Are Unpaid Internships Legal in Australia?

Unpaid internships are legal in Australia, but only in limited circumstances. The label on the arrangement doesn’t matter. What matters is whether an employment relationship exists in practice. Get that wrong and you’re up for back-pay liability and significant civil penalties under the Fair Work Act 2009 (Cth).

Most employers who get this wrong aren’t trying to exploit anyone. They take on a student, give them real work to do because it’s more useful for everyone, and genuinely believe the arrangement is fine because the intern agreed to it. The intern’s consent doesn’t determine legality. The nature of the work does.

What is an unpaid internship in Australia?

An unpaid internship is a structured work experience arrangement where someone works for a business to gain skills and industry exposure without receiving wages. Under the Fair Work Act 2009 (Cth), the Fair Work Ombudsman defines it as a work experience arrangement where a person works for a business to gain experience in a particular occupation or industry.

The key word is “experience.” The moment the arrangement tips from learning to productive contribution, the legal character of the relationship starts to shift. That’s not an obvious line to spot in practice, which is why unpaid internship disputes come up in the Fair Work Ombudsman’s enforcement work more often than employers expect.

It’s also worth knowing that there is no single definition of “intern” in Australian law. The Fair Work Act 2009 does not use the word. What it does regulate is employment relationships and vocational placements. That distinction is everything. Two arrangements that both call themselves internships can sit on completely different sides of the legal line, depending on what actually happens day to day.

Are unpaid internships legal in Australia?

Yes, unpaid internships are legal in Australia under two specific conditions. Either the arrangement is a formal vocational placement under an approved education or training course, or it involves no employment relationship at all. Both are legitimate. But both come with real requirements that are easy to miss.

Vocational placements

A vocational placement is a formal work experience arrangement that is part of an approved education or training course. Under Section 12 of the Fair Work Act 2009, a vocational placement can lawfully be unpaid if three things are true:

• The person is not entitled to receive payment for the placement
• The placement is a requirement of their education or training course
• The course is authorised under a Commonwealth, state, or territory law or administrative arrangement

In practice, this covers students in nursing, social work, law, engineering, teaching, and similar professionally accredited programs where workplace hours are a graduation requirement. It also covers TAFE and RTO placements. What it does not cover is a recent graduate who has already finished their degree, or a student on a course that doesn’t formally require the placement.

If you’re accepting a student through their university or TAFE, ask for written confirmation from the education provider before they start. This should confirm the placement is a formal course requirement and that the institution has authorised it. That letter is your first line of protection if the arrangement is ever questioned.

Arrangements with no employment relationship

Outside of vocational placements, an unpaid internship can still be lawful if there is genuinely no employment relationship. The Fair Work Ombudsman uses three indicators to assess this:

• The person is not doing productive work. Their role is mainly observational, shadowing, or learning-focused.
• The main benefit of the arrangement flows to the intern, not the business.
• The person is receiving a meaningful learning experience, training, or skill development.

All three indicators need to point in the same direction. A short-term arrangement where the intern observes operations, attends meetings, and picks up practical knowledge is typically fine. A longer arrangement where the intern is filling a role the business would otherwise need to hire for is typically not.

How to tell if your unpaid internship is actually an employment relationship

This is where most businesses get into trouble. Courts and the Fair Work Ombudsman don’t look at what you call the arrangement. They look at the substance of it. Here are the factors that matter.

The type of work being done. Is the intern doing tasks that a paid employee would do? Writing copy, preparing client documents, managing accounts, running social media campaigns? If yes, the arrangement looks like employment. Observing, shadowing, and skill-building that doesn’t directly generate revenue or replace a staff member sits in the safer zone.

Who benefits most. If your business is getting meaningful output from the intern’s work, output you’d otherwise pay someone for, that’s a strong signal of an employment relationship. This is sometimes called the “primary beneficiary” test. The intern should be the clear winner here, not the business.

Length and structure. The longer and more structured the arrangement, the more it resembles employment. A two-week observational placement is one thing. A three-month arrangement with set hours, a regular schedule, and performance expectations looks more like a job. There’s no fixed maximum duration, but the Fair Work Ombudsman’s guidance is clear: longer arrangements attract higher scrutiny.

Whether the intern is expected to attend. If you roster them, require them to come in on specific days, or rely on them being there to keep operations running, that points toward employment. A genuine intern can generally choose their own hours or attend flexibly without disrupting the business.

Whether a job is dangled at the end. This one catches a lot of employers off guard. Promising an intern a job at the end of their placement is one of the clearest signals that the arrangement is actually employment. Courts treat this as evidence that the intern has committed to work for the business’s benefit in exchange for a reward. That satisfies the employment relationship test even without wages being paid.

