Employment

Foreign liquidators gain traction in Hong Kong’s High Court

3 April, 2018

Unpaid internships are often viewed as a rite of passage for those entering the workforce. But any business looking to engage an intern must ensure that it does so in accordance with the law. This three-part article series explains the relevant law (Part 1), outlines how to set up a proper intern arrangement (Part 2) and highlights the importance of getting the arrangement right (Part 3).

In this article, Part 1 in our series on internships, we examine the relevant law to help you understand the legal requirements for an internship.

Unpaid internships can offer those without relevant experience an opportunity to get their foot in the door in some of the workforce’s most competitive industries. However, businesses need to be aware that unpaid internships are only legitimate when undertaken as part of a vocational placement related to the individual’s course of study or in circumstances where an employment relationship does not exist.

The primary purpose of an internship is for the individual to learn, observe and develop skills. As the Fair Work Ombudsman, Sandra Parker has said “Business operators cannot avoid paying lawful entitlements to their employees simply by labelling them as interns. Australia’s workplace laws are clear – if people are performing productive work for a company, they are legally entitled to be paid minimum award rates”.¹

1. Intern or employee?

Businesses need to understand the distinction between legitimate unpaid internships, which offer genuine work experience, and sham internships that exploit cheap (or free) labour, to ensure they do not fall foul of the Fair Work Act 2009 (Cth) (FW Act).

To be properly categorised as an unpaid intern, an individual must:

be undertaking a ‘vocational placement’; and/or
not be in an employment relationship with the business.

Vocational placements

The FW Act expressly excludes individuals on a vocational placement from being considered an employee.

A ‘vocational placement’ is a placement that:

does not entitle the individual to any remuneration;
is undertaken as a requirement of an education or training course; and
is approved. That is, the institution delivering the course that provides for the placement must be authorised to do so under a law or an administrative arrangement of the Commonwealth, a State or a Territory.

If a placement does not meet each of these requirements, it is not a vocational placement for the purposes of the FW Act and the individual may, depending on the facts and circumstances of the arrangement, be entitled to receive wages and other employment entitlements.

As outlined above, a vocational placement must be undertaken as a requirement of an education or training course. This generally requires an arrangement between:

the student;
their education institution; and
the host employer.

The course must be authorised, such as a university award course or for an accredited course offered by a registered training organisation.

The placement does not have to be a prerequisite for the student’s overall course of study or even be assessable in order to satisfy the vocational placement exemption. Rather, the internship must simply be a placement that is a requirement of the course, unit or subject.

Example: Vocational placement/unpaid internship

As part of her university accounting degree, Elizabeth is awarded course credits for undertaking a placement within a host accounting business.

Because the placement is considered part of the university course, it satisfies the requirements of a vocational placement. Elizabeth is not an employee of the host business and is not entitled to receive wages or other employment entitlements.

Example: Not vocational placement

Following completion of his university graphic arts degree, Simon begins to perform work as an ‘unpaid intern’ at a local magazine.

Because Simon has already completed his degree, his work at the magazine is not part of a vocational placement. Depending on matters such as the tasks that Simon is requested to perform, he may be considered an employee of the magazine and be entitled to wages and other employment entitlements (see further example below).

Existence of an employment relationship

As mentioned above, the primary purpose of an internship is for the individual to learn, observe and develop skills. As such, the benefit of an unpaid internship should predominantly flow to the individual rather than to the productivity of the business.

An individual is likely to be considered an employee if they are expected to perform work ordinarily carried out by an employee, as opposed to altruistically offering their services as a true ‘volunteer’. Bearing this in mind, some circumstances that might indicate an employment relationship are as follows:

the individual is performing work to help with the ordinary operation of the business or organisation. For example, the business is charging clients for the work completed by the individual;
the work performed by the individual is normally completed by paid employees, unless the productive activities are being completed as part of a learning experience, training or skill development; and/or
the individual has an expectation that they will be paid for the work they are performing.

A good question for a business to ask itself is this – Are we expecting the intern to complete productive work? If the answer to this question is ‘yes’, it is likely that the individual would be considered an employee.

In addition, the longer an arrangement lasts and the more regular the hours of attendance, the more likely the arrangement will constitute an employment relationship.

Example: Unpaid intern

James is studying radio journalism and in order to gain further insight into the industry he attends his local radio station for 3 hours each week for a month. James does not do any tasks that would otherwise be performed by an employee.

Because James merely observes the radio station operations and shadows the station’s employees, he is enjoying the main benefit from the arrangement and no employment arrangement exists.

