We recently had a query from one of our members regarding offering unpaid traineeships to university students.  Whilst this may be a great way to attract quality candidates to your business in a tight labor market, there are a couple of things your business needs to be aware of before going down this path.  Specifically in this case, we were asked if there was any difference between students that were offered traineeships directly through their university vs other students that were directly referred through their friends.

The key difference in this case that we discussed was the key benefit that the trainee was receiving as a result of the unpaid traineeship.  In other words, there is less likely to be any issues if the primary benefit of the traineeship is extending their education.  This is far easier to demonstrate if the traineeship is undertaken in direct conjunction with the university or educational facility.

However, for other students who were applying directly for unpaid traineeships, whilst the intention from both parties was genuine, in our view there was an increased risk that the trainee could be viewed as an employee and subject to Modern Awards and other industrial instruments.  

We understand that this a grey area to prevent businesses offering traineeships for the primary motivation of creating profits with effectively free labor.  Ultimately, our advice to the client was to continue to source their trainees through their established relationships with educational facilities to minimize risk.

Finally, one item of note was that this particular client indicated that they had an extremely high conversion rate from trainees to full time employees following a 3 month traineeship.  So this is something that businesses certainly can keep in mind in employment market with below 4% unemployment and the war on talent in full swing.