No single factor is determinative. Courts weigh them all up together. But the more of these apply to your arrangement, the more exposed you are.

What happens when employers get it wrong: real enforcement cases

This isn’t theoretical. In 2016, the Federal Circuit Court imposed a $272,850 civil penalty against a Sydney-based media company after the Fair Work Ombudsman found it had disguised employment relationships as unpaid internships. The company required a student to complete 180 hours of productive work over four months, covering tasks like administration, event organising, and magazine editing, before starting to pay her. The court was not sympathetic to the label the business had used.

The Fair Work Ombudsman has also published a worked example directly relevant to many small businesses: an accounting student who came into a firm three days a week, prepared client tax returns and financial statements, and whose work the firm charged clients for. The firm had promised the student a job on graduation. Despite the student’s written agreement not to be paid, the FWO found this was an employment relationship. The firm was required to back-pay wages for every hour worked.

The pattern across enforcement cases is consistent. It’s rarely the student who initiates the complaint at the time. It’s more often a disgruntled ex-intern after the job promise doesn’t come through, or a current employee who reports the situation. By that point, back-pay liability has typically accumulated over months.

A pattern Lawpath lawyers see repeatedly is the “try before you hire” arrangement. A business wants to assess a candidate before committing to employment, so they bring them on as an “intern” for a few weeks. The person does real work. The business evaluates their performance. That is exactly what the Fair Work Ombudsman’s guidance treats as a paid trial, not an internship. If it looks like a job assessment, it needs to be a paid one.

Do you have to pay an intern in Australia?

Not always, but more often than employers assume. If the intern is on a genuine vocational placement through an approved course, you don’t have to pay them. If there is no employment relationship because the work is observational, short-term, and non-productive, you don’t have to pay them. In every other case, you do.

Where payment is required, the intern must receive at least the applicable award rate or the national minimum wage for the type of work they’re performing, whichever is higher. They’re also entitled to the full set of National Employment Standards entitlements, including leave accruals. You cannot contract out of these by calling the arrangement an internship.

If your business is covered by a modern award, check whether there’s a specific classification for trainees or juniors. Many awards include these, and they may apply to your intern if the arrangement is found to be employment. The relevant award depends on the industry and the type of work being performed, not the age of the worker.

Your other obligations as an employer hosting an intern

Even for a lawfully unpaid internship, you have obligations that go beyond not misclassifying the arrangement.

Work health and safety. Whether the intern is paid or unpaid, they are a “worker” under work health and safety legislation. You must provide a safe workplace, appropriate induction and supervision, and the same duty of care you’d extend to any employee. If they’re injured on the job and you haven’t met your WHS obligations, the fact they were unpaid is no defence.

Insurance. Check your workers’ compensation policy before the placement starts. In most Australian states and territories, unpaid vocational placement students are covered under the education provider’s insurance. For arrangements outside a formal course, your workers’ comp policy may not extend to them. A separate public liability policy won’t fill that gap. Confirm coverage with your insurer before the intern sets foot in the workplace.

Confidentiality and IP. Interns often work on real projects and see real client information. Without a signed agreement covering confidentiality and intellectual property, you have no clear legal recourse if they share sensitive information or dispute ownership of work produced during the placement. This is especially relevant in creative industries, software development, and professional services, where intern contributions can feed directly into commercial deliverables.

An Internship Agreement. This is the document that holds everything together. A properly drafted Internship Agreement makes clear that the arrangement is not employment, defines the learning objectives, covers confidentiality and IP, sets the time period, and protects both parties. It is not the same as an Employment Agreement, and making that distinction explicit in writing is important for both parties.

What if the arrangement changes mid-way through?

This is an underappreciated risk. You might start with a genuinely observational placement, then gradually give the intern more responsibility because they’re performing well. Before long they’re doing real work and making a genuine contribution. The placement hasn’t changed on paper, but in practice the legal character of the arrangement has shifted.

The Fair Work Ombudsman’s guidance is explicit on this point: if the arrangement changes, discuss it again and reassess. Review whether the intern is now doing productive work. If they are, the right response is to transition them onto a paid arrangement with a proper Employment Agreement, not to keep the “intern” label on a relationship that has quietly become employment.

A practical approach is to schedule a brief review at the midpoint of any placement longer than two weeks. Ask: has the scope changed? Are we relying on this person? Would we need to replace them or redistribute their work if they stopped coming in? If the answer to any of those is yes, it’s time to reassess the legal status of the arrangement.

