Some university graduates hoping to break into well-paid careers are working months at a time as unpaid interns.

Careers experts say short-duration unpaid work has long been a component of tertiary education, but they're hearing of arrangements which become indefinite.

While unpaid internships may help graduates into full-time work, some employers offer vague promises and open-ended terms - effectively taking advantage of free labour.

AUT Business School research analyst Danae Anderson says the problem seemed to crop up a few years ago, mainly with international students trying to get NZ experience.


"The internship periods seem to be longer now. Rather than getting that 'Kiwi' experience, we're starting to find New Zealanders are starting to work as unpaid interns.

"With a lack of legislative oversight governing internships it really is a grey area," Anderson says.

"There would also be the problem with any legislative oversight and a real possibility of prescriptive regulation that does not appropriately address exploitative cases.

"While I don't believe internships are inherently abusive, length and lack of progression may make them so. Combined with the high number of graduates and limited opportunities in the current labour market there are real concerns."

Council of Trade Unions president Helen Kelly says all unpaid work is illegal, unless an employer can show it is a genuine training opportunity.

"And for most of these [unpaid internships following graduation] you just won't find that," Kelly says.

"In my view, this type of arrangement is little different to unpaid trials endured by some workers in the hospitality industry and in a precedent-setting Employment Court case last year, one of these was ruled illegal."

The so-called Salad Bowl ruling she refers to is expected to eliminate unpaid work trials, but a legal expert doubts it will apply to internships.


Catherine Stewart, a barrister specialising in employment law, says the case won't necessarily spell the end of unpaid internships, but in light of it businesses should approach such arrangements with caution.

"The court specifically mentioned that there is a potentially broad spectrum of intern practices which are open to abuse, and commented that this kind of abuse occurs more often in longer-term internships than short-term situations," Stewart says.

"There can be legitimate unpaid intern arrangements. The critical factor is whether the parties have entered into an employment relationship or not. If they have, the worker will be entitled to be paid as well as to the statutory protections in the legislation such as raising personal grievance claims for unjustified dismissal.

"If there's no employment relationship between the parties and the worker is strictly a 'volunteer', then the worker does not have these rights or protections."

Stewart has seen graduates offer services to a company or practice free of charge and later being offered permanent employment. "This may not have been the original intention of the parties, but the outcome can be a win-win if it works well on both sides and both parties act fairly," she says.

But Ms Kelly says when the interning arrangement fits the definition of work, rather than training, the person involved could take a pay claim, even seven years after the arrangement.

"I would suggest they start doing that and we are interested in hearing from any of them who want to."

As yet the CTU has not received many complaints from interns.

"Young people think they have to do this to break into a business and then once they've done it sticking up for their rights is seen as trouble-making. Nobody ever challenges it because the narrative is that people should be grateful to have a job."

Unpaid work

This seemed to be the case with a 20-year-old who asked to be named only as "Redge". The young Aucklander graduated in graphic design at AUT last year, but found that potential employers were usually seeking up to three years' experience.

Redge said this left him little choice but to work as an unpaid intern at a graphic design company. He has put in more than a month working two unpaid days a week, and recently increased this to five days, in the hope it will lead to a permanent position.

His managers say they would like to give him a full-time job and will soon assess whether they can take him on full-time.

Before going to work he works several hours a day in a paid part-time job. Redge also draws a Job Seeker benefit from Winz and receives assistance from his family to help make ends meet.

"I like the work, I really like the people there and I've given them some good creative ideas, which they've thanked me for. And I've learned a lot," he says.

"There are more pros than cons but the largest con is that there's no pay out of any of it."

Auckland University career development manager Catherine Stephens says the term "internship" is now applied too broadly.

"In the purest sense an internship is supposed to be a learning experience. If it's unpaid, the internship should be mostly for the benefit of the student. Remember, if it's a genuine training opportunity, that student is taking someone out of the workplace to help train them - they're receiving something tangible and not being exploited at all.

"But if they are taking the place of an employee, then the work should be paid because they're doing the work that otherwise an employee would do."

Highly structured work placements are an integral part of earning a university degree, Stephens says.

"In teaching it's quite cut and dried - practicums are part of the training. In engineering they have to do 800 hours out in the field.

"There are pharmacy and medical practicums. Law students get summer work as legal clerks, then they get internships and everyone knows where they stand in these arrangements," Stephens says.

"Learning on the job is just vital because students can't come out [of university] and instantly be all things to all people. Employers must provide opportunity for them to grow into these roles."

From the sublime

As well as some shonky examples, the term "intern" can describe a dream job.

BMW New Zealand receives about 180 to 200 applications each time it advertises one of its intern positions. These one-year contracts make up 10 per cent (five out of 50) of the company's New Zealand workforce.

Tom Dyson is the third intern participating in the BMW Finance Graduate Programme. His immediate predecessor was an intern who worked for a year before deciding to travel overseas. The intern in the role before that now has a permanent position with the company. BMW is funding Tom's studies to become a chartered accountant. Corporate communications manager Edward Finn says there is a policy of investing in all staff, not just interns.

Lynley Tam, the first intern at BMW's financial services division, recently accepted a permanent position. Lynley says she was aware of BMW only as a good company to work for. "But since joining I've fallen in love with my colleagues and become an enthusiast for cars we sell as well."

As well as remuneration Tom and Lynley enjoy perks. They participated in M3 and M4 model launch drive days at Taupo Race Track and BMW Driving Experience days at Hampton Downs.

• Have you or your family had similar experiences with unpaid internships? Let us know below