoretical or practical education in a school
or training centre, usually spread over a number of years and with defined criteria for completion
and certification.2 Through an internship, by contrast, the ‘experience’ involved may be gained less
systematically, and in a broader range of ways: by performing actual or mock tasks or assignments,
whether with or without supervision; by ‘shadowing’ a more experienced worker and observing
what they do; or by performing what may be quite basic or even menial tasks for, or in close
proximity to, individuals who have already secured positions in the occupation or profession that the
intern is striving to join. The internship (or ‘traineeship’ as it is sometimes called in Europe) may be
taken to meet a requirement of, or at least be credited towards, a formal education or training
program. Or it may be established by a business or organisation for its own purposes, either without
reference to any educational institution, or with the institution doing no more than informally
facilitating or encouraging the participation of its students or graduates. In some cases, internships
may be mandated, funded or facilitated by governments, as part of ‘active’ labour market policies
designed to assist the unemployed.3
There are no definitive statistics on the prevalence of internships. But in the United States, it has
been estimated that interns now represent 1.3% of the labour force, with around half of all college
students reporting having completed an internship during their studies.4 Roughly half of all US
internships are unpaid, though paid arrangements are more common in the for-profit sector.5 In
2013, a survey conducted in 27 European countries found that 46% of people aged from 18 to 35
had undertaken at least one (and often more than one) traineeship, understood for this purpose to
mean ‘a limited period of work experience and training spent in a business, public body or non-profit
institution by students or young graduates’.6 The proportion ranged from as high as 79% in the
Netherlands and 74% in Germany, to only 8% in Lithuania and Slovakia.7 59% of respondents who
had undertaken a traineeship reported that their most recent arrangement was unpaid, while of
2
See Directorate-General for Employment, Social Affairs and Inclusion, ‘Apprenticeship Supply in the Member
States of the European Union: Final Report’, European Commission, January 2012, p 22; Kari P Hadjivassiliou et
al, Study on a Comprehensive Overview on Traineeship Arrangements in Member States: Final Synthesis Report,
European Commission, 2012, http://ec.europa.eu/social/main.jsp?catId=738&langId=en&pubId=6717
(accessed 22 June 2015), pp 50–3.
3
See eg the typology of traineeships in Hadjivassiliou et al, above n 2, pp 4–5. Note that issues can also arise
with unpaid ‘trial periods’ or ‘pre-employment testing’: see eg Stewart and Owens, above n 1, pp 31–8, 138–
40; Andrew Langille, ‘Lost in Transition: The Regulation of Unpaid Labour during the School-to-Labour Market
Transition in Ontario’ (2015) 4 E-Journal of International and Comparative Labour Studies 21, 32-5. But again,
these arrangements are not the focus of this paper.
4
Anthony P Carnevale and Andrew R Hanson, ‘Learn & Earn: Career Pathways for Youth in the 21st Century’
(2015) 4 E-Journal of International and Comparative Labour Studies 76, 82.
5
Ibid, 82–3.
6
Directorate-General for Employment, Social Affairs and Inclusion, ‘The Experience of Traineeships in the EU’,
Flash Eurobarometer 378, European Commission, November 2013, pp 5, Q1.
7
Ibid, p 7.
2
those receiving some form of compensation, less than half considered that the amount was
sufficient to live on.8
The scale of the internship phenomenon is nicely captured in a 2014 article in The Economist:
The internship – a spell of CV-burnishing work experience – is now ubiquitous across
America and beyond. This year young Americans will complete perhaps 1m such
placements; Google alone recruited 3,000 interns this summer, promising them the
chance to ‘do cool things that matter’. Brussels and Luxembourg are the summer homes
of 1,400 stagiaires, or embryonic Eurocrats, doing five-month spells at the European
Commission. The ‘Big Four’ audit companies – Deloitte, Ernst & Young, KPMG and
PricewaterhouseCoopers (PwC)—will employ more than 30,000 interns this year. Bank of
China runs an eight-week programme (‘full of contentment, yet indescribable’, according
to an intern quoted on its website); Alibaba, a Chinese online-retailing behemoth, has a
global scheme. Infosys, an Indian tech giant, brings 150 interns from around the world to
Bangalore each year.9
In very broad terms, we see four main drivers for the surge in internships across the developed
world. On the demand side, it is understandable that job-seekers will take every opportunity they
can to gain a foothold in the job or sector of their choice – even if that means having to work
without pay. This is especially true at a time when, as we discuss in Part 2 of the paper, the global
economy has been sluggish and competition for employment in many fields has increased – trends
which have impacted young people in particular.10 As the International Labour Organisation (ILO) has
pointed out:
Work experience is highly valued by firms and so the lack of such experience constitutes a
major obstacle for first-time jobseekers. Many young people are trapped in a vicious
circle: they are unable to acquire work experience because they cannot find a first job,
but they cannot obtain a job because they do not have work experience. 11
It is not surprising if unpaid internships are seen as one way of breaking out of that circle. For many
young people, especially in certain industries, their ‘first job’ is necessarily one now that requires
them to ‘volunteer’ their services.
On the supply side, many businesses or organisations have come to see value in the idea of
establishing internship programs. This may reflect an altruistic desire to give young job-seekers a
chance, or a philosophical commitment to the concept (discussed below) of combining work with
learning. Internships can also serve as a useful form of pre-employment screening, giving
organisations a chance to assess a pool of potential candidates before deciding whom to hire for
ongoing positions. But it is also clear that some unpaid (or barely paid) internships are used to obtain
productive work that would otherwise be done by paid employees. Such arrangements may allow
8
Ibid, p 5.
9
‘The internship: Generation i’ The Economist, 6 September 2014,
www.economist.com/news/international/21615612-temporary-unregulated-and-often-unpaid-internship-hasbecome-route (accessed 20 June 2015).
10
We should emphasise that although unpaid work experience is not necessarily or exclusively a problem for
young people, it is particularly relevant to them and hence the focus of the paper.
11
ILO, Global Employment Trends for Youth 2013: A Generation at Risk, ILO, Geneva, 2013 p 64.
3
employers to cut their labour costs. And of course the more that some employers do this, the
greater likelihood that others will be forced to follow suit to remain competitive.
The rise of internships also needs to be understood in the context of a changed approach to skills
development. In the globalised economy, the pressure on businesses to deliver returns to
shareholders and the lack of predictability in global markets militate against long term investment in
training. The in-house training that was once part and parcel of entry level jobs in particular has
been all but abandoned. The costs of this aspect of doing business have effectively been shifted to
the worker. With the demise of the ideal of lifelong employment with a single firm/business, the
responsibility for training is increasingly seen to lie with the individual – after all, why should a
business invest in an individual who may leave and go to work for another business in a year or two?
So if an organisation recognises the need to train/educate for the workplace, it is very clear that it is
going to do this in the cheapest possible way –which means at the least that will be reluctant to bear
the cost of the labour in doing so.
A third driver has been the embrace by higher education institutions of what is often now termed
‘work integrated learning’. As a study for the Australian Learning and Teaching Council notes, this is
‘a chameleon term with a problem of definition’. Nevertheless:
Its most common use is to describe programs where students engage with workplaces
and communities as a formal part of their studies. Terms such as practicum, field-work,
internships, cooperative education and clinical placement describe these programs. A
commonly expected outcome of these student WIL experiences is gaining new
knowledge, understandings and capabilities, and mastering skills considered essential to
particular workplace practices. The underlying assumption is that students cannot learn
these skills and knowledge in formal classrooms.12
Part of the explanation for the growth in work integrated (or ‘experiential’) learning lies in the
increasing demand from governments, industry and the community for graduates who are more
‘work-ready’.13 But as Perlin observes, the competitive and fiscal pressures facing educational
institutions may also lead them to see value in internships and work placements as a purely costcutting exercise. In the worst case, additional teaching resources may be garnered for nothing from
the workplace where the student is allocated, with the student still paying fees (or being subsidised
by government) to enrol in ‘courses’ that may in fact involve minimal or non-existent academic
supervision – not to mention working for a business for nothing.14
Finally, a fourth driver has been government policies. Besides supporting the increasing emphasis on
WIL in education or training, some governments have ‘launched intern programmes as a form of
“active” labour market policy designed to conceal unemployment’.15 This may include formally
12
Jan Orrell, Good Practice Report: Work-integrated Learning, Australian Learning and Teaching Council,
Sydney, 2011, p 5 (references omitted); and see further Debra D Burke and Robert Carton, ‘The Pedagogical,
Legal, and Ethical Implications of Unpaid Internships’ (2013) 30 Journal of Legal Studies Education 99, 101–7.
13
See eg Carol-Joy Patrick et al, The WIL Report: Work Integrated Learning, A National Scoping Study,
Queensland University of Technology, Brisbane, 2008, p 3.
14
Perlin, above n 1, ch 5; and see also David L Gregory, ‘The Problematic Employment Dynamic of Student
Internships’ (1998) 12 Notre Dame Journal of Law, Ethics and Public Policy 227.
15
Guy Standing, The Precariat: The New Dangerous Class, Bloomsbury Academic, London, p 16.
4
recognising internships that allow recent graduates to be employed at below the minimum wage,16
or encouraging unemployed job-seekers to undertake unpaid work experience as part of their
government assistance programs.17
There is clearly nothing wrong with the principle of gaining experience or enhancing skills through a
period of time spent in a workplace – especially if that occurs as part of a carefully structured and
monitored program. And even where an internship does not meet that ideal, it may still be of
benefit to any given job-seeker if it gives them the skills, contacts or resume boost they need to
secure ongoing employment.
Nevertheless, there are many concerns that can be, and have been, expressed about internships –
especially those offered in the ‘open market’, rather than in conjunction with education or training
institutions or government programs.18 Many do not provide any real education or training, with
tales rife of interns being given menial tasks (photocopying, making coffee, collecting laundry, etc)
that bear no relation to the jobs they are ultimately seeking to do; or, conversely, being expected to
do real work without adequate supervision or training. Interns may be lured by false hopes that the
experience will lead to employment, with decent pay and conditions, when in fact few will be
successful in gaining permanent work. In the European survey mentioned earlier, over 70%
considered that their traineeship would be helpful in getting a regular job, but only around a quarter
reported being actually offered employment at the end of their most recent traineeship.19 Even
where job-seekers are aware of these various pitfalls, they may take the view that there is no
practical alternative to undertaking unpaid or under-paid work experience, especially in industries
where such arrangements have become the norm.20
Beyond the potential for individual disappointment or mistreatment, however, the rise of
internships poses two broader challenges. The first is the prospect (or indeed the reality) of
internships being used as a source of what Guy Standing calls ‘cheap dead-end labour, exerting
downward pressure on the wages and opportunities of others who might otherwise be employed’.21
As Perlin observes, the willingness of desperate job-seekers to work unpaid creates a ‘race to the
bottom’:
Every time young people scramble for an unpaid position, they reinforce the flawed
perception that certain kinds of work have lost all value. Whether or not any given
individual is happy to make this trade-off, the decision has consequences for everyone
else.22
16
See eg the example from South Korea given by Standing, ibid, pp 75–6.
17
As in the case of a recent initiative by the Australian government: see Patrick Carvalho, ‘Work for the dole
encore: will it work?’ Canberra Times, 30 May 2015.
18
See eg Hadjivassiliou et al, above n 2, pp 24–5, 63–5, 89–91, 117–19.
19
Directorate-General for Employment, Social Affairs and Inclusion, above n 6, pp 5–6.
20
See eg Sabina Siebert and Fiona Wilson, ‘All Work and No Pay: Consequences of Unpaid Work in the Creative
Industries’ (2013) 27 Work, Employment and Society 711, 714–5.
21
Above, n 15, p 76.
22
Above n 1, p 62.
5
In some industries, what used to be paid entry-level jobs have been displaced by a constantly
replenished pool of unpaid interns, competing for the opportunity to be hired. In this situation,
interns (or their families, or sometimes governments) are in fact subsidising the organisation for
which they are working. Indeed they may actually have to pay for the privilege of doing so, whether
by way of course fees to an educational institution, or a brokerage charge to an intermediary,23 or
even as the price of winning an auction for the right to work unpaid at a prestigious enterprise.24
The costs that may be involved in working as an intern, whether direct or indirect, in turn bring us to
the second major challenge of this practice. This is what the British Low Pay Commission has termed
the ‘potentially damaging impact … on social mobility by inhibiting labour market access for
particular groups who cannot afford to undertake them’.25 A recent report by the Sutton Trust
highlights the fact that in the United Kingdom, as in many other countries, ‘elite and influential
professions such as politics, journalism, law and finance have been consistently dominated by those
from the most privileged backgrounds’.26 Given living costs in London, where those professions are
most likely to offer the opportunity to gain work experience, it is clear that ‘unpaid internships will
be largely restricted to those from the wealthiest families’, and that such arrangements can ‘only
serve to reduce chances for social mobility for those from more modest backgrounds’.27 In many
professions, more affluent students or graduates are already likely to have an advantage in gaining
jobs, through the quality of education they have received and the networks or contacts their families
can offer. To require what may be a lengthy period of unpaid work, especially in an expensive city,
simply pushes the bar even higher for anyone from a lower socio-economic group.
Against the background then of those concerns, this paper seeks to review some of the legal and
policy responses around the developed world to the rise of unpaid work experience. In doing so, we
hope to lay the foundation for a more effective response to what has become a clear challenge to
the objective of securing decent work.
In terms of structure, Part 2 builds on the introduction by locating the discussion of internships in
the broader context of globalisation, the growth of precarious work and the present high levels of
youth unemployment. In doing so we outline some of the commentary and statements of principle
issued by bodies such as the ILO and the European Union (EU). In Part 3 we discuss the challenges
for regulating work experience in the context of the ongoing debate as to how work relationships
are and should be conceptualised for regulatory purposes. Part 4 then examines some of the
particular strategies used by or in selected countries to address internships. These include the
imposition of legislative restrictions (as in France); more stringent enforcement of existing labour
laws by public authorities (Australia) or groups of workers themselves (United States); and the
23
As to the practice of agencies selling internships, see eg Perlin, above n 1, ch 8.
24
Ibid, pp 155–6; G Miller, ‘Going Once. Going Twice. Sold: Internships on the Auction Block’ ERE Recruiting
Intelligence, 31 October 2013.
25
Low Pay Commission, National Minimum Wage: Low Pay Commission Report 2012, Cm 8302, The Stationery
Office, London, 2012, p 98; and see also Hadjivassiliou et al, above n 2, pp 68–9.
26
Sutton Trust, ‘Research Brief: Internship or Indenture?’, 2 November 2014, p 3.
27
Ibid, pp 3–4; and see also K Allen, J Quinn, S Hollingworth and A Rose, ‘Becoming Employable Students and
“Ideal” Creative Workers: Exclusion and Inequality in Higher Education Work Placements’ (2013) 34 British
Journal of Sociology of Education 431.
6
development of guidelines or codes of practice for ‘ethical’ forms of work experience (United
Kingdom). We also note the use of social media, including by groups representing interns, to
increase awareness and build pressure for change in this area. Part 5 returns to a global perspective,
setting out relevant international labour standards and explaining why, in our view, the rise of
internships calls for a global response. Finally, Part 6 contains a brief conclusion that summarises
some of the major issues and challenges we see in framing that response.
2. The Broader Context: Youth in Education and Employment
The growth of internships, and especially unpaid internships, has to be seen in the context of
broader changes in the world of work. The old industrial model of work relations has been
disintegrating, with the emergence of new industries and a greater focus than ever before on the
provision of services. The global world of commerce is a highly competitive one, making the
demands for productivity and flexibility in production more and more urgent. Technological change
has driven, and continues to drive, much of this change, by enabling the creation of a global
marketplace and also a global labour market. There has been a shift in developed economies away
from the ‘standard employment relationship’, based on the male breadwinner model of lifelong, fulltime employment, and a corresponding rise in more precarious forms of work.28 In addition, many
larger firms now no longer employ workers directly, but instead source their labour needs through a
network of smaller businesses, thus shifting risk onto smaller employers and individual workers.29
These various trends would have been challenging enough in a period of sustained economic
growth. But in the wake of the Global Financial Crisis (or the ‘Great Recession’ as it is sometimes
labelled in the United States), the challenges for young job-seekers in particular have multiplied. This
is an issue that has captured the attention of the ILO in recent years. In June 2012, for example, the
International Labour Conference adopted a resolution concerning the ‘youth employment crisis’.30 It
painted a grim picture of the impact of the GFC on youth employment around the world and
stressed the long lasting effects this situation was likely to have unless drastic action were taken.
A more recent assessment of global employment trends from the ILO indicates that recovery from
the GFC continues to be slow, with growth well below trends predicted prior to 2008 and a
continuing deterioration predicted for the coming five years. As the report notes:
Youth, especially women, continue to be disproportionately affected by unemployment.
Almost 74 million young people (aged between 15-24 years) were looking for work in
2014. The youth unemployment rate is practically three times higher than is the case for
their adult counterparts. The heightened youth unemployment situation is common to all
28
As to the characterisation of internships as a form of precarious, contingent or ‘non-standard’ work, see eg
Standing, above n 15, pp 16, 75–6; Perlin, above n 1, pp 36–41, 197–202; Rosemary Owens and Andrew
Stewart, ‘Internships, the Contract of Employment and the Scope of Labour Law’, Labour Law Research
Network Inaugural Conference, Barcelona, 15 June 2013.
29
See eg David Weil, The Fissured Workplace: Why Work Became So Bad for So Many and What Can be Done
to Improve It, Harvard University Press, Cambridge (Mass), 2014.
30
‘Resolution Concerning The Youth Employment Crisis: A Call for Action’, 25 July 2012,
www.ilo.org/ilc/ILCSessions/101stSession/texts-adopted/WCMS_185950/lang--en/index.htm (accessed 20
June 2015).
7
regions and is occurring despite the trend improvement in education, thereby fuelling
social discontent.31
The report goes on to observe that while the employment situation is improving in some developed
economies, such as the United States and Japan, much of Europe continues to struggle, while the
situation is deteriorating in many emerging and developing economies.32 Figures from the EU show a
youth unemployment rate of 21.9%, with employment rates for young people having fallen three
times as much for adults over the past four years.33
An earlier ILO report from 2013 on youth employment trends summarises the policy challenges in
the following terms:34

