Unpaid internships are often considered 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 2 in this series on internships, we outline the clauses that you should include in an internship agreement to protect your business from the risks associated with engaging an intern.
When a business decides to engage an unpaid intern it needs to take the time to set up the internship arrangement properly. As outlined in Part 1 of this series, a true unpaid intern is not entitled to receive remuneration or other employment benefits. For this reason, businesses often overlook the importance of entering into an internship agreement to mitigate the risks associated with engaging an intern.
Where an employment relationship exists, businesses have certain automatic legal protections. Examples of these are the duties on an employee not to disclose confidential information, follow lawful and reasonable directions and use skill and care in the performance of their work. In the absence of an employment relationship, a business doesn’t receive these protections as a matter of course – the intern must agree to them. An internship agreement facilitates this.
Additionally, businesses need to remember that duties are also owed to interns. Work health and safety obligations are an example of this. A proper intern agreement will assist a business and its management to meet these obligations.
An intern agreement should always be entered into before the internship begins. Like an employment contract or contractor agreement, an intern agreement acts to clarify the parties’ expectations and, in particular, the duties and obligations of the intern. It also contains certain protections for the business.
To ensure that both the business and intern are clear about the terms of the internship, the intern agreement should set out the following matters:
Because an employment or contracting relationship does not exist, the business is not required by law to provide the intern with notice of the termination of the internship. To provide the most flexibility, we recommend that either party be permitted to terminate the internship with immediate effect at any time.
As mentioned above, engaging an intern does not give a business the automatic protections that an employment relationship does. For this reason, duties and responsibilities should be imposed on the intern through a written intern agreement.
Some of the broad duties and responsibilities that businesses may look to impose on an intern include a need to:
There are many other duties and responsibilities that a business might consider including in the internship agreement, depending on the nature of its operations and the type of work the intern will be exposed to or assist with.
In most cases, interns will be exposed to information that is confidential to the business and its operations. While the level of disclosure will depend on the work observed or performed by the intern, it is good practice to require an intern to agree not to disclose any confidential information they come to know as a result of the internship.
The internship agreement should define what constitutes “confidential information”. Although consideration should be given to the nature of the business and the areas to which the intern may be exposed, “confidential information” can include client lists, pricing strategies, internal processes, and business, sales and marketing plans.
Unlike employees, the ownership of any intellectual property created by an intern in the course of performing their internship may not automatically vest in the business. For this reason, it is important to ensure that the intern agrees to assign to the business all rights, title and interests in any intellectual property created by them during the course of the internship.
Another option is to permit the intern to retain ownership of any intellectual property they create, but have the intern provide the business with a licence to use the intellectual property as it wishes. Whether the licence will entitle the intern to receive royalties from the business should be set out in the intern agreement.
Example: Ownership of computer code written by intern
Having just finished her degree in computer science, Hannah starts an internship with a software development business to get some industry experience. During the internship, Hannah writes a code that the business would like to use in one of the programs it is developing. Because Hannah isn’t an employee of the business, she automatically owns the code she has written and the business cannot use it without her permission.
If the business wants to own the code, Hannah needs to assign the ownership of the code to the business.
If the business is happy for Hannah to retain ownership of the code, but wants permission to continue to use it in the software, Hannah needs to provide the business with a licence to use the code. Depending on the agreement, the licence may or may not entitle Hannah to receive royalties.
Even if the intern does not retain ownership in any intellectual property they create as part of the internship, they will still have the three following “moral rights” in relation to any copyright works:
While an intern’s moral rights cannot be transferred, assigned or sold to the business, the intern can consent to the business using the intern’s works as they wish.
Example: Use of blog post written by intern
Phillip decides to commence an unpaid internship at a small accounting firm while he is studying a business administration course. At the end of the internship, Phillip writes a short blog post on his experience as an intern. The accounting firm decides it would like to use it on their website and in marketing material.
Unless Phillip has consented to the accounting firm infringing his moral rights, it is not permitted to publish any part of Phillip’s blog post unless it clearly and prominently identifies him as the author of the material. The accounting firm is also not permitted to edit Phillip’s blog post in a way that might prejudice Phillip’s reputation, such as by making fun of him.
Businesses, and certain individuals within a business, have a duty to ensure the health and safety of workers and visitors, including interns. Accordingly, businesses must do everything reasonably practicable to ensure the physical and mental wellbeing of interns in their workplace. It is imperative that interns be required to follow health and safety procedures to ensure that they do not put the health and safety of other workers at risk. Significant penalties (including fines and imprisonment) can be imposed for breaches of work health and safety laws.
To assist a business meet its work health and safety obligations, the internship agreement should require the intern to follow all relevant health and safety policies and procedures, and report any health and safety risks, or incidents, to their manager or supervisor.
In addition, the intern should also be required to undertake induction training about the work health and safety policies and procedures of the business.
Whilst the terms to be included in an intern agreement should be considered in the context of the specific internship, we set out below a checklist of the provisions that we would recommend be included in all intern agreements.
Part 3 of our series looks at some real examples that highlight the importance of correctly categorising an unpaid internship and ensuring that the internship is set up properly.
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 , 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 , 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 : "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.
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  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.
The recent decision in New Aim Pty Ltd v Leung  FCAFC 67 (New Aim) has provided some useful guidance in relation to briefing experts in litigation.