Example: Employment

Following completion of her university marketing degree, Kate begins to perform work as an ‘unpaid intern’ with an online retail business. Kate creates content for the website and accompanying social media accounts, for 2 days each week.

Even though Kate may have agreed not to receive payment for the work she performs for the online retail business, she does work that would have ordinarily been performed by a paid employee. This indicates the existence of an employment relationship and Kate should receive wages and other employment entitlements.

2. Payments to interns

Businesses should not pay wages to true interns. While minor reimbursements for things such as travel expenses or lunch are permitted, any remuneration that is calculated based on hours worked will be characterised as ‘wages’ and exclude the individual from the FW Act’s definition of ‘vocational placement’.

If they are being paid for the work being performed, the individual is likely to be rendered an employee for the purposes of the FW Act. In those circumstances the individual will be entitled to remuneration and other employee entitlements regardless of the individual’s title. This also means that the remuneration should be at an appropriate level and pay scale for the individual’s position.

3. Beware of labels

The act of taking on an unpaid intern who does not meet the statutory requirements (even if done innocently) is likely to expose a business (and in some cases individuals) to liability for breaches of the FW Act (see Part 3 of this series). As we outline above, simply calling an individual an ‘intern’ is not enough. The title ‘intern’ does not legitimise underpayment of salary and entitlements.

4. Checklist

Before looking to engage an unpaid intern, a business should carefully consider whether the internship arrangement:

will satisfy the requirements of a vocational placement under the FW Act; and
will likely be considered an employment relationship, as outlined above.

Although each arrangement needs to be considered on its own merits, here is a quick checklist of the matters usually considered when determining whether an individual can be engaged as an unpaid intern because they are either undertaking a vocational placement and/or there is no employment relationship.

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<p>In <a href= Part 2 of this series, we outline some guidelines for setting up an unpaid intern arrangement that aims to mitigate the risks that can arise when engaging an unpaid intern. In Part 3, we examine some of the potential ramifications if a business was to wrongly categorise someone as an intern, when they are in fact an employee.

¹ FWO Media Release ‘Fashion start-up penalised over unpaid internship’, 1 March 2019.

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Andrew Lacey

Managing Principal

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Litigation and Dispute Resolution