‘it is not easy to be young in the labour market today’, given the slow recovery from the
crisis, the growth of precarious work, and the rising global unemployment and
underemployment for young people;

a ‘skills mismatch is adding to the youth employment crisis’, a problem not just for
individuals, but for society, which is losing youth labour and productivity;

‘In developing regions where 90 per cent of the global youth population lives, stable quality
employment is especially lacking’;35

‘in advanced economies long-term unemployment has arrived as an unexpected tax on the
current generation of youth’;

‘creative wide ranging policy solutions are needed’.
In light of all that, it is hardly surprising that both the ILO and the G20 nations have identified youth
employment as one of the main issues to be tackled in their current strategic objectives.36
The policies of most developed economies now require that young people should either be in
education or in work. This mantra is, for example, reflected in a recommendation as to the
establishment of a ‘Youth Guarantee’, adopted in April 2013 by the Council of Europe.37 Under this
initiative, all member states of the EU were to present Youth Guarantee Implementation Plans in
31
ILO, World Employment and Social Outlook: Trends 2015, ILO, Geneva, 2015, p 11.
32
Ibid.
33
European Commission, ‘Addressing Youth Employment in the EU’, factsheet,
http://ec.europa.eu/social/main.jsp?catId=1036 (accessed 20 June 2015), p 1.
34
ILO (2013), above n 11, pp 1–2.
35
Without at all meaning to understate the importance of tackling youth unemployment in such regions, we
stress that this paper is concerned predominantly with what is happening in developed or ‘advanced’
economies.
36
As to the position of the G20, see eg ‘G20 Labour and Employment Ministerial Declaration’, Melbourne 10–
11 September 2014, https://g20.org/wp-content/.../12/2014%20LEMM%20Declaration.pdf (accessed 24 June
2015).
37
http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32013H0426%2801%29&from=EN
(accessed 20 June 2015).
8
2014, to be monitored by the European Commission and reporting on the trialling of various related
initiatives.38 The Guarantee ‘seeks to ensure that all EU Member States make a good-quality offer to
all young people up to age 25 of a job, continued education, an apprenticeship or a traineeship
within four months of leaving formal education or becoming unemployed’.39 It ‘should enable young
people to find a job suited to their education, skills and experience or to acquire the education, skills
and experience that are directly relevant in increasing their chances of finding a job in the future’.40
The unstated assumption (or hope) in many policies of this kind is that education provides an
assured pathway to employment/productive work. However, the reality is that the transition from
one to the other is by no means automatic. In some instances the problems encountered in making
this transition arise from the availability and location of employment opportunities. But there is also
much debate about whether formal education equips students with the necessary knowledge and
skills to enter successfully, and maintain a place in, the world of work. In an era when the proportion
of young people completing higher education has climbed, so too have problems of both overeducation and under-education, leading to a mismatch of qualifications and available employment.41
The pace of developments in the competitive global marketplace means that opportunities available
at one point in time can disappear quickly as developments rapidly outpace the nimbleness of
educational courses and institutions. Labour market needs identified at the time a student begins a
formal education course may be changed completely by the time they exit their courses.
One way of attempting to bridge the gap between formal education and job opportunities is, of
course, to stress the value of work experience. Hence, for example, the 2012 International Labour
Conference resolution suggested to governments that they consider improving the links between
education, training and the world of work through, among other means, a greater emphasis on
work-based learning.42 But the resolution also sounded a cautionary note:
[I]nternships, apprenticeships, and other work experience schemes have increased as
ways to obtain decent work. However, such mechanisms can run the risk, in some cases,
of being used as a way of obtaining cheap labour or replacing existing workers. 43
Significantly, the resolution invited the ‘social partners’ (trade unions and employers) not just to
encourage enterprises to provide more internships or apprenticeships, but to engage in collective
38
See eg Anne-Mari Hall et al, ‘Piloting Youth Guarantee Partnerships on the Ground: A Summary of Key
initiatives and Lessons from the European Parliament Preparatory Act on the Youth Guarantee’, European
Commission, April 2015, providing an overview of 18 pilot projects.
39
European Commission, above n 33, p 1.
40
Ibid.
41
See eg ILO (2013), above n 11, ch 3; Alan Felstead and Francis Green, ‘Underutilization, Overqualification and
Skills Mismatch: Patterns and Trends’, Joint Skills Committee, Scottish Funding Council and Skills Development
Scotland, 2013.
42
Above n 30, [26].
43
Ibid, [24].
9
bargaining as to the working conditions of interns and apprentices, and indeed ‘raise awareness’
about the labour rights of young workers.44
In the wake of this call to action, an article on the ILO’s website noted that “internships have
become increasingly common in developed economies, as has controversy over the practice’. While
recognising the awkward ‘catch 22’ for young people who cannot get enter the labour market
without work experience and who cannot get work experience without some access to a job, the coordinator of the ILO’s Youth Employment Programme, Gianni Rosas, was quoted as warning of the
dangers if internships become simply a ‘disguised form of employment’ and without any of the
benefits they promise, such as real on the job training.45
The youth employment strategies currently being developed in the EU likewise recognise both the
positive role that work experience can play, and the need for appropriate regulation. As the Council
of the EU has noted:
Over the past two decades, traineeships have become an important entry point into the
labour market.
Socio-economic costs arise if traineeships, particularly repeated ones, replace regular
employment, notably entry-level positions usually offered to trainees. Moreover, lowquality traineeships, especially those with little learning content, do not lead to significant
productivity gains nor do they entail positive signalling effects. Social costs can also arise
in connection with unpaid traineeships that may limit the career opportunities of those
from disadvantaged backgrounds.
There is evidence that links exist between the quality of the traineeship and the
employment outcome. The value of traineeships in easing the transition to employment
depends on their quality in terms of learning content and working conditions. Quality
traineeships bring direct productivity benefits, improve labour market matching and
promote mobility, notably by decreasing search and matching costs both for enterprises
and for trainees.46
Mention was made earlier of a 2013 survey of traineeships in the EU.47 Analysis of the results from
that survey revealed that ‘30 % of traineeships were ‘deficient in terms of either learning content or
working conditions’ and, crucially, that ‘those who had done a substandard traineeship were
significantly less likely to find a job afterwards’.48
44
Ibid, [27]. Compare the ILO’s 2013 report on youth employment (above, n 11, pp 63–4, 68, 70), which
although emphasising the value of work experience (generally by reference to apprenticeships), says nothing
about the potential pitfalls with such arrangements or the need for regulation.
45
‘Internships: Head Start or Labour Trap?’, 22 August 2012, www.ilo.org/global/about-theilo/newsroom/features/WCMS_187693/lang--en/index.htm (accessed 20 June 2015).
46
Council of the European Union, ‘Council Recommendation on a Quality Framework for Traineeships’, 10
March 2014, https://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/lsa/141424.pdf
(accessed 20 June 2015), Preamble, [3]–[5].
47
Above, n 6.
48
‘Executive Summary to the Impact Assessment Accompanying the Proposal for a Council Recommendation
on a Quality Framework for Traineeships’, European Commission Staff Working Document, 4 December 2013,
http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52013SC0496 (accessed 20 June 2015), p 4.
10
To meet such concerns, in March 2014 the EU Council formally adopted a Quality Framework for
Traineeships.49 The Framework, which is expressed as a set of recommendations to member states,
is intended to ‘[i]mprove the quality of traineeships, in particular as regards learning and training
content and working conditions, with the aim of easing the transition from education,
unemployment or inactivity to work’.50 It is seen as offering ‘an important reference point for
determining what constitutes a good quality offer of traineeships’ for the purposes of the Youth
Guarantee.51 However, it is not intended to cover ‘work experience placements that are part of
curricula of formal education or vocational education and training’, nor traineeships whose content
is regulated under national law and which must be completed to enter a particular profession, such
as medicine or architecture.52 Member states are urged to take appropriate measures as soon as
possible to apply the Framework, and to report their progress by the end of 2015.53
We return to the Quality Framework later in the paper to consider some of its key elements. Before
doing so, however, and as a prelude to looking at some the strategies for dealing with internships in
different countries, we turn next to the broader question of how work relationships are
conceptualised for regulatory purposes.
3. Conceptualising Work Relationships
Both globalisation and the changes in labour markets noted at the beginning of Part 2 have
presented enormous challenges to the identification of both the purposes of labour law and its
subject.54 In modern times, it is the ‘employee’ and the ‘employment relationship’ that have come to
be treated as the primary subject of labour regulation. A compelling argument can be made that this
represents too narrow a focus, that attention can and should be directed to a broader array of work
relationships.55 Indeed it is not unusual for laws dealing with matters such as discrimination or safety
at work to apply beyond the employment relationship.56 Nevertheless, the fact remains that in most
49
For earlier proposals as to the drafting and content of the Framework, see European Commission, ‘Towards
a Quality Framework on Traineeships: Second-stage Consultation of the Social Partners at European Level
under Article 154 TFEU’, 5 December 2012, http://ec.europa.eu/transparency/regdoc/rep/1/2012/EN/1-2012728-EN-F1-1.Pdf (accessed 20 June 2015).
50
Council of the European Union, above n 46, Recommendation, [1].
51
Ibid, Preamble, [25].
52
Ibid, Preamble, [28].
53
Ibid, [19]–[20].
54
See eg the collected essays in Guy Davidov and Brian Langille (eds), Boundaries and Frontiers of Labour Law:
Goals and Means in the Regulation of Work, Hart Publishing, Oxford and Portland (Or), 2006; Guy Davidov and
Brian Langille (eds), The Idea of Labour Law, OUP, Oxford, 2011.
55
See eg Mark Freedland and Nicola Kountouris, The Legal Construction of Personal Work Relations, OUP,
Oxford, 2011; Richard Johnstone et al, Beyond Employment: The Legal Regulation of Work Relationships,
Federation Press, Sydney, 2012; Judy Fudge, Shae McCrystal and Kamela Sankaran (eds), Challenging the Legal
Boundaries of Work Regulation, Hart Publishing, Oxford and Portland (Or), 2012.
56
The ‘model’ work health and safety legislation recently introduced in most Australian jurisdictions offers a
notable example, imposing duties on any ‘person conducting a business or undertaking’ in respect of the
safety of any ‘worker’ (including any contractor, apprentice, trainee, student gaining work experience or
volunteer): see Johnstone et al, above n 55, pp 162–8.
11
countries, rights and protections at work are accorded primarily or in the first instance to
employees, and to other workers only by some form of special extension.
The essence of the employment relationship has generally been seen as involving an element of
subordination.57 Yet increasingly the identification of this relationship in law has presented a
problem around the world. This has been especially apparent with labour hire or sub-contracting
arrangements, where a formally agreed classification of a relationship as something other than
employment may be contrary to its observable and practical manifestations. In many countries, the
costs and liabilities associated with the application of labour laws give businesses and other
organisations an obvious incentive to avoid treating workers as employees. As a report prepared for
the ILO notes:
A disguised employment relationship is one which is lent an appearance that is different
from the underlying reality, with the intention of nullifying or attenuating the protection
afforded by the law or evading tax and social security obligations. It is thus an attempt to
conceal or distort the employment relationship, either by cloaking it in another legal
