As an employer, it is important to know when unpaid work is legal. The Employment Court's recent decision in the Gloriavale case highlights the importance of knowing when unpaid work is legal, given it was unclear whether the Gloriavale church's workers were volunteers or employees. Generally, a worker is likely an employee if payment is expected. Nevertheless, this article clarifies in what circumstances unpaid work is legal in NZ.

Volunteers

Volunteers should not expect payment or receive payment for their work since they are not employees. Consequently, it is important that you make clear to your volunteers from the outset that the worker should not expect, nor will receive, any payment or other non-monetary benefit (such as free lunches).

It is important to note that reimbursing volunteers for expenses is not considered payment. Additionally, you may also choose to give a koha or a small token of appreciation. However, providing them with any other payment or non-monetary benefit, such as lunch, may be regarded as payment.

If any disputes arise after you have made a payment, the Court may deem the volunteer an employee. As consequence, you will likely have to pay them at least the minimum wage entitlements

Unpaid Internships

Internships are a great way for students and recent graduates to gain experience. However, interns are also at a greater risk of exploitation. While there is no specific definition for internships under the law, an intern must work as a volunteer to ensure their unpaid work is legal.

Interns and volunteers are not considered employees and therefore do not have protections under the Employment Relations Act. Nevertheless, you owe them certain obligations under the Health and Safety at Work Act and the Human Rights Act.

If you want to hire an unpaid intern, you must ensure that the internship will not cause any economic benefit to the business or organisation. It is also important that any work the intern may complete should not be work that an employee would commonly complete. This is all to say that the primary focus of the internship should be allowing the intern to gain new skills and experiences.

Unpaid Work Trials

In some industries like hospitality, unpaid pre-employment trials are common. However, an unpaid trial will, in most cases, be deemed unlawful, especially if the work undertaken provides a commercial benefit to the business.

Consider the Salad Bowl case. In this instance, the person undertaking the trial had completed a three-hour work trial. However, during this time, the employee:

  • performed work that needed to be undertaken in the business; and
  • wore the required work uniform.

In this sense, the person had presented themselves as an employee and, in doing so, could expect to receive some form of benefit. Hence, the Employment Court determined that she was an employee and not a volunteer due to several factors, including the fact that the company provided her with a non-monetary benefit equivalent to a payment of wages.

As an employer, if you want to trial a potential employee's skills, it would be wise to pay them for the time that they are performing the trial. Another option is to opt for the 90-day trial period if the:

  • employee is new i.e. has not worked for the business before;
  • 90-day trial period is specified in their employment agreement with a specified start date in the offer of employment letter;
  • employee signs the employment agreement before they start the trial;
  • notice of termination of the trial period must be given within 90 days of the employee starting work; and
  • employee had time to seek independent legal advice before agreeing to the 90-day trial.

Generally, work trials should be treated with caution. Where any disputes arise, the Courts will first look at the:

  • real nature of the relationship; and
  • employer's conduct.

If you want to include an unpaid work trial, you should ensure that the trial is limited to testing a small number of skills for a short period of time. You should make it clear to the applicant that the trial is unpaid before they agree to undertake the position.

Key Takeaways

There is a fine line between when volunteers, unpaid interns and work trials cross into the realm of paid employment. If you want a volunteer for a specific role, you must ensure they are not performing the work that another employee would be getting paid for. Additionally, interns should gain new skills and experiences rather than engage in revenue-generating or commercial activities.