National coffee chain suspended from government’s PaTH intern scheme after allegedly underpaying workers

A national coffee chain has been booted off the government’s controversial PaTH employment scheme following allegations it was underpaying young workers and offering Visa gift cards as reimbursement.

Buzzfeed News uncovered the alleged underpayments earlier this week after a worker on the PaTH scheme at the Espresso Lane coffee chain told the publication they were being underpaid. Espresso Lane operates 10 stores around Australia.

The government’s PaTH scheme — which stands for ‘Prepare, Trial, Hire’ — was unveiled in the 2016 budget and has been rolled out since, including with a range of retail partnerships announced in April this year.

Businesses that sign up for the program can employ young people who are receiving Centrelink benefits as interns within their companies for three months. The overall goal is for PaTH interns to receive on-the-job training and potentially permanent work at the end of the program.

Businesses also receive an $1000 upfront payment from the government for taking on these workers, and may also be eligible for up to $10,000 via the Youth Bonus Wage subsidy if the workers are hired at the end of the program.

However, the scheme has came under scrutiny from the union movement and the opposition over concerns about how workers are paid under the program, with participants earning $200 a fortnight on top of their income support payments for taking part, reports SBS.

Concerns were also raised about the potential for exploitation by some businesses, leading to experts warning businesses should know “where the boundaries are”.

Interns under the PaTH program are allowed to work a maximum of 50 hours per week, however, PaTH workers at Espresso Lane told Buzzfeed News they worked in excess of that amount, with one worker now reportedly chasing over $2000 in unpaid wages.

Another worker under the PaTH scheme at the same chain was allegedly rostered on at the business for two eight-hour shifts prior to signing her employment contract. The worker was then allegedly offered Visa gift cards as remuneration.

The other worker was also allegedly offered Visa gift cards as compensation for his unpaid wages.

In response, the Department of Employment has suspended Espresso Lane from the PaTH program, with a spokesperson telling Buzzfeed News “it was a clear violation”.

“The department urges all young people to notify their employment service provider or the department directly and immediately if they are unsure about their internship agreement,” the spokesperson said.

SmartCompany contacted Espresso Lane but the business was unable to provide a comment. However, a manager at one store told BuzzFeed News they were “planning” to compensate the first worker, and the Visa cards were just a “token of appreciation”.

The Department of Employment confirmed to SmartCompany the chain has been suspended from the program, and warned employers would be taken off the program if interns were found to be exploited.

PaTH could blur line between intern and employee

Speaking to SmartCompany, employment and workplace lawyer at TressCox Lawyers Chris Molnar says while it’s hard to know what occurred in this case without a proper investigation, the alleged actions raise “a number of issues” for businesses and employees involved in the PaTH program.

“If you look at what’s happening here, it’s a potentially common issue for these sorts of programs which are designed to get in young people who lack work experience. They’re not designed to get these people to do actual work a business could pay someone else for,” Molnar says.

“Internships are about getting experience and understanding how a business works and maybe getting some training. It’s about the person doing the internship, it’s not about the business.

“Principally, there needs to be an obvious benefit for the internee.”

Molnar believes the dividing line between PaTH applicants being internees or employees could potentially be blurred for some employers, and while the program specifies applicants must be provided with a “reasonable prospect” of getting a job, Molnar thinks there is a potential for some businesses to exploit the system.

“The idea is the government gives the business and the PaTH applicant some money, and after the program, if the business likes them and the applicant likes the business, then golly gosh, you might get a job,” he says.

“The risk here is that some business might think this could be abused. They might get someone in to do what would otherwise be paid work, and then at the end, not offer them a job.”

The inclusion of both a payment for businesses and applicants from the government has the potential to blur the lines even further says Molnar.

He says despite payments to businesses being reasonable, due to the training businesses are supposed to provide under the scheme, the money in the system “can lead to the intern-employee relationship being blurred”.

More education needed for businesses

Molnar says there’s a lack of education for companies interested in the PaTH scheme, saying businesses just have to fill in a few forms and sign a contract with the internee.

On the government’s resources page for businesses interested in the PaTH scheme, two documents are provided: a sample contract for employees and interns and a short information document for businesses.

“At the front end, much more education needs to be given to employers signing up to these programs around what work is suitable to be given to the applicants and how it is not a way to avoid hiring someone,” Molnar says.

“At the back end, interns need to be made aware that if they have complaints, they are entitled to complain to the Fair Work Ombudsman or the Department of Employment.”

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