Canadian Court elevates thumbs-up emoji to signature status

In June 2023, a Canadian Court in South-West Terminal Ltd v Achter Land and Cattle Ltd, 2023 SKKB 116, held that the "thumbs-up" emoji carried enough weight to constitute acceptance of contractual terms, analogous to that of a "signature", to establish a legally binding contract. Facts This case involved a contractual dispute between two parties namely South-West Terminal ("SWT"), a grain and crop inputs company; and Achter Land & Cattle Ltd ("ALC"), a farming corporation. SWT sought to purchase several tonnes of flax at a price of $17 per bushel, and in March 2021, Mr Mickleborough, SWT's Farm Marketing Representative, sent a "blast" text message to several sellers indicating this intention. Following this text message, Mr Mickleborough spoke with Mr Achter, owner of ALC, whereby both parties verbally agreed by phone that ALC would supply 86 metric tonnes of flax to SWT at a price of $17 per bushel, in November 2021. After the phone call, Mr Mickleborough applied his ink signature to the contract, took a photo of it on his mobile phone and texted it to Mr Archter with the text message, "please confirm flax contract". Mr Archter responded by texting back a "thumbs-up" emoji, but ultimately did not deliver the 87 metric tonnes of flax as agreed. Issues The parties did not dispute the facts, but rather, "disagreed as to whether there was a formal meeting of the minds" and intention to enter into a legally binding agreement. The primary issue that the Court was tasked with deciding was whether Mr Achter's use of the thumbs-up emoji carried the same weight as a signature to signify acceptance of the terms of the alleged contract. Mr Mickleborough put forward the argument that the emoji sent by Mr Achter conveyed acceptance of the terms of the agreement, however Mr Achter disagreed arguing that his use of the emoji was his way of confirming receipt of the text message. By way of affidavit, Mr Achter stated "I deny that he accepted the thumbs-up emoji as a digital signature of the incomplete contract"; and "I did not have time to review the Flax agreement and merely wanted to indicate that I did receive his text message." Consensus Ad Idem In deciding this issue, the Court needed to determine whether there had been a "formal meeting of the minds". At paragraph [18], Justice Keene considered the reasonable bystander test: " The court is to look at “how each party’s conduct would appear to a reasonable person in the position of the other party” (Aga at para 35). The test for agreement to a contract for legal purposes is whether the parties have indicated to the outside world, in the form of the objective reasonable bystander, their intention to contract and the terms of such contract (Aga at para 36). The question is not what the parties subjectively had in mind, but rather whether their conduct was such that a reasonable person would conclude that they had intended to be bound (Aga at para 37)." Justice Keene considered several factors including: The nature of the business relationship, notably that Mr Achter had a long-standing business relationship with SWT going back to at least 2015 when Mr Mickleborough started with SWT; and The consistency in the manner by which the parties conducted their business by way of verbal conversation either in person or over the phone to come to an agreement on price and volume of grain, which would be followed by Mr Mickleborough drafting a contract and sending it to Mr Achter. Mr Mickleborough stated, "I have done approximately fifteen to twenty contracts with Achter"; and The fact that the parties had both clearly understood responses by Mr Achter such as "looks good", "ok" or "yup" to mean confirmation of the contract and "not a mere acknowledgment of the receipt of the contract" by Mr Achter. Judgment At paragraph [36], Keene J said: "I am satisfied on the balance of probabilities that Chris okayed or approved the contract just like he had done before except this time he used a thumbs-up emoji. In my opinion, when considering all of the circumstances that meant approval of the flax contract and not simply that he had received the contract and was going to think about it. In my view a reasonable bystander knowing all of the background would come to the objective understanding that the parties had reached consensus ad item – a meeting of the minds – just like they had done on numerous other occasions." The court satisfied that the use of the thumbs-up emoji paralleled the prior abbreviated texts that the parties had used to confirm agreement ("looks good", "yup" and "ok"). This approach had become the established way the parties conducted their business relationship. Significance of the Thumbs-Up Emoji Justice Keene acknowledged the significance of a thumbs-up emoji as something analogous to a signature at paragraph [63]: "This court readily acknowledges that a thumbs-up emoji is a non-traditional means to "sign" a document but nevertheless under these circumstances this was a valid way to convey the two purposes of a "signature" – to identify the signator… and… to convey Achter's acceptance of the flax contract." In support of this, Justice Keene cited the dictionary.com definition of the thumbs-up emoji: "used to express assent, approval or encouragement in digital communications, especially in western cultures", confirming that the thumbs-up emoji is an "action in an electronic form" that can be used to allow express acceptance as contemplated under the Canadian Electronic Information and Documents Act 2000. Justice Keene dismissed the concerns raised by the defence that accepting the thumbs up emoji as a sign of agreement would "open the flood gates" to new interpretations of other emojis, such as the 'fist bump' and 'handshake'. Significantly, the Court held, "I agree this case is novel (at least in Skatchewan), but nevertheless this Court cannot (nor should it) attempt to stem the tide of technology and common usage." Ultimately the Court found in favour of SWT, holding that there was a valid contract between the parties and that the defendant breached by failing to deliver the flax. Keene J made a judgment against ALC for damages in the amount of $82,200.21 payable to SWT plus interest. What does this mean for Australia? This is a Canadian decision meaning that it is not precedent in Australia. However, an Australian court is well within its rights to consider this judgment when dealing with matters that come before it with similar circumstances. This judgment is a reminder that the common law of contract has and will continue to evolve to meet the everchanging realities and challenges of our day-to-day lives. As time has progressed, we have seen the courts transition from sole acceptance of the traditional "wet ink" signature, to electronic signatures. Electronic signatures are legally recognised in Australia and are provided for by the Electronic Transactions Act 1999 and the Electronic Transactions Regulations 2020. Companies are also now able to execute certain documents via electronic means under s 127 of the Corporations Act. We have also seen the rise of electronic platforms such as "DocuSign" used in commercial relationships to facilitate the efficient signing of contracts. Furthermore, this case highlights how courts will interpret the element of "intention" when determining whether a valid contract has been formed, confirming the long-standing principle that it is to be assessed objectively from the perspective of a reasonable and objective bystander who is aware of all the relevant facts. Overall, this is an interesting development for parties engaging in commerce via electronic means and an important reminder to all to be conscious of the fact that contracts have the potential to be agreed to by use of an emoji in today's digital age.

