Unpaid Work in New Zealand: Interns, Volunteers and Contractors

Unpaid work can look simple at first. A founder offers a student “experience”, a friend helps out for free, or a business brings someone in as a contractor and assumes minimum wage rules do not apply. This is where businesses often get caught. Common mistakes include calling an employee an intern, treating a volunteer like staff, or relying on a verbal promise instead of a written agreement.

The problem is that labels do not decide the legal position. What matters is the real working arrangement, what the person is doing, who controls the work, and whether there is an expectation of payment or business benefit. If you get that wrong, the fallout can include wage claims, penalties, disputes over holidays and leave, and damage to your reputation.

This guide explains what unpaid work means in New Zealand, when unpaid internships or volunteer arrangements may be lawful, when contractors should still be paid under their contract, and what to check before you sign.

Overview

Unpaid work is not automatically unlawful in New Zealand, but it is heavily context-dependent. The key legal question is whether the person is genuinely a volunteer, trainee, intern or independent contractor, or whether they are really an employee who must be paid at least minimum entitlements.

• Whether the person is performing productive work for your business or mainly observing and learning
• Whether there is a written agreement that clearly sets out the arrangement
• How much control your business has over hours, duties and supervision
• Whether the person can refuse work or walk away without penalty
• Whether there is any promise, expectation or indirect form of payment
• Whether a contractor arrangement reflects a real business-to-business relationship
• Whether health and safety, privacy and confidentiality obligations are covered

What Unpaid Work Means For New Zealand Businesses

The short answer is this: if someone is really working for your business like a staff member, calling the arrangement unpaid will not avoid employment law.

New Zealand businesses commonly deal with three different categories in this area: interns, volunteers and contractors. Each one has different risks. Before you hire your first worker, before you classify someone as a contractor, or before you accept help from a friend or student, you need to be clear about which category actually fits.

Interns

An internship can be lawful, but not every internship can be unpaid. The main issue is whether the intern is receiving genuine training and work exposure, or whether they are filling a role that a paid worker would otherwise do.

If the intern is mainly shadowing staff, observing meetings, doing limited supervised tasks for learning purposes and receiving structured guidance, the arrangement is more likely to be genuine work experience. If they are rostered like ordinary staff, covering shifts, handling core duties or producing work that your business depends on, the risk rises sharply that they are really an employee.

This distinction matters because employees in New Zealand are generally entitled to minimum wage and other minimum employment standards. A business cannot avoid those obligations simply by using an internship label.

Founder reality is often less tidy than the label on paper. A startup may begin with an informal two-week learning placement and then gradually ask the person to answer customer queries, prepare reports, manage social media or help with admin every week. Once the person is contributing regular productive work, the legal analysis can change.

Volunteers

A genuine volunteer is usually someone who freely offers their time without expecting payment and without being treated like an employee. Volunteer arrangements are more common in charities, community groups and events, but they can appear in commercial settings too, especially at very early stage businesses.

The risk for businesses is assuming that because someone says they are happy to help for free, that ends the issue. It does not. If your business sets fixed hours, requires attendance, assigns regular duties, disciplines poor performance or relies on the person as part of normal operations, the person may start to look more like an employee than a volunteer.

Reimbursement also needs care. Paying actual out-of-pocket expenses is different from paying an allowance that looks like wages. Even non-cash benefits can muddy the picture if they become substantial or tied to hours worked.

Contractors

Contractors are not usually described as doing unpaid work, but this category still matters because some businesses use contractor labels to avoid employment obligations. Others ask a contractor to do “trial” work without clear payment terms, then end up in a dispute.

A true contractor runs their own business, invoices for services, controls how the work is done to a greater extent, and takes on some commercial risk. But if the person works under close direction, cannot realistically work for others, uses your systems like a staff member and is integrated into the business, a court or authority may look past the contract label.

There is also a simpler commercial point. Even where a person is genuinely a contractor, you should not rely on casual assumptions about free trial work, deferred fees or “we will pay you once we are funded”. If payment is part of the deal, the contractor agreement should say so clearly.

Why labels are not enough

New Zealand employment law generally looks at the real nature of the relationship, not just the wording of the agreement. This means a document titled “Volunteer Agreement” or “Internship Contract” is only one part of the picture.

Decision-makers will usually consider a range of factors, such as:

• what work the person actually performs day to day
• whether the work benefits the business commercially
• how much supervision and control the business exercises
• whether the person is expected to work set hours
• whether the person can decline tasks
• whether there is payment, reimbursement or some other reward
• how the parties behaved in practice, not just what the paperwork says

This is why founders should review the reality of the arrangement, not just the title on the document.

Legal Issues To Check Before You Sign

The best time to fix an unpaid work arrangement is before you sign, not after a complaint is made.

If you are considering an intern, volunteer or contractor arrangement, there are several legal points to sort out first. These are the areas that most often determine whether the arrangement is workable and whether your paperwork matches reality.

1. Is this person really an employee?

This is the first question because it changes everything else. If the person is legally an employee, minimum wage, holidays, leave, record-keeping and other employment obligations can apply.

Before you sign a contract, ask yourself:

• Will they perform tasks your business would otherwise pay someone to do?
• Will they work regular hours or shifts?
• Will they be under your direction and supervision?
• Will they have real freedom to say no to tasks or stop volunteering?
• Will your business depend on their output?

If the honest answer to most of those questions is yes, you should pause before treating the arrangement as unpaid.

