Vocational placements

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We are an engineering business and we are starting to get calls from university students asking if they can do a work placement with us as part of their degree? If we were to offer them a placement are we required to pay them?

Vocational placements are commonly used so that a student is able to develop real life skills in the workplace and gain hands on experience relevant to their course.

This experience will help to facilitate their transition from study to work. There are many educational courses where a placement is a compulsory part of the course (e.g. nursing, teaching, engineering and medicine) and the student may receive a credit for undertaking the placement, or it may be a compulsory but ungraded unit of their course.

Under the Fair Work Act 2009, where a student is undertaking a vocational placement, there may not be a requirement to pay the student; however, the placement must meet certain criteria.

When payment is not required

To qualify as a vocational placement where the employer is not required to pay the student, the placement must meet all of the following criteria:

There must be a placement – the placement can be organised at the initiative of the student or through the educational institution, but must be specifically linked with the requirement of the course they are studying.
There must be no entitlement to pay for the work the student does – there should not be an employment contract signed which would indicate an employment relationship may have been established, with the right to payment flowing from it.
The placement must be done as a requirement of an education or training course – it must be a component of the course they are studying; in some cases, it may be a compulsory component or it could form part of an elective subject. Either way, the student should be able to provide detail on the requirement under their course to undertake the placement. The student may be required to write a report, do a presentation or seek written feedback from the business placing them. In most circumstances the student would need to provide some evidence back to the educational provider as to the completion of the placement.
The placement must be approved – the educational institution must be an authorised one under Australian law. Courses offered by universities, TAFEs and schools will all satisfy this requirement. Students studying in another country seeking places will not meet this requirement.

If all the above are met, then the business would not be required to pay the student for the placement. Should the business choose to make a payment to the student, it is completely at their own discretion.

Making such a payment where the above criteria is met would not be construed as an indication of an employment relationship, as they are under no legal obligation to make such a payment or afford the student any entitlement under the Fair Work Act.

When payment is required

If the above criteria are not met, then the arrangement would not be considered a vocational placement and where the student is then engaged to do productive work for the employer, this may amount to the establishment of an employment relationship.

The student would have to be paid the applicable modern award wage for the work undertaken or at least the Federal Minimum Wage (when a modern award does not cover the student).