guise or by giving it another form. Disguised employment relationships may also involve
masking the identity of the employer, when the person designated as an employer is an
intermediary, with the intention of releasing the real employer from any involvement in
the employment relationship and above all from any responsibility to the workers.58
To deal with the issue of misclassification, in 2006 the ILO adopted Recommendation No 198
concerning the Employment Relationship. Its key elements include the proposition in Article 9 that
the determination of the employment relationship ‘should be guided primarily by the facts relating
to the performance of work and the remuneration of the worker, notwithstanding how the
relationship is characterised in any contrary arrangement, contractual or otherwise’.
In identifying its subject then, labour law must be concerned in particular with two things. The first is
how to identify whether a worker is an employee – and thus, in the words of Article 4(a) of the ILO
Recommendation, to provide guidance for parties on ‘effectively establishing the existence of an
employment relationship’. The second is how to ensure that law’s processes are robust enough to
detect sham arrangements – or as Article 4(b) puts it, to combat disguised employment.
In a recent comparative study Davidov, Freedland and Kountouris observe that, because the answer
to the question ‘who is an employee?’ identifies who gets access to labour law, and is in this sense
fundamental, it tends not to be strongly dependant on the complex characteristics of any given
labour law system.59 In most jurisdictions, to answer the question, a number of factors are weighed.
57
See eg Alain Supiot, Beyond Employment: Changes in Work and the Future of Labour Law in Europe, OUP,
Oxford, 2001.
58
The Employment Relationship, Report (V)(1), International Labour Conference, 95th Session, 2006, [46]
(emphasis in original).
59
Guy Davidov, Mark Freedland and Nicola Kountouris, ‘The Subjects of Labour Law: “Employees” and Other
Workers’ in Matthew Finkin and Guy Mundlak (eds), Research Handbook in Comparative Labor Law, Edward
Elgar, Cheltenham (UK) and Northampton (Mass), 2015 (forthcoming,
www.labourlawresearch.net/papers/subjects-labor-law-employees-and-other-workers, accessed 21 June
2015).
12
Although the number of factors and the weight to be given to them may vary between jurisdictions,
any divergences tend to indicate ‘a difference of practice rather than theory’.60
In some jurisdictions, the perceived difficulties around the identification of work relationships has
prompted statutory reform, and the development of specific definitions of the kind of work
relationship to which the relevant statute extends. In countries such as Sweden, Canada and Spain,
for example, certain regimes apply to ‘dependent contractors’, while in the United Kingdom
minimum wage laws and other standards apply to certain workers who contract to supply their
personal labour, even if they would not be regarded as employees.61 However, as Davidov et al
highlight, in most instances it is the judiciary which responds first to new practices of evasion of the
law by employers.62 It is important then that in a number of countries a ‘purposive’ approach is
taken to interpretation, in which the term ‘employee’ is given a meaning that would advance the
purpose, underlying the relevant.63 But as they also note, this response has not been uniform.
Indeed, significantly, the United States Supreme Court appears to have rejected such an approach.64
Furthermore, it is worth noting that there is not always consistency within any given jurisdiction in
applying such an approach.65
For the most part these problems regarding the classification of workers have been worked out in
judicial decisions that are centred on the distinction between an employee and an ‘independent
contractor’ providing services under what is conceived as a commercial arrangement. Indeed it is the
‘binary divide’ between these two categories that has come to dominate much of the discussion and
analysis of the definition of employment and the reach of labour regulation in different
jurisdictions.66
By contrast, the question of whether interns fall within the scope of labour regulation may, in the
absence of specific legislative guidance, depend on two rather different boundaries. One is the
dichotomy between employment and ‘volunteering’, which in countries such as Australia or the
United Kingdom may be addressed by asking whether an arrangement to work without pay is
60
Ibid, p 7.
61
Ibid, pp 14–16.
62
Ibid, p 8.
63
Ibid, pp 10–11, citing Australia (Konrad v Victoria Police (1999) 165 ALR 23), Canada (Pointe-Claire (City) v
Quebec [1997] 1 SCR 1015), Israel (Sarusi v National Labour Court (1995) 52(4) PD 817) and the United
Kingdom (Autoclenz Ltd v Belcher [2011] 4 All ER 745) as examples.
64
Above n 59, p 10, citing Nationwide Mutual Insurance Co v Darden (1992) 503 US 318.
65
Compare the UK Supreme Court decision in Autoclenz (above, n 63) with its ruling in X v Mid Sussex Citizens’
Advice Bureau [2013] 1 All ER 1038 concerning the interpretation and application of the Equality Act 2010 (UK)
to a volunteer; and see also the divergent approaches in recent Australian decisions such as Fair Work
Ombudsman v Quest South Perth Holdings Pty Ltd [2015] FCAFC 37 and Tattsbet Ltd v Morrow [2015] FCAFC
62.
66
See eg Giuseppe Casale (ed), The Employment Relationship – A Comparative Overview, Hart Publishing,
Oxford and Portland (Or), 2011; Chris Engels, ‘Subordinate Employees or Self-Employed Workers?’ in
R Blanpain (ed), Comparative Labour Law and Industrial Relations in Industrialized Market Economies, 11th ed,
Wolters Kluwer, Alphen aan den Rijn, 2014, ch 12; Davidov et al, above n 59.
13
intended by the parties to carry some mutuality of benefit and obligation.67 The other is the
suggested distinction between work and education or training, which as we will see in Part 4 has
become crucial to the application of employment statutes in countries such as the United States.68
Nevertheless, it may still be useful to consider whether some of the approaches used to distinguish
an employee from an independent contractor are transferable, or easily transferable, to the
question of whether a learner gaining work experience can be classified as an employee.
Both the case law surveyed by Davidov et al and the ILO’s Recommendation No 198 suggest that
identifying the subject of labour law is a factual matter, to be determined by taking all facts into
account. In most common law countries there is a resistance to saying any one fact or criterion is
determinative – it is a matter of balancing all the indicators. This is not to deny that in many cases –
perhaps a majority in some countries - some factors have tended to be seen as particularly
important, notably the issue of subordination or control, and the question of the right to delegate
tasks to others. Because of the uncertainties that necessarily arise in balancing a multiplicity of
factors, Article 11(b) of the ILO Recommendation proposes that there be a presumption in favour of
the employment relationship and that the employer/business bear the burden of proof. Although
this approach has been adopted in a number of Central and South American countries,69 it has not
generally taken root. Without such a reference point, we might expect to see courts varying in the
way they characterise work experience arrangements – and this has indeed generally been the case
in the common law jurisdictions, as we will see in Part 4.
An alternative approach to an impressionistic test that balances a range of factors might be to
develop a checklist of requirements to be met, either to constitute employment or to fall outside
that category. An obvious example of this, once again to be considered in Part 4, is a factsheet
drawn up the United States Department of Labor to provide easy guidance for young people and
businesses as to whether a trainee is entitled to the minimum wage under the Fair Labour Standards
Act 1938 (FLSA).70 The problem with this approach, however, is precisely that it does not accord with
the balancing exercise ordinarily adopted by common law courts. It is unsurprising then to find that
67
This is because in both countries, the relationship of employment is considered to require an enforceable
contract, which in turn necessitates both an intention to create legal relations and some form of
‘consideration’ or agreed exchange: see Stewart and Owens, above n 1, ch 6, pp 226–33. See also Jill Murray,
‘The Legal Regulation of Volunteer Work’ in C Arup et al (eds), Labour Law and Labour Market Regulation,
Federation Press, Sydney, 2006, p 696; Sandra Fredman, ‘Equality Law: Labour Law or an Autonomous Field?’
in Alan Bogg et al (eds), The Autonomy of Labour Law, Hart Publishing, Oxford and Portland (Or), 2015, p 257
at pp 263–6, discussing the decision in X v Mid Sussex Citizens’ Advice Bureau (above, n 65).
68
Compare the approach taken in Australia, where the general view has been that the two categories are not
mutually exclusive: see Owens and Stewart, above n 28, pp 13–18, contrasting that position with case law
from the United Kingdom.
69
See Eduardo J Ameglio and Humbero Villasmil, ‘Subordination, Parasubordination and Self-Employment: A
Comparative Overview in Selected Countries in Latin America and the Caribbean’ in Casale, above n 66, p 69 at
pp 75–81. See also the more limited use of presumptions under French and Dutch law, noted by Davidov et al,
above n 59, pp 13–14.
70
See below, text at n 104.
14
not all US courts seem to have accepted that every item in the checklist needs to be ticked for an
arrangement to fall either within or outside the FLSA’s definition of employment.71
Another key issue that arises in the employee/contractor cases is the relevance of intention. It
seems to be generally accepted that the label applied to a relationship should not be treated as a
definitive indicator of its ‘true’ character. And yet as Davidov et al’s survey makes clear, approaches
can and do differ both within and between jurisdictions as to the extent of any deference to the
parties’ declared wishes.72 If the issue is whether an intern is entitled to the benefit of minimum
entitlements created by labour or social security legislation, then it seems to us proper to disregard
the intention of the parties involved, in favour of an approach that objectively determines the
character of any given arrangement. This is not just because of the obvious vulnerability of young
workers to the use of standard form agreements that purport to remove their rights. We accept that
many job-seekers might genuinely be prepared to sacrifice pay or other entitlements to gain what
they regard as necessary work experience. Nevertheless, there are sound reasons of public policy for
not permitting them to waive their rights. It is generally unlawful for an employee to consent to take
less than the minimum wage set for their work. If so, why then should an intern be permitted to
achieve the same result by agreeing that they are being trained or are volunteering their services, if
the reality of their arrangement suggests they are actually being employed?
To return to an earlier point, we would also stress that we see the suggested distinction between
employment on the one hand, and education or training on the other, as being a false dichotomy. It
is clearly possible to be employed and receive training at the same time. Indeed many employees
are expected to keep learning and developing their skills while at work. This is not to deny that it
may be possible to characterise an activity or period as involving education or training, rather than
productive work – or vice versa. But if the question is whether an intern can be classified as an
employee under a general definition or understanding of that term, we would argue that it is
unhelpful to ask whether they should be regarded as a trainee instead. In other words, employment
status should not be denied merely because there is also an arrangement for education or training.
4. Regulatory Strategies from Different Jurisdictions
With that background in mind, we turn now to examine how selected countries have addressed the
regulation of internships. We stress that we do not seek to present a comprehensive survey, and
also that there is never a one dimensional approach to the problem in any country. Not only do the
details of labour regulation vary between jurisdictions, but it is also necessary to consider the
treatment of internships in the context of what may be very different general systems for education
and training.73 Laws regulating the latter may have an important part to play in determining the
nature and availability of internships, especially when undertaken at the behest, or to satisfy the
requirements, of an educational institution or training provider. For present purposes, however, we
71
See below, text at nn 105–106.
72
Above n 59, pp 3–4.
73
As, for example, is apparent from a 2012 review of training arrangements in EU countries: see Hadjivassiliou
et al, above n 2.
15
are interested in the way that labour laws establishing rights and protections for employees and
(sometimes) other workers either may, do or do not apply to interns.
In the sections that follow, we outline the following different approaches, one or more of which may
be found within any given jurisdiction:

specific regulation of the use or content of internships;

regulation by inclusion – that is, expressly bringing internships within the operation of
general labour laws;

regulation by exclusion – that is, expressly exempting internships from the operation of such
laws;

enforcement of general labour laws, in the absence of any specific extension or exclusion;

the use of ‘soft law’, such as codes of practice, to influence the use and content of
internships.
In the fourth of those categories, we also distinguish between individual and state enforcement,
noting in particular the impact that an active government agency (such as the Fair Work
Ombudsman in Australia) can have on the legal characterisation of internships.
Specific regulation of internships
The most obvious examples in this category come from Europe. In December 2013, just prior to the
introduction of the Quality Framework for Traineeships, a European Commission report noted that
the regulatory framework for traineeships varied widely across the EU. Less than half of the EU’s
member states were said to have ‘provisions on duration, remuneration or social protection
coverage’.74 Even that may have overstated the extent of specific regulation in Europe, however, as
is apparent from an earlier and much more detailed review of the nature and regulation of
traineeships across the EU.75 The great bulk of the laws and regulations summarised in that review
relate specifically to traineeships undertaken as part of formal education and training courses, or
labour market assistance programs, with few appearing to have much application to the kind of
‘open market’ arrangements identified in the report as attracting the greatest need for attention.
A clear exception, however, is France. The ‘Cherpion’ Law of 28 July 2011 introduced a range of
measures to regulate internships and protect against exploitation.76 The Law is not concerned to
74
‘Executive Summary to the Impact Assessment Accompanying the Proposal for a Council Recommendation
on a Quality Framework for Traineeships’, above n 48, p 3.
75
See Hadjivassiliou et al, above n 2, esp at pp 41–50.
76
LOI n° 2011-893 du 28 juillet 2011 pour le développement de l'alternance et la sécurisation des parcours
professionnels, Titre II: Encardement Des Stages. Details of amended legislation (Code de l’éducation and Code
du Travail) can be accessed from
www.ilo.org/dyn/natlex/natlex4.detail?p_lang=en&p_isn=87401&p_country=FRA&p_count=6622&p_classifica
tion=09&p_classcount=376 (accessed 22 June 2015). For a summary of the Law, see Hadjivassiliou et al, above
n 2, pp 430, 442–3.
16
regulate interns under the age of 16 years, nor those who are undertaking professional training. Its
cornerstone provision is that it requires an internship to be undertaken as part of the intern’s degree
or other training. As such, internships can only be established under a tripartite contractual
arrangement between the employing business, the intern and the relevant educational institution.
Internships are limited to a maximum duration of six months, although modifications of this limit are
allowed where there is an interruption for the purpose of gaining new skills in the degree, or when
the degree is over a longer period of time. In summary, the main purpose of the legislation is to
ensure that the internship is a genuine educational experience, and must provide genuine training.
An intern (or ‘stagiaire’) has no right to receive any wage during the first two months, though a
payment may be negotiated. But where the internship exceeds two months (not necessarily
consecutive), compensation in the form of a ’gratification’ bonus must be paid. Under recent
regulations, the minimum amount for this payment is set at €508.20 per month, a figure that will
rise to €554.40 (or €3.60 per hour) from September 2015.77
The Cherpion Law also provides that if an intern is taken into employment within 3 months of
completing an internship, their probationary period is reduced by the period of the internship,
provided they are taken on in the same role. If they are engaged to perform different work, the
reduction will be for half the length of the internship, unless a collective agreement provides for a
greater rebate.
Further elements of the Cherpion Law are designed to protect interns from exploitation. They are
not, for example, permitted to perform work which could be undertaken by someone holding a
permanent position in the business or organisation. Furthermore, unless an intern leaves early,
there must be a break of at least one third of the duration of the last internship before another
intern can be taken on in the same role.
There are also reporting requirements under the Law. For organisations employing fewer than 300
employees, an annual report must include details of any internships. In addition, quarterly reports
must be given to works councils detailing the number of interns, their conditions of employments
and the tasks undertaken by them.
The Cherpion Law is not without its critics. While the Law has clearly strengthened the regulatory
framework around internships, the lack of monitoring of internship agreements has been seen as a
weakness. In some instances, it is said, there have been fictitious university registrations, as well as
claims that in some institutions internship contracts are provided in exchange for a fee.
Furthermore, the requirement that interns are not used as substitutes for employees has not always
77
See Stephanie Braudeau, ‘France: monthly minimum wage for student interns to increase to 554€’, QS
Intelligence Unit, 15 January 2015, www.iu.qs.com/2015/01/france-monthly-minimum-wage-for-studentinterns-to-increase-to-554e/ (accessed 22 June 2015). Details of the ‘gratification minimale d'un stagiaire’ can
be found at http://vosdroits.service-public.fr/professionnels-entreprises/F32131.xhtml (accessed 22 June
2015).
17
been enforced. However, there is a broad reluctance to further tighten the regulation, given high
levels of youth unemployment.78
Despite this, it is notable that in the wake of the EU’s move to adopt the Quality Framework for
Traineeships, the details of which will be set out in Part 5 of the paper, a number of other European
countries have moved to tighten controls on internships. For example, Romania has introduced an
Internship Law that requires (among things) a written agreement, a six-month duration, the
payment of remuneration and the identification of a mentor/supervisor.79 In Bulgaria, the Labour
Code now stipulates that internships can only be undertaken by a person younger than 30 who has
completed secondary or higher education and has no prior experience in their chosen profession.
The internship must be for a period of between six months and a year and be covered by a formal
agreement. The intern must be supervised by a mentor, whose own employment contract must be
amended to reflect the time and responsibilities they are taking on.80
It will be interesting to see what other developments across the EU are revealed when member
states submit their reports on the implementation of the Quality Framework, as they are required to
do by the end of 2015.81
Looking beyond Europe, Argentina offers another example of a country that has moved to address
the position of interns. A law introduced in 2008 requires them to be paid an allowance that is
calculated as a proportion of the applicable collective agreement rate for employees, or otherwise
the minimum wage. An intern must not be engaged to replace an existing staff member, or fill a
vacancy. Furthermore, any failure by an employer to comply with the terms of an internship
agreement will result in the intern being deemed to have a continuing employment contract.82
Extending general labour laws to interns
As noted earlier, some labour statutes are framed to apply to a very broad range of workers, so that
they extend well beyond the traditional employment relationship.83 But we are interested here more
particularly in moves to single out those involved in work experience for coverage.
78
See Sarah Mongourdin-Denoix, ‘Strengthened Regulation of Internships’, EurWORK, 12 December 2011,
www.eurofound.europa.eu/observatories/eurwork/articles/other/strengthened-regulation-of-internships
(accessed 22 June 2015); and see also ILO, ‘Internships: Head Start or Labour Trap?’, above n 45.
79
See Dentons, ‘New law on internship in Romania’, Lexology, 27 January 2014,
www.lexology.com/library/detail.aspx?g=c5420e89-cf9e-4bc3-8c02-0eaf99ff7864 (accessed 22 June 2015).
80
See Maria Drenska, ‘Bulgaria: the internship agreement as a new type of employment agreement’, Lexology,
18 March 2015, www.lexology.com/library/detail.aspx?g=ef209446-7cc6-4dcb-9c8f-c9e923f11e91 (accessed
22 June 2015).
81
Above, n 53.
82
See Committee of Experts on the Application of Conventions and Recommendations, Minimum Wage
Systems: General Survey on the Minimum Wage Fixing Convention 1970 (No 131) and the Minimum Wage
Fixing Recommendation 1970 (No 135), Report III (1B), 103rd session, International Labour Conference, 2014,
[186].
83
See eg the Australian work health and safety laws noted above, n 56.
18
A recent example can be found in the United States, where courts have on a number of occasions
refused to extend the protection of equal opportunity or anti-discrimination laws to interns, on the
basis that they cannot be regarded as employees.84 In July 2014, New York’s Governor signed into
law a bill that amended the State’s employment discrimination statute to expressly cover unpaid
interns. Section 296(c) of Article 15 of the New York State Executive Law (the ‘Human Rights Law’)
specifically prohibits various discriminatory practices relating to interns. For the purpose of the
statute, interns are defined as follows:
As used in this section, ‘Intern’ means a person who performs work for an employer for
the purpose of training under the following circumstances:
a.
the employer is not committed to hire the person performing the work at the
conclusion of the training period;
b.
the employer and the person performing the work agree that the person performing
the work is not entitled to wages for the work performed; and
c.
the work performed:
(1) provides or supplements training that may enhance the employability of the
intern;
(2) provides experience for the benefit of the person performing the work;
(3) does not displace regular employees; and
(4) is performed under the close supervision of existing staff.
In Canada, a number of provincial labour codes are specifically worded so as to apply to interns or
other trainees, albeit with significant exceptions that, for example, include work experience
programs that are part of an educational or training course.85 We look in more detail at one of those
exceptions in the next section. Recent concerns about the exploitation of interns have led to a
number of proposals to extend the coverage of other Canadian laws, for example on health or
safety, or to narrow some of the existing exceptions.86 The most recent development, in May 2015,
has seen the federal government propose amendments to the Canada Labour Code that would make
its provisions on both occupational health and safety (Part II) and minimum working conditions (Part
III) applicable to ‘any person who is not an employee but who performs for an employer ... activities
whose primary purpose is to enable the person to acquire knowledge or experience’.87 But once
84
See eg O’Connor v Davis (1997) 126 F.3d 112; Lowery v Klemm (2006) 845 NE 2d 1124. For discussion of such
cases, see eg Craig J Ortner, ‘Adapting Title VII to Modern Employment Realities: The Case for the Unpaid
Intern’ (1998) 66 Fordham Law Review 2613; James J LaRocca, ‘Lowery v Klemm: A Failed Attempt at Providing
Unpaid Interns and Volunteers with Adequate Employment Protection’ (2006-2007) 16 Boston University
Public Interest Law Journal 131; . Lauren Fredericksen, ‘Falling Through the Cracks of Title VII: The Plight of the
Unpaid Intern’ (2013) 21 George Mason Law Review 245.
85
See eg the summary offered by the Canadian Intern Association, www.internassociation.ca/what-is-the-law/
(accessed 23 June 2015).
86
See James Attfield and Isabelle Couture, ‘An Investigation into the Status and Implications of Unpaid
Internships in Ontario’, undated, http://dspace.library.uvic.ca/handle/1828/5294?show=full (accessed 23 June
2015), pp 9–11; and see further Langille, above n 3.
87
See Bill C-59, An Act to implement certain provisions of the budget tabled in Parliament on April 21, 2015
and other measures, 1st reading, 7 May 2015, House of Commons of Canada, Pt 3 Div 7.
19
again, there are significant exceptions, at least in relation to the application of Part III, as we go on to
detail below.
Exempting interns from employment rights
It is not unusual for particular types of intern to be excluded from the scope of some or all of the
protections provided by a general labour statute. In Australia, for example, federal law has since
1996 provided that a person undertaking a ‘vocational placement’ cannot be regarded as an
employee, and thus is not entitled to minimum wages, leave entitlements and so on. As presently
defined in section 12 of the Fair Work Act 2009, this covers an unpaid placement undertaken as a
requirement of an education or training course and authorised under a federal, State or Territory
law or administrative arrangement. While the drafting and scope of this exception are not as clear as
they might be,88 it ensures at the very least that periods of unpaid work experience undertaken as
part of a higher or vocational education course,89 or a government assistance program, are not
subject to the Fair Work Act, even if they might otherwise (for reasons explored later in this part) be
capable of characterisation as employment.
A more recent example is provided by the new minimum wage legislation in Germany, which took
effect at the beginning of 2015 and which entitles adult workers to at least €8.50 per hour. The new
law, the Gesetz zur Regelung eines allgemeinen Mindestlohns (MiLoG), has been hailed by the
Federal Labour Minister as putting an end to ‘generation internship’, since it makes clear that
anyone with a vocational or university degree is entitled to the minimum wage.90 But it also contains
a number of important exceptions. Aside from workers under 18, there are specific exclusions for
internships that are mandated by educational institutions or professional training requirements, that
are preparatory to vocational studies, or that are undertaken concomitantly with a professional or
university education and that do not last for more than three months.91
In the Canadian province of Ontario, section 1(1) of the Employment Standards Act 2000 defines the
term ‘employee’ to include ‘a person who receives training from ... an employer’. The potentially
broad application of this extension is reduced by an exemption in section 3(5) for secondary school
students undertaking authorised work experience, together with anyone ‘who performs work under
a program approved by a college of applied arts and technology or a university’. Section 1(2) also has
the effect that a person is not to be considered an employee, if the person or organisation who
would otherwise be their employer can establish that they are engaged under a training
arrangement that meets the following six conditions:
1. The training is similar to that which is given in a vocational school.
