Internship Contract: Setting Up Compliant Internships in Australia

Interns can bring fresh energy and skills to your business - and a well-run internship program can build your talent pipeline for years to come.

But there’s a catch: interns sit in a tricky legal space. If you don’t structure things properly, you can accidentally create an employment relationship and expose your business to underpayment claims, penalties, and reputational damage.

This guide steps you through how to set up an internship contract that’s compliant under Australian law, what to include, when interns must be paid, and the practical steps to get your program running smoothly.

What Is An Internship Contract In Australia?

An internship contract is the written agreement between your business and an intern that sets out the scope of work, learning objectives, supervision, confidentiality, IP ownership, and whether the internship is paid or unpaid.

It’s not a “lightweight” version of an employment contract. The terms need to reflect the real nature of the relationship so you don’t accidentally create an employment arrangement.

In Australia, the Fair Work framework focuses on substance over labels. If the intern is doing productive work like a regular staff member, under your direction, for your benefit, they’re likely an employee - and must be paid at least minimum wages and entitlements.

That’s why having a clear, tailored Internship Agreement matters. It helps anchor the arrangement around learning outcomes and makes the obligations clear for both sides.

Are Interns Employees? Getting The Classification Right

Before you draft anything, decide what the internship actually is. This classification drives your legal obligations, including pay, super, insurance, and policies.

1) Genuine Vocational Placement (Usually Unpaid)

Some internships are embedded in formal education (e.g. required placements for a university course). These can be unpaid if they meet the Fair Work Act’s “vocational placement” criteria (formally arranged through an education provider and a required part of the course).

For these, a simple, structured Work Experience Agreement is often appropriate - focusing on supervision, hours, safety, learning goals, and responsibilities.

2) Work Experience/Internship Focused On Learning (May Be Unpaid)

If there’s no formal course requirement, an unpaid internship is only lawful where the primary purpose is for the intern to learn, observe and gain experience, and your business gets little to no productive benefit.

Think “shadowing and training”, not “filling a role”. If the intern starts doing billable or operational work like other employees, you likely owe wages.

3) Employee (Paid)

If the intern performs productive work, is rostered like staff, or you rely on them to deliver outcomes for your business, they are almost certainly an employee. In that case, use an Employment Contract and pay at least the applicable minimums (wages, super, leave as relevant). If you’re genuinely engaging a project-based independent contractor, use a Contractors Agreement - but contractor status depends on multiple factors beyond just the contract.

Getting classification right early will save you headaches later. If you’re unsure, it’s better to treat the intern as an employee and pay them, or get tailored advice before you commence.

What Should Your Internship Contract Cover?

Every internship is different, but most internship contracts should cover the following core areas in plain English.

Learning Objectives And Scope

• Define the purpose: learning, exposure and training, not replacing an employee.
• Outline tasks suitable for observation, training, and supervised practice (avoid listing essential business duties if the internship is unpaid).
• Identify mentors/supervisors and how feedback will be provided.

Duration, Hours And Flexibility

• State the start and end dates, expected weekly hours, and any flexibility (e.g. around study, exams or other commitments).
• Include reasonable breaks and limits - long, full-time schedules can indicate an employment relationship.

Paid Or Unpaid Status

• Make it clear whether the internship is paid or unpaid.
• If unpaid, clarify expense reimbursement (e.g. travel, meals) and reiterate the learning focus.
• If paid, confirm the wage rate and entitlements, and align the agreement with the correct award or enterprise instrument if applicable.

Confidentiality And IP

• Protect your business information, client data and trade secrets with a standalone Non-Disclosure Agreement or robust confidentiality clauses.
• Set out who owns any intellectual property created during the internship and whether the intern may include samples in a portfolio (subject to confidentiality).

Workplace Conduct And Safety

• Reference your code of conduct, WHS obligations and key workplace policies (e.g. bullying and harassment, social media, device use).
• Confirm supervision arrangements and that the intern will receive any required safety induction or training.

Privacy And Data Handling

• If the intern will access personal information, ensure they follow your Privacy Policy and data security practices.
• Limit systems access to “need to know” and specify return/deletion of access and materials at the end of the internship.

End Of Placement

• Explain how either party can end the internship early and any notice you expect.
• Remind the intern to return equipment, remove data from personal devices, and keep information confidential after they leave.

