There has recently been significant changes as to what is considered “work:”
· sleep overs being considered work rather than rest
· contractors being considered employees, and
· ‘on call’ being considered work.
The case of Associations of Professional and Executive Employees Inc and Anor v The Secretary for Education - 6 April [2023] NZERA - has now extended this to determining that unpaid interns are employees.
The applicants were students undertaking a practicum placement that was required to complete their university degree programmes. The interns were paid a scholarship, for the 40 week period they were on placement, the terms of which required them to repay the scholarship if they did not complete the full internship.
The ERA considered the following factors in determining if the interns were undertaking “work” in accordance with s6(1)(a) of the Employment Relations Act 2000:
(a) the constraints placed on the freedom the intern would otherwise have to do as she or he pleases – The interns were found to be restrained as they were required to attend work at specific times and follow Ministry directions in undertaking the work.
(b) the nature and extent of responsibilities placed on the person – The interns were found to bare the same responsibilities as other employees, as they were undertaking work that would otherwise be undertaken by an employee of the Ministry.
(c) the benefit to the Ministry of having the intern perform the role – It was determined that there was benefit to the Ministry in having an intern perform the role, which was not the actual work undertaken, but the long term strategic benefit to the Ministry of growing potential recruits. The operational benefit of developing interns skills meant that interns were contributing to its business.
In determining if the interns were employees, the Authority also considered:
(d) did the interns work for hire or reward? It was found that the scholarship provided to the interns, the value of the supervision, and the prospect of future employment amounted to reward
(e) did the arrangements amount to a contract for service (employment)? After applying all the relevant matters, integration and economic reality tests, the Authority concluded that the arrangement amounted to employment.
The Authority determined that the nature of the arrangement meant the interns were undertaking work on what was effectively a fixed term basis, and therefore were entitled to be paid in accordance with the applicable Collective Agreement. They were also entitled to other minimum entitlements such as KiwiSaver, annual holiday and sick leave. The Authority confirmed that the scholarships already paid should be considered as part payment of what was due when calculating the arrears owed.
The decision has restated the well-established principle that “reward” for work undertaken does not need to be monetary, and it is likely to have wide ranging impacts on how practical training is undertaken moving forward.
It is important to note that this Authority determination is not precedent setting so expect this decision to be challenged in the Employment Court.
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