2. The training is for the benefit of the individual.
88
See Stewart and Owens, above n 1, pp 75–82.
89
See eg Upton v Geraldton Resource Centre [2013] FWC 7827.
90
‘Bundestag approves Germany's first universal minimum wage’, EurActiv, 3 July 2014,
www.euractiv.com/sections/social-europe-jobs/bundestag-approves-germanys-first-universal-minimumwage-303282 (accessed 23 June 2015).
91
See www.gesetze-im-internet.de/milog/__22.html (accessed 23 June 2015).
20
3. The person providing the training derives little, if any, benefit from the activity of the
individual while he or she is being trained.
4. The individual does not displace employees of the person providing the training.
5. The individual is not accorded a right to become an employee of the person providing
the training.
6. The individual is advised that he or she will receive no remuneration for the time that
he or she spends in training.
The need to satisfy all of these criteria, which are clearly based on a similar list formulated by the US
Department of Labor (see below), should in practice make it very difficult for businesses or
organisations to treat an intern performing productive work as anything other than an employee.92
On the other hand, as Andrew Langille points out, there is ‘little if any enforcement of laws
governing unpaid labour and ... a deep reluctance on the part of youths to challenge probable
violations of workplace law due to a deep power imbalance they face from employers’.93
It is interesting to contrast the Ontario exclusions with those proposed by the federal government as
part of its Canada Labour Code amendments. Again, there is a two-pronged exclusion, set out in a
proposed section 167(1.2). A person would not be covered by the minimum standards in Part III of
the Code if they were performing activities ‘to fulfil the requirements of a program offered by a
secondary or post-secondary educational institution or a vocational school, or an equivalent
educational institution outside Canada’. Alternatively, and even in the absence of a link to such a
program, an unpaid internship of up to four months (full-time) or twelve months (part-time) would
be excluded if the activities involved primarily benefited the intern, the activities involved were
supervised, the intern did not replace any employee and there was no right to be employed at the
end. Once again, the cumulative effect of these conditions might seem to make it hard for a business
to use an internship as a disguised form of employment. Nevertheless, advocates for intern rights
have described the conditions as ‘overbroad, unclear and inadequate’ and suggested that the Bill
would create an incentive for federally regulated employers ‘to cycle through interns indefinitely for
free labour instead of providing paid positions’.94
Enforcing general labour laws
In many countries it remains an open question as to whether internships are or are not caught by
general labour laws. The answer often depends on a court, tribunal or government agency
determining whether an intern falls into the (often undefined) category of ‘employee’. In recent
times, at least in some jurisdictions, the number of cases testing that out has risen in proportion
both to the use of internships and the critical attention devoted to them by government agencies,
92
See eg Girex Bancorp Inc v Hsieh & Sip 2004 CanLII 24679 (ON LRB); Langille, above n 3, 30–2.
93
Langille, above n 3, 27. This is not to say that the Ontario Ministry of Labour has been entirely inactive in this
area: see eg Meaghan McWhinnie, ‘Ministry of labour announces enforcement blitz to target unpaid
internships’ Ontario Employer Advisor, 24 April 2014, www.ontarioemployerlaw.com/2014/04/24/ministry-oflabour-announces-enforcement-blitz-to-target-unpaid-internships/ (accessed 23 June 2015).
94
Claire Seaborn, Josh Mandryk and Andrew Langille, ‘Tory budget bill exposes interns to exploitation’ Toronto
Star, 11 May 2015, www.thestar.com/opinion/commentary/2015/05/11/tory-budget-bill-exposes-interns-toexploitation.html (accessed 23 June 2015).
21
academics, the media and (not least) intern groups.95 In this section, we look in some detail at
developments in two countries, the United States and Australia, where there have been heightened
levels of enforcement – albeit in somewhat different forms.
United States
In the United States, as is often the way in a country with so many courts and jurisdictions, the
position is rather confused – and, importantly, may vary depending on the legal regime being
applied. Ever since the 1947 decision of the Supreme Court in Walling v Portland Terminal Co,96 in
which a group of railway brakemen undergoing a preliminary course of training were found not to be
employees, US courts have applied a range of different tests in determining whether trainees of
various kinds are entitled to the protection of labour statutes. Amongst these, the most common
have been a ‘primary beneficiary test’, which asks whether it is the trainee or their alleged employer
who benefits most from the training, and a test which focuses more generally on the ‘totality of
circumstances’. There seems to be a general consensus among commentators that there is unlikely
to be any consistency of approach unless and until the issue is revisited by the Supreme Court .97
According to the final draft of the American Law Institute’s recently finalised Third Restatement of
Employment Law, ‘interns who work without compensation or a clear promise of future
employment generally are not employees’ and nor are ‘students who render uncompensated
services to satisfy education or training requirements for graduation or for admission to a particular
profession or craft generally’.98 The reporters’ notes for this comment suggest that:
Many students do not meet the initial conditions for being employees because their work
serves only their own interest in learning and skill development rather than the interest
of the institution providing the instruction or training. This can be true even for a forprofit enterprise providing practical training as a means of developing a labor pool for
future recruitment.99
As the notes make clear, there has been far from unanimity on this point. But there have certainly
been a number of major cases in which interns have been unable to establish employment status.
Besides the equal opportunity and discrimination cases mentioned earlier,100 a notable recent
example is provided by the decision of the Supreme Court of Wisconsin in Masri v State of Wisconsin
Labor and Industry Review Commission.101 Ms Masri, a doctoral student at the University of
95
We return to the role of intern groups in the next section, dealing with voluntary or ‘soft’ regulation
96
(1947) 330 US 148.
97
For recent reviews of the relevant case law, see eg Gregory S Bergman, ‘Unpaid Internships: A Tale of Legal
Dissonance’ (2014) 11 Rutgers Journal of Law and Public Policy 551; Cody E Brookhouser, ‘Whaling on Walling:
A Uniform Approach to Determining Whether Interns are ‘Employees’ Under the Fair Labor Standards Act’
(2015) 100 Iowa Law Review 751.
98
American Law Institute, Restatement of the Law Third: Employment Law, Proposed Final Draft, 18 April 2014,
p 25 (Article 1.02, comment (g)). Article 1.02 states as a general proposition that: ‘An individual is a volunteer
and not an employee if the individual renders uncoerced services without being offered a material
inducement.’
99
Ibid, p 30.
100
Above, n 84.
101
Case No 2012AP1047; 2014 WI 81.
22
Wisconsin-Milwaukee (UWM), had her position as a psychologist intern at a medical college
terminated after she raised clinical/ethical concerns with an administrator. Her appeal against this
decision raised the question of whether she was an ‘employee’ within the meaning of the Wisconsin
Fair Employment Act, so as to be eligible for certain protections provided by another statute, the
Health Care Worker Protection Act. The court ruled by majority that she was not an employee.
In its decision, the majority referred to the ordinary, dictionary definition of an ‘employee’ as ‘a
person working for another person or a business firm for pay’. Because in some other parts of the
statute the legislature had made provision for certain volunteers, the majority considered this to
indicate it did not intend the statute to extend to unpaid interns. The fact that Masri received no pay
thus became critical. Although she did receive a number of tangible benefits – security badge, free
car parking, office space, and support staff -- the majority considered that these had no independent
value and were provided to her in order to enable her to undertake the work. The majority thus
effectively assumed that an unpaid intern was not an employee.
In a powerful dissent Justice Bradley, with whom Chief Justice Abrahamson agreed, held that the
Health Care Worker Protection Act was intended on its proper construction to extend to unpaid
interns. Acknowledging some ambiguity in the statutory words, the minority’s decision depended in
large part on a purposive interpretation of the statute, as well as a critique in the circularity of the
reasoning of the majority. The dissenting judges also considered that the common law approach to
the determination of who is an ‘employee’ – that is the application of a multi-factorial test, taking
into account such matters as control, skill, location of the work, delegation, etc – was more
consistent with Supreme Court authority, than the adoption by the majority of a dictionary
definition. On this basis the dissenting judges were prepared to consider Masri to be an employee.
One of the factual elements of the case argued by the college to be important was that Masri was a
student at UWM and as such allowed to gain clinical experience only as part of its educational
program. UWM did not require students to register for credit for the internship, merely that they
had to be enrolled. According to a UWM handbook, ‘Internship in Counselling Psychology’, a
contract between the University and the college should have been prepared, which set out the
details of the arrangement, including matters such as salary, fringe benefits and allowances.
Although Masri’s supervisor at the college had initially indicated that she had sought and received
funds to pay her, in fact this did not eventuate and, consequently, in this case no contract was put in
place. The college argued that the University contemplated that its student interns could be
employees (and would be paid), but that had not in fact happened in this case. The factual scenario
in Masri thus also illustrates the way in which the very existence of ‘soft regulation’, which in fact
may not be implemented, can have an impact through intersection with other more formal forms of
regulation such as statute.
However, while US interns have sometimes struggled to obtain legal protection under certain
regimes, it has been a different story in recent cases brought under the federal Fair Labour
Standards Act 1938 (FLSA). The FLSA is applicable to a range of employers, including many in the
private sector. Among other things, it requires the payment of a minimum wage (currently set at
US$7.25 per hour) to any ‘employee’, defined simply in section 203(e)(1) as ‘any individual employed
by an employer’. The legislation specifically excludes certain workers who would otherwise fall
within the definition of ‘employee’, including workers in a family business, and certain volunteers.
But by virtue of section 203(g), the word ‘employ’ also includes ‘to suffer or permit to work’. This
23
particular wording has been taken to justify adopting a broader meaning of the term ‘employee’
than in other statutory regimes.102
There is no specific definition in the FLSA that refers to interns. Nonetheless, the Wage and Hour
Division of the Department of Labor (DoL), which administers the FLSA, has developed a six-point
test to determine whether a trainee is an ‘employee’ and so entitled to workplace benefits under
the legislation. The six criteria, distilled from the decision in Walling v Portland Terminal,103 are
intended to capture the characteristics of a trainee who is not to be regarded as an employee for
FLSA purposes. They are:
1. The internship, even though it includes actual operation of the facilities of the
employer, is similar to training which would be given in an educational environment;
2. The internship experience is for the benefit of the intern;
3. The intern does not displace regular employees, but works under close supervision of
existing staff;
4. The employer that provides the training derives no immediate advantage from the
activities of the intern; and on occasion its operations may actually be impeded;
5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
6. The employer and the intern understand that the intern is not entitled to wages for the
time spent in the internship.
In April 2010 the DoL issued a fact sheet as guidance for interns and those employing them in the
for-profit sector, titled ‘Fact Sheet #71: Internship Programs under the Fair Labor Standards Act’.104
The fact sheet indicates that where all six of the criteria set out above are satisfied, then ‘an
employment relationship does not exist under the FLSA, and the Act’s minimum wage and overtime
provisions do not apply to the intern’. The exclusion, it is explained, is necessarily narrow because
the definition in the legislation is so wide.
In the wake of this initiative, a number of test cases were brought by or on behalf of unpaid interns
to establish their entitlement to minimum wages under the FLSA. Two of these so far have produced
decisions, though both are currently under appeal. The first, Wang v The Hearst Corporation,105
involves a class action brought against one of the world’s largest magazine publisher for millions of
dollars in back pay. The lead plaintiff, Xuedan (Diana) Wang, claims to have worked at Harper’s
Bazaar as an intern for up to 55 hours a week, between August and December 2011. Her duties were
said to include co-ordinating pickups and deliveries of fashion samples, assigning a team of interns to
carry out such pickups, maintaining records of the sample trunks and fashion closet, providing on
site assistance at photo shoots, and processing reimbursement requests for corporate expense
reports. The allegation is that there was no training provided, and Wang claims that she and others
were misclassified as interns rather than as employees.
102
A point acknowledged by the reporters’ notes in the Third Restatement, above n 98, p 31.
103
Above, n 96.
104
See www.dol.gov/whd/regs/compliance/whdfs71.htm (accessed 23 June 2015).
105
(2013) 293 FRD 489 (SDNY).
24
In an initial ruling, Judge Baer of the US District Court for the Southern District of New York refused
the plaintiffs’ motion for summary judgment. In doing so he rejected their argument that the correct
test to apply in determining their employment status was to ask whether the defendant had derived
any ‘immediate advantage’ from their work, or failing that, to apply the DoL’s six-point test in an ‘all
or nothing’ fashion. While prepared to accord weight to the DoL’s criteria, he accepted the
defendant’s submission that in accordance with the Supreme Court’s ruling in Walling, it would be
necessary to consider the ‘totality of the circumstances’ in ultimately deciding whether the plaintiffs
were employees.
