The Case

FWO v Crocmedia Pty Ltd (2015)

Crocmedia engaged two university students on unpaid work experience for 3 weeks. Following this period, they continued their engagements as volunteers. The students were involved in producing various radio programs and worked primarily between midnight and 6am.

Crocmedia described the students as volunteers and therefore did not pay them a wage. Instead, Crocmedia paid the students varying amounts between $75 and $120 per shift to reimburse them for expenses.

Following an investigation, the Fair Work Ombudsman (FWO) commenced proceedings against Crocmedia for its failure to:

• pay minimum wages;
• pay casual loadings;
• pay the students at least monthly; and
• provide payslips.

The Verdict

The Federal Circuit Court found that Crocmedia had breached the Fair Work Act 2009 (Cth) (FW Act), as alleged by the FWO.

Prior to the FWO’s prosecution, Crocmedia had rectified the underpayments and hence received a 30% discount on the penalty. However, Crocmedia was still ordered to pay $24,000 in penalties in relation to the four breaches.

Importantly, as Crocmedia had described the payments they had made to the students as “reimbursement for expenses”, they were not permitted to deduct these payments from the wages and casual loadings owed. This means that Crocmedia would have been in a much better financial position if they had properly remunerated the students from the beginning.

The Lesson

While the FW Act does permit vocational placements to enable employers to take on students for work experience on an unpaid basis, you must be sure that such arrangements are lawful.

An unpaid work arrangement will not be a genuine vocational placement if:

• the person performs productive work that is of value to your business, or from which your business could make a commercial gain; and
• this work is not required of the person as part of an education or training course.

In this case, the person should be treated as an employee and properly remunerated.

The FWO has indicated that it will be targeting employers who engage people in unpaid or voluntary work when it should be properly paid work.

Please note: Case law is reported as correct and current at time of publishing. Be aware that cases in lower courts may be appealed and decisions subsequently overturned.