Unpaid internships: exploitation or opportunity?

Author:Mr Dylan Pine and Anthony Drake
Profession:Wynn Williams Lawyers

Economist Milton Friedman famously said, "there is no such thing as a free lunch".

For decades there has been a steady growth in non-standard employment agreements and arrangements in New Zealand, including unpaid internships. A key purpose of an internship is to gain experience, skills or contacts that may assist a prospective employee to gain employment or work opportunities in the future, but is it exploitation?

In 2015 a young New Zealand activist and filmmaker created international headlines by sleeping in a tent on the shores of Lake Geneva because he couldn't afford to pay for rent during his unpaid internship with the United Nations. That same activist released a documentary cataloguing unpaid internships, raising the shortcomings with the practice to New Zealand. Similarly, the International Labour Office released a working paper titled "The regulation of internships: A comparative study" which advocates that internationally internships or work experience arrangements should attract the same entitlements and protections as an ordinary employment relationship. While this article does not comment on the value of unpaid internships (and whether interns should be compensated for the value of their labour) the conclusion reached by the International Labour Office is neither difficult nor controversial and it reflects comments made by the then Chief Judge of the Employment Court in The Salad Bowl Ltd v Howe-Thornley (2013)1 concerning short work trials:

[25] ... Unpaid or inadequately remunerated 'internships', the acquisition of 'work experience', and other like categorisations of long-term unpaid or underpaid work, especially in times of high unemployment and/or in fields where there is an over-supply of applicants for work, have attracted the attention of academics and practitioners recently in Australia and elsewhere.


[27] Where the reasonableness line is likely to be crossed most commonly and "work" may be engaged in, for which there may be a requirement for payment as well as where other incidents of an employment relationship arise, is where the employer gains an economic benefit from the employee's activity ... Although the economic or other business or operational benefit to the employer may not have been optimal at that point due to the need for the defendant to be shown what to do and to develop the necessary skills, the defendant was nevertheless performing work for the plaintiff and contributing to its business."


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