A month after this ruling, Judge Pauley of the same court handed down his decision in Glatt v Fox
Searchlight Pictures Inc.106 Like Judge Baer, he considered that it was appropriate to have regard to
the factors identified by the DoL, but nonetheless to consider the totality of the circumstances. In
this case, however, summary judgment was granted in favour of two unpaid interns who had
worked in the production office for the Oscar-winning film Black Swan. Both had worked for many
months without pay as accounting or production interns. Their tasks included a wide range of office
chores, from making coffee, taking lunch orders and cleaning the office, to reviewing personnel files,
delivering pay cheques and preparing invoices, as well as other secretarial tasks. In Judge Pauley’s
view, they must be regarded as employees:
They worked as paid employees work, providing an immediate advantage to their
employer and performing low-level tasks not requiring specialized training. The benefits
they may have received – such as knowledge of how a production or accounting office
functions or references for future jobs – are the results of simply having worked as any
other employee works, not of internships designed to be uniquely educational to the
interns and of little utility to the employer. They received nothing approximating the
education they would have received in an academic setting or vocational school. This is a
far cry from Walling where the trainees impeded the regular business of the employer,
worked only in their own interest, and provided no advantage of the employer.107
In the wake of this ruling, The Economist reported that:
More than 30 similar lawsuits have been brought in America against firms including Sony,
NBC, the Donna Karan fashion label and the Pittsburgh Power football team. Some have
been settled: last October the Elite Model Management Corporation agreed to pay
$450,000 to a group of more than 100 former interns who argued that they had done the
work of ordinary employees in its New York office. A few months earlier the production
company of Charlie Rose, a talk-show host, agreed to pay about $60,000 to interns who
had worked on his show.108
More recently, in December 2014, a federal judge gave preliminary approval to a $5.85 million
payout by magazine publisher Condé Nast to settle a class action brought against it by a group of its
106
(2013) 293 FRD 516 (SDNY).
107
Ibid, p 26.
108
Above, n 9.
25
former interns. NBC Universal was reported to have reached an even higher settlement of $6.4
million two months earlier.109
Despite these successes, including (at least for now) the court ruling in Glatt, it cannot be assumed
that the employment status of US interns has been entirely resolved. It seems likely that those
performing productive work that would otherwise have been done by paid employees, without
reference to a meaningful training program, will succeed in establishing an entitlement to the
minimum wage under the FLSA. But even so, calls will continue for the position to be clarified, if not
by the courts, then by legislatures.110
What is also notable about the situation in the United States is the rather indirect, if nonetheless
influential, role played by the DoL’s Wage and Hour Division. Its Factsheet #71 has operated not only
to provide guidance to businesses and interns, but influenced the courts’ approach to the
interpretation of the FLSA. Nevertheless, with only limited resources, it has not been in a position to
press the issue of the possible underpayment and exploitation of interns. Instead, it has been left to
individual litigants and their lawyers to initiate the legal proceedings (in particular the class actions)
that are clearly having at least some impact on the misuse of intern programs to obtain free labour.
Australia
The Australian equivalent to the Wage and Hour Division, the Fair Work Ombudsman (FWO), has
played a far more active and visible role not just in seeking to clarify the law, but in working to bring
about a change in attitudes and practice. The FWO is a federal agency charged with the task of
promoting both understanding of, and compliance with, the Fair Work Act 2009.111 In 2011 it
identified unpaid work experience in Australia as an emerging issue that warranted its attention.
This was prompted in particular by a newspaper article advocating the value to businesses of the
‘free labour’ on offer from eager young interns.112 The FWO responded by developing educative
materials on the topic and initiating contact and discussion with major stakeholders. But it also
determined that further research would be of assistance, and commissioned the authors of this
paper to undertake a major study of the issue. Our report, published in February 2013, included the
following assessment of the prevalence of unpaid work experience in Australia:
[A] growing number of businesses are using unpaid interns to do work that, in many
instances, would otherwise be performed by paid employees. Although it is not possible
109
Jonathan Stempel, ‘US court approves Condé Nast $5.85 million intern pay settlement’, Reuters, 29
December 2014, www.reuters.com/article/2014/12/29/us-condenast-interns-idUSKBN0K71IX20141229
(accessed 23 June 2015).
110
See eg Bergman, above n 97; Brookhouser, above n 97; Paul Budd, ‘All Work and No Pay: Establishing the
Standard for when Legal, Unpaid Internships Become Illegal, Unpaid Labor’ (2015) 63 Kansas Law Review 451;
Patricia Reid, ‘Fact Sheet #71: Shortchanging the Unpaid Academic Intern’ (2014) 66 Florida Law Review 1376.
111
As to the nature and role of the FWO, a body created in 2007 to allay public concerns over the Howard
Government’s controversial ‘Work Choices’ legislation, see eg Tess Hardy, ‘A Changing of the Guard:
Enforcement of Workplace Relations Laws Since Work Choices and Beyond’ in Anthony Forsyth and Andrew
Stewart (eds), Fair Work: The New Workplace Laws and the Work Choices Legacy, Federation Press, Sydney,
2009, p 75; Tess Hardy, John Howe and Sean Cooney, ‘Less Energetic but More Enlightened? Exploring the Fair
Work Ombudsman’s Use of Litigation in Regulatory Enforcement’ (2013) 35 Sydney Law Review 565.
112
Valerie Khoo, ‘Eager workers can be free and easy’ Sydney Morning Herald, 13 August 2011.
26
to say how many people are undertaking internships in Australia today, either paid or
unpaid, a general picture of the phenomenon has emerged. While internships are more
common in particular industries, such as the print and broadcast media, there is scarcely
an area of professional life that is untouched by them. Young people are the ones most
often likely to be engaged in internships. But migrant workers, especially international
students and those on temporary working visas, are also especially vulnerable to unpaid
work, because they often have the additional urgency of seeking to maximise the
possibility of securing access to permanent residency. 113
Whether it is lawful in Australia for a business or organisation to obtain work from an unpaid intern
depends primarily on whether the intern can be considered to be an employee for the purpose of
the Fair Work Act. As noted earlier, the Act specifically provides that a person undertaking an unpaid
‘vocational placement’ associated with an authorised education or training course is not to be
regarded as an employee.114 But for other, ‘extracurricular’ arrangements, it is a matter of
determining whether the work is being performed under what the common law would recognise as
a contract of employment.
In our 2013 report, we noted that in a number of earlier cases on job trials, Australian courts had
determined that no employment relationship existed, for lack either of any ‘mutuality of obligation’
or intention to create legal relations.115 But there had also been instances in which employment
contracts had been found to exist, especially in relation to arrangements of longer duration.116 While
acknowledging the differing approaches that could be taken, we expressed the view that it would be
consistent with the objects of the Fair Work Act to ‘start from the assumption that if a person is
performing productive work for an organisation, under an arrangement whereby they will either
gain experience or be considered for an ongoing job, they are doing so under an employment
contract – unless there is clear evidence to the contrary’.117 We stressed too that it was important to
take an objective view of work experience arrangements, by having regard to the practical reality of
what was involved, rather than how they might be described or labelled by the parties involved.118
The report recommended that the FWO take a number of steps to help clarify the legal status of
unpaid internships, including by refining its educational materials. We suggested that it continue and
extend its attempts to work with stakeholders (including young people and migrant workers
themselves, educational institutions and industry groups), not just to improve understanding of the
legal position, but to help develop ‘best practice’ approaches that would improve the quality of work
113
Stewart and Owens, above n 1, pp xii–xiii. As to the position of migrant workers, see ibid, ch 7.
114
Above, text at nn 88–89.
115
See eg Dietrich v Dare (1980) 54 ALJR 388; Pacesetter Homes Pty Ltd v Australian Builders Labourers
Federated Union of Workers (WA Branch) (1994) 57 IR 449.
116
See eg Nominal Insurer v Cleanthous [1987] NTSC 51; Cossich v G Rossetto & Co Pty Ltd [2001] SAIRC 37.
117
Stewart and Owens, above n 1, p 249; and see further ibid, pp 148–50, 248–53.
118
Ibid, pp 120–2, 149–50, 253. For more recent expressions of this view, in the context of disregarding
contractual arrangements designed to portray or disguise employees as independent contractors, see eg ACE
Insurance Ltd v Trifunovski (2013) 209 FCR 146; Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd
[2015] FCAFC 37.
27
experience programs and reduce the misuse or exploitation of young job-seekers.119 In addition, we
proposed that the FWO look for opportunities to bring test cases before the courts, and that it be
especially willing to pursue businesses that are not just agreeing to help job-seekers, but actively
setting out to profit from their willingness to work for free:
Where organisations are systematically using unpaid interns or unpaid job applicants,
there is clearly a greater threat to the integrity of the Fair Work legislation. This should be
treated as a significant factor in any decision as to whether to investigate a particular
matter, or to take action. It is also important to recall that while those who are
undertaking unpaid work experience are often amongst the most vulnerable workers, it
may be important to pursue investigations even where a person has made a free and
informed choice to accept unpaid work to secure greater opportunities in the labour
market. The point of enforcing labour laws in this setting is not just to protect the
individuals involved. It is to assert a principle – a fair day’s pay for a fair day’s work – that
underpins our system of minimum labour standards. It is also to promote the goal of
‘social inclusion’ that is expressly made part of the objects of the Fair Work Act. 120
Since receiving our report and accepting its recommendations, the FWO has consulted extensively
with stakeholders and developed a new and expanded range of internet resources for employers.121
This has included working with educational institutions to help develop model policies and
procedures for both vocational placements and the facilitation of extracurricular programs. In terms
of compliance, the FWO has devoted considerable resources to investigating and pursuing
employers for what it regards as unlawful exploitation of trainees or interns.122 Some matters have
been resolved by employers undertaking to rectify any underpayments and alter their practices.123
But two proceedings have also resulted in favourable court decisions.
In Fair Work Ombudsman v Devine Marine Group Pty Ltd124 two Fijian dockworkers who had been
brought to Australia to work for a marine salvage company, under what was found to be a bogus
training program, were held to be employees. Justice White of the Federal Court stressed that if the
objective reality or ‘true substance’ of a relationship is one of employment, it does not matter that it
may be described in other terms, or indeed that the worker concerned may be acquiring additional
skills or experience. More recently, in Fair Work Ombudsman v Crocmedia Pty Ltd125 a broadcaster
119
Stewart and Owens, above n 1, ch 9, esp pp 258–61; and see also Committee on Children and Young
People, Volunteering and Unpaid Work Placements Among Children and Young People in NSW, New South
Wales Parliament, Sydney, 2014, ch 5.
120
Stewart and Owens, above n 1, p xxiii.
121
See www.fairwork.gov.au/pay/unpaid-work (accessed 24 June 2015).
122
Besides the matters detailed in the text that follows, see the summary of compliance and other activities in
‘Internships & unpaid work – update’, media release, 12 August 2014, www.fairwork.gov.au/about-us/newsand-media-releases/2014-media-releases/august-2014/20140812-interns-unpaid-work-update (accessed 24
June 2015).
123
For a recent example involving a firm of architects, see ‘Company signs up to workplace pact after
underpaying student intern almost $7000’, media release, 19 March 2015, www.fairwork.gov.au/aboutus/news-and-media-releases/2015-media-releases/march-2015/20150319-d-studio-architects-eu-presser
(accessed 24 June 2015).
124
[2014] FCA 1365.
125
[2015] FCCA 140.
28
was fined for underpaying two university students who worked for many months as radio producers.
The breaches were acknowledged not to be deliberate and were quickly rectified after the FWO
intervened. But Judge Reithmuller, who made extensive reference to our 2013 report, described the
arrangements as ‘exploitative’ and emphasised that ‘profiting from “volunteers” is not acceptable
conduct’.126
The FWO’s activities in relation to unpaid work experience arrangements in Australia offer what we
would regarded as a sensible and nuanced approach to this issue. While the most visible outcomes
might be court decisions such as those described above, it is the agency’s ‘behind the scenes’ work
in encouraging businesses and institutions to review and improve their practices that arguably stand
as its greater contribution. We are in the early stages of conducting further research to assess how
the educational sector in particular may have modified its practices in light of increasing scrutiny
from the FWO and others. But our preliminary impression, albeit for now based on anecdotal
evidence alone, is that the FWO’s educational and compliance activities have made some difference
in halting or slowing the proliferation of unlawful or exploitative internships.
Voluntary or ‘soft’ regulation
There are many ways in which governments can seek to influence the use and content of
internships, without directly regulating them. To take just one example, conditions may be attached
to the provision of subsidies, something common in Europe even in relation to programs not
formally linked to educational institutions.127 A particularly interesting example from Austria is
quoted in the European Commission’s 2012 survey of training arrangements:
[I]n an effort to help the so-called ‘internship generation’ secure regular employment
instead of frequent rounds of traineeships, the 2010 Aktion +6000 Programme provides
