Am I an employer? When is unpaid work legal in New Zealand? – Employee Rights/ Labour Relations

As an employer, it is important to know when unpaid work is
legal and when it may just be considered volunteering. This will
help you decide whether your workers classify as employees and,
therefore, whether you owe them certain rights. Generally, a worker
is likely an employee if they expect to be paid. This
article clarifies the circumstances in which unpaid work is legal
in New Zealand.

Who Classifies as a Volunteer?

A volunteer is an individual who offers their
time and skill to your business and does not expect any payment for
doing so. Since volunteers are not employees, you should not be
paying them for their work. Consequently, it is important that you
make clear to your volunteers from the outset that they will not
receive payment or any other non-monetary benefit, such as free
lunches.

If you engage volunteers, you need to understand what benefits
may constitute a payment under the law. Benefits that do not equal
payment include:

• reimbursements for expenses, and




• a koha or small token of appreciation.

What Are Unpaid Internships?

Internships are a great way for you to
introduce students and recent graduates to your business. If you
have an unpaid intern at your business, they must be a volunteer
for their work to be legal.

While unpaid interns and volunteers are not considered
employees, you still owe them certain obligations under employment
law, health and safety law and human rights law. Notably, interns
are at a greater risk of exploitation as there is no specific
definition for an internship under the law. Accordingly, be
diligent when complying with your duties.

If you want to hire an intern, your business should ensure
that:

• any internships will not cause an economic benefit for your
  business;




• the work an intern completes is not that which an employee
  would normally do; and




• the primary focus of any internship should be providing new
  skills and experiences for the intern.

What Are 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 you have gained a commercial benefit from it.

Some ways you could be gaining a commercial benefit include the
employee:

• performing work that the business needed to undertake; or




• wearing a required work uniform.

If a person presents themselves as an employee, they might
expect to receive some form of benefit for their work. Accordingly,
the courts may determine that the person was an employee during
their unpaid work trial, not simply a volunteer.

If you want to trial a potential employee’s skills, it would
be wise to pay them for the time you are trialling them. Another
option is to opt for the 90-day trial period if the employee is
new. In this case, the:

• employment agreement must specify the 90-day trial period;




• offer of employment letter must specify a start date;




• employee must sign the employment agreement before they start
  the trial;




• employee must receive a notice of termination for the trial
  period within 90 days of starting work; and




• employee must have had time to seek independent legal advice
  before agreeing to the trial.

If you opt for an unpaid work trial, you should ensure that the
worker is:

• only performing a small number of skills;




• on trial for a short period of time; and




• aware that their trial is unpaid before they agree to undertake
  the position.

Generally, your business should treat work trials with caution.
Where any disputes arise, a court will first look at the:

• real nature of the relationship; and




• employer’s conduct.

Key Takeaways

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