Published by Foez Dewan

29 August, 2023

Government

Venues NSW ats Kerri Kane: Venues NSW successful in overturning a District Court decision

The McCabes Government team are pleased to have assisted Venues NSW in successfully overturning a District Court decision holding it liable in negligence for injuries sustained by a patron who slipped and fell down a set of steps at a sports stadium; Venues NSW v Kane [2023] NSWCA 192 Principles The NSW Court of Appeal has reaffirmed the principles regarding the interpretation of the matters to be considered under sections5B of the Civil Liability Act 2002 (NSW). There is no obligation in negligence for an occupier to ensure that handrails are applied to all sets of steps in its premises. An occupier will not automatically be liable in negligence if its premises are not compliant with the Building Code of Australia (BCA). Background The plaintiff commenced proceedings in the District Court of NSW against Venues NSW (VNSW) alleging she suffered injuries when she fell down a set of steps at McDonald Jones Stadium in Newcastle on 6 July 2019. The plaintiff attended the Stadium with her husband and friend to watch an NRL rugby league match. It was raining heavily on the day. The plaintiff alleged she slipped and fell while descending a stepped aisle which comprised of concrete steps between rows of seating. The plaintiff sued VNSW in negligence alleging the stepped aisle constituted a "stairwell" under the BCA and therefore ought to have had a handrail. The plaintiff also alleged that the chamfered edge of the steps exceeded the allowed tolerance of 5mm. The Decision at Trial In finding in favour of the plaintiff, Norton DCJ found that: the steps constituted a "stairwell" and therefore were in breach of the BCA due to the absence of a handrail and the presence of a chamfered edge exceeding 5mm in length. even if handrails were not required, the use of them would have been good and reasonable practice given the stadium was open during periods of darkness, inclement weather, and used by a persons of varying levels of physical agility. VNSW ought to have arranged a risk assessment of the entire stadium, particularly the areas which provided access along stepped surfaces. installation of a handrail (or building stairs with the required chamfered edge) would not impose a serious burden on VNSW, even if required on other similar steps. Issues on Appeal VNSW appealed the decision of Norton DCJ. The primary challenge was to the trial judge's finding that VNSW was in breach of its duty of care in failing to install a handrail. In addition, VNSW challenged the findings that the steps met the definition of a 'stairwell' under the BCA as well as the trial judge's assessment of damages. Decision on Appeal The Court of Appeal found that primary judge's finding of breach of duty on the part of VNSW could not stand for multiple reasons, including that it proceeded on an erroneous construction of s5B of the Civil Liability Act 2002 and the obvious nature of the danger presented by the steps. As to the determination of breach of duty, the Court stressed that the trial judge was wrong to proceed on the basis that the Court simply has regard to each of the seven matters raised in ss 5B and 5C of the CLA and then express a conclusion as to breach. Instead, the Court emphasised that s 5B(1)(c) is a gateway, such that a plaintiff who fails to satisfy that provision cannot succeed, with the matters raised in s 5B(2) being mandatory considerations to be borne in mind when determining s 5B(1)(c). Ultimately, regarding the primary question of breach of duty, the Court found that: The stadium contained hazards which were utterly familiar and obvious to any spectator, namely, steps which needed to be navigated to get to and to leave from the tiered seating. While the trial judge considered the mandatory requirements required by s5B(2) of the CLA, those matters are not exhaustive and the trial judge failed to pay proper to attention to the fact that: the stadium had been certified as BCA compliant eight years before the incident; there was no evidence of previous falls resulting in injury despite the stairs being used by millions of spectators over the previous eight years; and the horizontal surfaces of the steps were highly slip resistant when wet. In light of the above, the Court of Appeal did not accept a reasonable person in the position of VNSW would not have installed a handrail along the stepped aisle. The burden of taking the complained of precautions includes to address similar risks of harm throughout the stadium, i.e. installing handrails on the other stepped aisles. This was a mandatory consideration under s5C(a) which was not properly taken into account. As to the question of BCA compliance, the Court of Appeal did not consider it necessary to make a firm conclusion of this issue given it did not find a breach of duty. The Court did however indicated it did not consider the stepped aisle would constitute a "stairway" under the BCA. The Court of Appeal also found that there was nothing in the trial judge's reasons explicitly connecting the risk assessment she considered VNSW ought to have carried out, with the installation of handrails on any of the aisles in the stadium and therefore could not lead to any findings regarding breach or causation. As to quantum, the Court of Appeal accepted that the trial judge erred in awarding the plaintiff a "buffer" of $10,000 for past economic loss in circumstances where there was no evidence of any loss of income. The Court of Appeal set aside the orders of the District Court and entered judgment for VNSW with costs. Why this case is important? The case confirms there is no obligation in negligence for owners and operators of public or private venues in NSW to have a handrail on every set of steps. It is also a welcome affirmation of the principles surrounding the assessment of breach of duty under s 5B and s 5C of the CLA, particularly in assessing whether precautions are required to be taken in response to hazards which are familiar and obvious to a reasonable person.

Published by Leighton Hawkes

18 August, 2023