wage subsidies to employers if, upon completion of the traineeship, they keep on the
trainees.128
In some other countries, government agencies have been active not just in enforcing labour laws,
but in seeking to reshape their use through the issue of guidelines. The United Kingdom offers an
example of this. The situation of young people there has been particularly difficult since the onset of
the GFC, an economic context which has provided fertile ground for a dramatic growth in
internships. However, as in many other countries, there has been a concerted effort from activists to
raise awareness about and campaign against the exploitative aspects of internships. Among other
things, this has prompted discussion about the potentially damaging impact of the present system of
126
Ibid, [45]. The 2013 report has also been cited in a decision of the New Zealand Employment Court
concerning a job trial: see The Salad Bowl Ltd v Howe-Thornley [2013] NZ EmpC 152, [25]. For discussion of the
legal status of work experience arrangements in New Zealand, see Stewart and Owens, above n 1, pp 201–7.
127
See eg Hadjivassiliou et al, above n 2, pp 63–5. We stress that in mentioning such initiatives, which may also
include differential tax treatment of employers who take on youth workers, we are not seeking to enter the
debate as to the efficacy or sustainability of such policies.
128
Ibid, p 65.
29
unpaid internships on equity and access, and social mobility, as well as a greater focus on the
enforcement of minimum wage laws.129
One of the more interesting products of that debate grew out of a specific concern to improve
access to professional careers for talented students from low income backgrounds. The ‘Common
Best Practice Code for High Quality Internships’ is a joint initiative of the Department for Business,
Innovation and Skills and the Gateways to the Professions Collaborative Forum, an advisory body
representing professional bodies and related organisations. First issued in 2011 and most recently
revised in late 2013,130 the Code outlines what an internship is: its purpose and value to both
internees and their employers; its length, ranging anywhere from 6 weeks to 12 months, but
typically 3 months; and that it can be taken up by undergraduate, graduate or postgraduate
placements, students in further education or adult education institutes, or adults wishing to make a
career change. The Code also identifies what an internship is not: for example, a compulsory
component of a course of study or work experience/work shadowing, vacation work unrelated to
professional career, or ordinary employment undertaken while a student. It makes clear the need
for employers to comply with the requirements of the National Minimum Wage legislation, where
applicable, and provides detailed guidance through six best practice principles on how to ensure a
high quality internship, covering every aspect of the process: preparation, recruitment, induction,
treatment, supervision and monitoring, and certification reference and feedback. The Code is
complemented by a two-page guide for interns themselves, prepared with the assistance of the
group Interns Aware.
Specific sectors where internships are common have adopted similar codes, modified according to
their needs. Thus, for instance, the National Council of Voluntary Organisations has developed a
guide for internships in the voluntary sector, emphasising the difference between employment and
‘true’ volunteering, canvassing the arguments about the appropriateness of taking on volunteer
interns and suggesting ‘principles of good practice’.131 In the artistic/cultural sector, often notorious
for unpaid internships, there has also been a concerted effort to ensure quality internships. In 2011,
Arts Council England and Creative & Cultural Skills issued ‘Internships in the Arts: A Guide for Arts
Organisations’,132 while a more recent initiative in the industry has been the establishment of a
£15m fund to support apprenticeship and paid internship opportunities for unemployed young
129
See Stewart and Owens, above n 1, pp 207–25. As noted there, the Low Pay Commission, the body
responsible for formulating Britain’s minimum wage and monitoring its impact, has played an important role in
this area.
130
See www.gov.uk/government/publications/providing-quality-internships-code-and-guidance-for-employers
(accessed 24 June 2015).
131
http://knowhownonprofit.org/people/volunteers-and-yourorganisation/NCVOVolunteerInternshipsintheVoluntarySector.pdf (accessed 24 June 2015).
132
www.artscouncil.org.uk/media/uploads/internships_in_the_arts_final.pdf (accessed 24 June 2015).
30
people.133 The British government has also adopted a ‘lead by example’ approach, and has abolished
informal internships at Whitehall.134
It is worth emphasising the role played by pressure groups such as Intern Aware (and others) in both
inspiring these initiatives and, in some cases, helping to design them. As Ross Perlin notes in
highlighting what he calls the ‘rise and rebellion of the global intern’, the tools of the internet and
social media are increasingly being used by young people across the world to expose and protest
against the exploitative aspects of modern internships.135 There appear to be as many websites
today questioning the benefits of internships as there are promoting them. But as the British
experience reveals, intern groups are capable not merely of lobbying for change, but helping to
direct it as well.136
5. International Standards and the Need for a Global Response
The challenge of dealing with the rise of internships is summarised with characteristic acuity by
Perlin:
There is no single body of experts, no famed mutltinational corporation, no particular
institution or government that is pushing the relentless global expansion of internships –
a process occurring so rapidly, and at the instigation of so many different actors, that its
contours seem almost impossible to gauge. The dynamics vary substantially from country
to country, with particular labor laws, different industries and specific values surrounding
work all coming into play, but the overall direction is clear: internships are pushing into
the workplaces of middle- and high-income nations the world over. What took four
decades to materialize in the U.S. has rapidly become a global fact of life: internships are
at once a significant source of cheap, flexible white-collar labor and a major
steppingstone to affluence and professional success. They grant access to those who can
afford them, and block further progress for those who cannot.137
There are many signs that unpaid work experience is now global ‘big business’. Quite part from the
internship programs that now proliferate at United Nations agencies and other major international
organisations,138 a phenomenon that has inspired its own set of welfare and lobby groups,139 there
are now agencies operating across the world to broker internships – for a fee.140 An example of the
133
See Gavin Stride, ‘Internships in the arts: rethinking how young people break into the industry’ The
Guardian, 12 February 2014.
134
See ‘Opening Doors, Breaking Down Barriers, A Strategy for Social Mobility’, April 2011,
www.gov.uk/government/uploads/system/uploads/attachment_data/file/61964/opening-doors-breakingbarriers.pdf (accessed 24 June 2015), pp 7–8, 56–8.
135
See Perlin, above n 1, pp 196–202; and see also Hadjivassiliou et al, above n 2, p 24.
136
For an initiative of this kind in our own country, see the accreditation scheme being proposed by Interns
Australia: www.internsaustralia.org/accreditation (accessed 24 June 2015).
137
Perlin, above n 1, 185–6.
138
See Stewart and Owens, above n 1, pp 183–7.
139
As in the case of the Geneva Interns Association: see http://internsassociation.org/ (accessed 24 June
2015).
140
See Perlin, above n 1, ch 6.
31
sophisticated marketing that is used to package internships worldwide can be seen on the website of
Dream Careers Inc (formerly the ‘University of Dreams’).141 Operating on a global scale, it offers
internships in exotic locations. But aside from promises of assistance in preparing resumés, there is
not very much detail as to what the internships actually involve. The images of playful young interns
featured on the website suggests more that they are on holiday, rather than being at work or being
educated.
Often implicit in what these agencies offer is a promise that internships will open up not only an
opportunity for entry to the labour market, but also an enhanced opportunity for accessing the
citizenship of the destination country. So global internships are an aspect of the convergence of the
growth in global migration and in the informal economy. Internships are in this sense a new form of
temporary labour migration. There is also concern about the very practice of seeking payment for
linking would be young migrant interns/workers to work opportunities. A basic principle of
international labour law is that labour agencies do not charge workers for their services. In relation
to international migration generally, there are already major concerns about the activities of
agencies brokering work opportunities, especially in relation to temporary labour migration – and
their conduct is often proving particularly resistant to effective national enforcement of labour
standards.142
Educational institutions are also very important players in relation to international internships. Often
for example, agencies link with tertiary providers who are desperate to demonstrate opportunities
to their students. The significant role that that universities can play is evident from a recent news
story from Australia. Through an arrangement promoted through her institution, a University of
Western Australia student was promised work as an intern in Singapore, but after paying a not
inconsiderable amount of money to a broker for the opportunity found herself unable to work there
because she did not have the correct visa. In this arrangement, her contract with the agent
stipulated the law of another jurisdiction (Hong Kong) as the law of the contract, as well as
stipulating that she was not an employee.143
Governments may also promote international internship arrangements as ways of getting to
understand better the business environments of their region.144 Without going into detail, it may be
noted that while there may be many beneficial aspects of such plans, they also raise questions – for
example concerning the role of global business in promoting such opportunities to young people in
developed economies, and whether reciprocal opportunities are offered to young people from less
developed economies.
141
See www.summerinternships.com (accessed 24 June 2015).
142
See Jennifer Gordon, ‘Global Labour Recruitment in a Supply Chain Context’, ILO Fair Recruitment Initiative
Series, Paper No 1, January 2015.
143
Josie Taylor, ‘Absolute Internship: Claims students left without visas in Singapore spark national review’ ABC
Online, 12 March 2015, www.abc.net.au/news/2015-02-19/concerns-about-paid-overseas-internships-sparknational-review/6148634 (accessed 24 June 2015).
144
As for example with the Australian government’s ‘New Columbo Plan’: see http://dfat.gov.au/people-topeople/new-colombo-plan/pages/new-colombo-plan.aspx (accessed 24 June 2015).
32
Thus there are international dimensions to the problem, which arguably demand a regulatory
response at the highest international level. As we noted earlier, the potential problems with
internship programs have been recognised by the International Labour Conference. It is also an issue
that has been highlighted by the ILO’s Committee of Experts on the Application of Conventions and
Recommendations. In its 2014 survey of the implementation of minimum wage fixing standards, the
Committee noted that ‘problems have been raised in several countries relating to unpaid internship
programmes and other similar arrangements, when they are used to evade the payment of
applicable minimum wages and to curtail employment opportunities’.145 The Committee added:
Recalling the overarching principle of equal pay for work of equal value, the Committee
considers that persons covered by apprenticeship or traineeship contracts should only be
paid at a differentiated rate where they receive actual training during working hours at
the workplace. In general, the quantity and quality of the work performed should be the
decisive factors in determining the wage paid. 146
Underpinning the ‘call to action’ of the 2012 International Labour Conference resolution concerning
the youth employment crisis147 are the core values of the ILO and its documents concerning recent
strategies for responding to the challenges of globalisation. These include: the ILO Declaration of
Philadelphia (1944), the ILO Declaration on Fundamental Principles and Rights at Work and its
Follow-up (1998), the Decent Work Agenda (1999), the Global Employment Agenda (2003), the
Conclusions concerning the promotion of sustainable enterprises (2007), the ILO Declaration on
Social Justice for a Fair Globalization (2008), the Global Jobs Pact (2009), and of course the body of
international labour standards (conventions and recommendations) relevant to work and young
persons.148
As a general proposition, it seems to us that most ILO conventions are broad enough to apply to
many interns as ‘workers’, regardless of whether they may qualify for domestic legal purposes as
employees. But there is very little in those instruments that would clarify their application (or nonapplication) to interns. One exception here is Convention No 138 concerning the Minimum Age for
Admission to Employment (1976), which is one of the eight conventions underpinning the
Declaration of Fundamental Principles and Rights at Work and has been ratified by 168 nations.
Article 6 exempts certain work experience and work related to training, as follows:
This Convention does not apply to work done by children and young persons in schools
for general, vocational or technical education or in other training institutions, or to work
done by persons at least 14 years of age in undertakings, where such work is carried out
in accordance with conditions prescribed by the competent authority, after consultation
with the organisations of employers and workers concerned, where such exist, and is an
integral part of–
(a) a course of education or training for which a school or training institution is primarily
responsible;
145
Committee of Experts, above n 82,
146
Ibid, [188].
147
Above, n 30.
148
‘Internships: Head Start or Labour Trap?’, above n 45, [8].
33
(b) a programme of training mainly or entirely in an undertaking, which programme has
been approved by the competent authority; or
(c) a programme of guidance or orientation designed to facilitate the choice of an
occupation or of a line of training.
Quite apart from any uncertainty over the application of other conventions, however, there must be
a real question as to whether existing international labour standards are specific enough to really
tackle the kind of issues we have highlighted in this paper.
From that perspective then, it is interesting to consider a regional initiative which does attempt to
deal specifically with the issue of work experience: the EU’s Quality Framework for Traineeships,
adopted (as we explained earlier) in March 2014. Key elements of the Quality Framework include:149