Paid Vs Unpaid Internships: What Does The Law Require?

In Australia, unpaid work is only lawful in limited circumstances. The key question is whether the arrangement is primarily for the intern’s benefit (learning) or for your business’ benefit (productive work).

When Unpaid Can Be Lawful

• Vocational placements required by an education course and officially arranged through the institution.
• Short, learning-focused experiences where the intern mainly observes, shadows or trains, and your business gains little to no productive value.

When You Should Pay

• If the intern does real work that your business relies on to operate or make revenue.
• If they’re rostered, supervised like staff, and producing outcomes similar to employees.
• If hours are regular, ongoing and look like a normal part-time or full-time role.

Also keep trial work in mind. There are strict limits on what counts as a legal unpaid trial. If you’re testing skills beyond a very brief demonstration, you should pay for that time. For context, see how a lawful unpaid work trial is assessed under Australian law.

If in doubt, pay the intern as an employee. It’s safer, supports fairness, and reduces regulatory risk.

Step-By-Step: Setting Up A Compliant Internship Program

Here’s a practical roadmap you can follow. Adjust it to your industry, risk profile and resourcing.

1) Map The Purpose And Role

• Document why you’re offering internships (learning pathways, pipeline, CSR) and the skills interns should gain.
• List sample tasks and decide whether they are observational/training (unpaid) or productive (paid).
• Decide on the model: vocational placement, unpaid learning internship, or paid employee-style internship.

2) Decide The Legal Structure

• For vocational placements: use a structured Work Experience Agreement with the education provider’s involvement.
• For unpaid learning internships: implement a tailored Internship Agreement with tight scope, learning outcomes and supervision.
• For employee-style internships: engage under an Employment Contract, apply the correct award or minimum standards, and onboard like any staff member.

3) Prepare Your Documents And Policies

• Lock in confidentiality and IP ownership (separate NDA or robust clauses).
• Confirm acceptance of key workplace policies (WHS, bullying/harassment, device and email use, social media).
• Update safety procedures to cover interns (supervision, hazard briefings, incident reporting).
• Ensure your Privacy Policy and data access controls cover interns if they handle personal information.

4) Recruit And Screen Fairly

• Use clear selection criteria focused on capability and learning potential.
• Avoid unlawful questions during recruitment - make sure your team knows what counts as illegal interview questions under discrimination law.
• If you ask for a skills demonstration, keep it brief and mirror the real role. Pay for any meaningful trial work.

5) Onboard And Supervise

• Give a proper induction: culture, safety, privacy, IT access, reporting lines and how to raise concerns.
• Assign a named supervisor/mentor and set a review cadence (e.g. weekly check-ins).
• Track tasks against learning outcomes and promptly adjust if work drifts into productive territory for unpaid internships.

6) Monitor Compliance And Wrap Up

• Regularly review whether the arrangement still matches the contract. If the intern is doing productive work, switch to paid status.
• At the end, conduct an exit meeting, collect equipment, revoke system access and remind the intern of ongoing confidentiality.
• Document feedback for program improvement and consider a reference or pathway into a junior role where appropriate.

Insurance, Safety And Practicalities

• Confirm insurance coverage (public liability, professional indemnity where relevant, workers compensation for paid interns).
• Provide a safe workspace and appropriate training for equipment or software.
• Be clear about expense reimbursement (e.g. travel to events) and approval processes.

Key Takeaways

• Classify your internship correctly from day one - genuine vocational and learning-focused placements may be unpaid, but productive roles must be paid and treated like employment.
• Use the right written agreement for the arrangement you’ve chosen: Work Experience Agreement for formal placements, Internship Agreement for learning-focused programs, and an Employment Contract for paid interns.
• Build clear learning objectives, defined scope, supervision, confidentiality, IP ownership and privacy expectations into every internship contract.
• If an intern begins doing productive work your business relies on, pay them and apply minimum employment standards - it’s safer and fairer.
• Recruit and onboard carefully, avoid illegal interview questions, and ensure your Privacy Policy and safety procedures cover interns.
• Strong documentation (including a Non-Disclosure Agreement and, where appropriate, a Contractors Agreement) helps protect your business and manage risk.

If you’d like a consultation on setting up an internship contract and program for your business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.