Setting up a compliant unpaid internship: a practical checklist

Before you bring an intern on, work through these questions honestly:

• Is this a formal vocational placement arranged through a university, TAFE, or RTO? If yes, get written confirmation from the education provider and align the placement with their course requirements.
• Is the work mainly observational and educational? If the intern will be doing work a paid staff member would otherwise do, reconsider the structure or pay them.
• Is the arrangement short and time-limited? Set a clear end date before the placement starts. Aim for no more than a few weeks full-time, or the equivalent in part-time hours.
• Have you avoided promising a job at the end? Hoping to hire them later is fine. Making that expectation conditional on the internship, or communicating it before or during the placement, creates legal risk.
• Does your Internship Agreement cover confidentiality, IP, WHS responsibilities, and the non-employment nature of the arrangement?
• Have you confirmed your workers’ compensation insurance covers this person?
• Have you scheduled a mid-placement check-in to reassess whether the scope has changed?

If you can answer yes to all of these, you’re in a solid position. If you’re unsure about any of them, resolve it before the intern starts.

Frequently asked questions

Are unpaid internships legal in Australia?

Yes, but only in limited circumstances. An unpaid internship is lawful if it is a formal vocational placement under an approved education or training course, or if there is genuinely no employment relationship. That means the intern does primarily observational work, is not performing productive tasks that benefit the business, and receives the main benefit from the arrangement.

What is a vocational placement?

A vocational placement is formal work experience that is part of an approved education or training course, such as a nursing student’s hospital placement or a law student’s practical legal training. Under the Fair Work Act 2009, the placement must be a formal course requirement and authorised under relevant state, territory, or Commonwealth legislation to qualify as lawfully unpaid.

Can a graduate do an unpaid internship in Australia?

This is where a lot of businesses get into trouble. Once someone has graduated, they are no longer on an approved course, so the vocational placement exemption doesn’t apply. A post-graduation unpaid internship is only lawful if there is truly no employment relationship, which is hard to establish if the person is doing real, productive work. In most cases, recent graduates doing substantive work should be paid.

How long can an unpaid internship last in Australia?

There is no fixed maximum under the Fair Work Act, but duration is one of the key indicators of whether an employment relationship exists. Longer arrangements attract greater scrutiny. The Fair Work Ombudsman’s practical guidance suggests keeping non-vocational placements to a few weeks. The longer the arrangement runs, the harder it becomes to argue no employment relationship has formed.

What happens if I get it wrong?

If the Fair Work Ombudsman determines your intern was actually an employee, you will be required to back-pay all wages owed at the applicable award rate, plus superannuation. You can also face civil penalties under the Fair Work Act for underpayment contraventions. Penalties for individuals and companies can be substantial. The FWO has enforced six-figure penalties against businesses found to have disguised employment relationships as unpaid internships.

Does the intern need to sign anything?

Yes. Before any unpaid placement begins, both parties should sign an Internship Agreement. This document records the non-employment nature of the arrangement, the learning objectives, the time period, confidentiality obligations, and who owns intellectual property created during the placement. It doesn’t make an unlawful arrangement legal, but it protects both parties in a lawful one.

Are unpaid interns entitled to leave?

No. Because interns are not employees, they are not entitled to annual leave, personal leave, or other leave entitlements under the National Employment Standards. If the arrangement is later found to be employment, those entitlements accrue from day one, which adds significantly to the back-pay liability.

What is the difference between an intern and an employee?

The difference is not the label. It’s the substance of what actually happens. An employment relationship exists where a person does work for the benefit of the business, under its direction and control, in exchange for something of value (which can include experience or a job promise). An intern who does productive work under supervision, follows a roster, and was promised future employment is likely an employee regardless of what any written agreement says.

Is an unpaid internship the same as work experience?

They’re closely related but not identical. Work experience typically refers to shorter, more observational placements, often arranged through secondary schools. Internships tend to be longer and more structured, sometimes associated with university courses. Under the Fair Work Act 2009, the same legal framework applies to both. What determines legality is the nature of the arrangement, not what you call it.

Where to from here

Most employers who run into trouble with unpaid internships weren’t trying to do the wrong thing. They just didn’t have the structure right from the start. Setting it up properly takes an hour: confirm the vocational placement details with the education provider (if applicable), put a proper Internship Agreement in place, check your insurance, and keep the scope observational. That’s genuinely the core of it.

If you’re not sure whether your current or planned arrangement crosses the line into employment, a quick consultation with an employment lawyer will give you a clear answer. That conversation is far less expensive than back-pay, penalties, and a Fair Work investigation.

Speak with a Lawpath employment lawyer, or get started with our Internship Agreement template today.