requiring a prior written agreement that sets out (among other things) the educational
objectives and duration of the arrangement, working conditions, whether the trainee is to
be remunerated or compensated, and the parties’ rights and obligations;

encouraging a supervisor to be designated;

ensuring that, where applicable, any limits set by national or EU laws on working time and
rest periods are respected, together with holiday entitlements;

encouraging traineeship providers to clarify whether they offer health and accident
insurance, as well as sick leave;

ensuring a reasonable duration for traineeships that, except where a longer duration can be
justified, does not exceed six months;

clarifying the circumstances in which a traineeship may be extended or renewed;

encouraging agreements to clarify the circumstances in which a traineeship may be
terminated;

promoting the recognition, assessment and certification of the knowledge, skills and
competences acquired during a traineeship; and

promoting transparency, by encouraging advertisements and other information to specify
both the terms and conditions of a traineeship, and the number of trainees typically
recruited into ongoing employment.
At first sight there is a great deal of value in these standards and it is easy to understand why they
should be considered appropriate for at least some kinds of training. But aside from the need to
determine at what point a work experience arrangement becomes sufficiently substantial as to
warrant this level of formality and prescription, the Framework leaves unresolved the question of
whether, and to what extent, trainees should also be entitled to the protections of general labour
laws. It encourages any applicable rules to be observed, but does not say whether they are or indeed
149
Council of the European Union, above n 46, Recommendation, [2]–[15].
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should be applicable at all. Nor do the principles necessarily assist in promoting high quality
traineeships and eliminating those which ostensibly provide little benefit at all, including little
prospect of leading to longer term decent work for young people.
6. Conclusion
There is no question that work experience programs can provide a useful bridge between education
and (paid) work. But it is also important to accept that, when poorly designed or misused, they may
not merely ‘fail to provide the first step towards decent and stable work’, but in fact ‘trap young
people in a vicious cycle of precarious employment and insecurity’.150 As we have noted, unpaid (or
underpaid) internships may have the effect of depressing wages and conditions for labour market
entrants, while also creating greater barriers to entry for those from lower socio-economic groups.
As such, they may serve to exacerbate income inequality, a force that is increasingly being
recognised by international institutions as having a negative impact on both economic growth and
social cohesion.151
Given the scale of the problem, there is plainly scope for consideration to be given at both
international and domestic levels to the introduction of rules or guidelines that (a) clarify what
entitlements or protections an intern should receive when performing work for a business or
organisation, and (b) encourage the provision of high-quality internships that deliver appropriate
educational and training outcomes. As we have pointed out, the new EU Quality Framework for
Traineeships may serve as a useful model for the latter task, but it does not (other than incidentally)
address the former. It may also be said that ‘best practice’ issues are capable of being addressed by
voluntary guidelines, whether developed by industry or government (or indeed intern associations):
they do not necessarily require formal regulation. The first question, by contrast, clearly does call for
statutory rules – and it is that issue on which we intend to concentrate in our remaining remarks.
It seems clear to us that there are some work experience arrangements that, even if structured or
described as an ‘internship’, or as involving some form of training, should attract the same
entitlements and protections as an ‘ordinary’ employment relationship. The question is whether this
is to be achieved simply by leaving courts, tribunals or government agencies to determine whether
an intern qualifies as an employee, by applying the standard tests. Arguably, given the difficulties
and uncertainties that are engendered by the typical lack of any definition of that term in labour
statutes, it would seem advisable to spell out in legislation what types of internship or training
program are to be deemed to involve, or be equated to, employment. We note here the example
offered by the current provisions in Ontario, or those recently proposed at a federal level in Canada
– though whether those particular formulations are appropriate might be open to debate.
150
Hadjivassiliou et al, above n 2, p 24.
151
See eg Jonathan D Ostry, Andrew Berg and Charalambos Tsangarides, ‘Redistribution, Inequality and
Growth’, IMF Staff Discussion Note, SDN/14/02, 2014; Federico Cingano, Trends in Income Inequality and its
Impact on Economic Growth, OECD Social, Employment and Migration Working Papers No 163, 2014; ILO,
OECD and World Bank Group, G20 Labour Markets: Outlook, Key Challenges and Policy Responses, Report
prepared for the G20 Labour and Employment Ministerial Meeting, Melbourne, 10–11 September 2014; and
see further Thomas Piketty, Capital in the Twenty-First Century, Belknap Press, Cambridge (Mass), 2014.
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One type of internship that might seem an obvious candidate not to be treated and regulated as an
employment relationship is a program that is undertaken as part of an education or training course –
as is presently the case in Ontario, as well as Australia and Germany. But we see strong arguments
here for at least some form of public oversight, such as requiring the course and/or institution that
provides it to be authorised or accredited – otherwise anything could be defined as ‘educational’ by
private providers. We also see merit in considering the imposition of limits, relating for example to
the maximum duration of a placement or internship, or the number of such programs a particular
individual can take. The formulation of such limits is again a matter that requires more detailed
consideration.
It should also be noted that even if a particular training arrangement is considered to be one that
should not be equated to employment for general labour law purposes, that does not and should
not mean that it must be immune from all forms of labour regulation. For example, we see no
reason why laws dealing with matters such as work safety or discrimination should not apply to
interns, even when undertaking a placement as part of an educational course. Similarly, and to touch
on an issue that we have deliberately neglected so far (because of both its complexity and the
diversity of approaches in different jurisdictions), it may be appropriate to mandate that either the
‘host’ organisation or the educational institution or training provider take out some form of
insurance against work-related injuries. And as the Cherpion Law in France illustrates, even in the
case of a training program that is otherwise excluded from the operation of (say) minimum wage
laws, it may be appropriate to establish modified entitlements or protections, especially for
programs that extend beyond a particular duration.
In closing, we are conscious that, at this stage least, we are doing little more than making general
suggestions or raising questions about the design, content and implementation of laws regarding
internships. Nevertheless, we hope that by highlighting both the challenges presented by the rise of
this type of arrangement, and documenting how different countries have sought to address them,
we can help lay the foundation for a more effective response to what has become a clear challenge
to the objective of securing decent work.
36