2. What is the purpose of the arrangement?

A lawful unpaid placement is easier to justify where the main purpose is education, observation, limited skill development or community contribution, rather than generating business value. That does not mean the person can never do useful tasks. It means the tasks should fit the training or volunteer purpose, not replace paid labour.

For example, a university student who observes meetings, assists with a supervised project and receives structured feedback is in a different position from someone covering reception three days a week because the business is short-staffed.

3. Do you have the right agreement?

You should always record the arrangement in writing. A verbal understanding is where many disputes begin.

The agreement should match the category involved:

• an employment agreement if the person is really an employee
• an internship or work experience agreement if the placement is genuinely educational and unpaid
• a volunteer agreement if the person is freely offering time without employment expectations
• a contractor agreement if it is a true independent services relationship

The right document usually covers:

• the role and scope of activities
• whether payment is made, and if so how and when
• whether expenses will be reimbursed
• hours, attendance expectations and flexibility
• supervision and training arrangements
• confidentiality and intellectual property
• health and safety responsibilities
• how either side can end the arrangement, including any termination rights

This is especially important before you rely on a verbal promise that “everyone understands it is unpaid”. If the arrangement later looks like employment, that sentence will not help much.

4. Are minimum wage and minimum entitlements engaged?

If the relationship is really employment, minimum standards generally cannot be contracted out of. This can include minimum wage and other statutory entitlements.

Businesses sometimes focus only on base pay and miss the wider issue. If someone should have been treated as an employee, there may also be questions about holiday pay, sick leave, record-keeping and wage arrears. The longer the arrangement continues, the bigger the exposure can become.

5. How much control are you exercising?

Control is a major indicator. The more your business controls when, where and how the person works, the harder it is to maintain that the arrangement is purely voluntary or independent.

Founders often create risk accidentally by:

• issuing fixed rosters
• requiring attendance at set times
• using performance management language
• approving leave requests
• requiring exclusive service
• giving the person a title and responsibilities identical to paid staff

If that sounds like your current arrangement, it is worth reassessing the classification.

6. Have you covered health and safety?

Even if a worker is unpaid, your health and safety obligations do not disappear. Anyone carrying out work in or for your business can be exposed to risk, and businesses still need suitable systems, instruction and supervision.

This is especially relevant where interns or volunteers are in physical workplaces, attending events, driving, using equipment or accessing clients. Before they start, make sure they know the site rules, reporting processes and who supervises them.

7. Have you protected confidential information and work product?

Unpaid arrangements are often informal, which makes confidentiality and ownership issues easy to miss. A student intern might have access to customer data, product plans, pricing, code, marketing materials or internal strategy.

Your written agreement should deal with:

• confidential information
• privacy obligations, including any privacy notice requirements, where personal information is involved
• ownership of intellectual property created during the arrangement
• return of documents, devices and access credentials when the arrangement ends

This matters even more for startups developing new products, software, brand assets or investor materials.

8. Are reimbursements and benefits clearly handled?

Paying actual expenses can be fine, but the arrangement should spell out what will be reimbursed and what evidence is required. Loose wording around “allowances”, “stipends” or perks can create confusion about whether the person is effectively being paid for their time.

You should also be careful with promises of future employment, equity or later payment. Those promises can create separate contractual disputes if they are vague or not properly documented. If you are considering equity or deferred compensation, get specific advice before you sign.

Common Mistakes With Unpaid Work

The biggest mistake is assuming good intentions make the arrangement lawful. They do not.

Most unpaid work problems arise because the business is moving quickly, the person seems happy, and nobody pauses to document what is really happening. Here are the mistakes that come up most often for startups and SMEs.

Using an unpaid intern as a regular staff member

This is one of the clearest red flags. If your intern is opening the office, handling daily customer enquiries, posting content on a schedule, processing orders or covering a team gap, you may have crossed from work experience into employment.

Founders sometimes justify this by saying the person is getting valuable experience. That may be true, but it does not cancel minimum employment obligations if the substance of the relationship is paid work.

Calling someone a volunteer in a for-profit business without checking the facts

For-profit businesses need extra care here. A genuine volunteer arrangement is harder to support where the business receives ordinary commercial benefit and the person is integrated into regular operations.

If a friend is helping casually at a one-off event, the risk profile is different from someone “volunteering” every Friday to do stock control and customer service.

Misclassifying a contractor

Some businesses think a contractor agreement solves everything. It does not. If the actual relationship looks like employment, the written contractor label may not stand up.

This commonly happens where the contractor works only for one business, is subject to close daily direction, uses the business's equipment, and has little real independence. Before you classify someone as a contractor, look at the practical working relationship, not just the invoice format.

Skipping written agreements

Informal arrangements often feel easier, especially when the person is a student, family friend or early supporter. But without a written agreement, disputes can spread quickly into pay, expenses, confidentiality, ownership of work product and how the arrangement ends.

A short, well-drafted document is usually far better than a casual exchange of messages.

Letting the arrangement drift

An arrangement that begins as observation can become productive work over time. A volunteer role can become structured and rostered. A contractor can become embedded in the team.

The legal risk often appears because nobody revisits the arrangement after the first few weeks. A review point in the agreement can help, especially where the role might evolve.

Forgetting privacy and data handling

Interns and volunteers may access staff files, customer records, health information, payment systems or internal messaging platforms. If you are collecting, storing or using personal information, your business should think about Privacy Act obligations, data protection, and internal access controls.

At a practical level, limit access to what the person genuinely needs, explain confidentiality expectations, and remove access promptly when the arrangement ends.

Assuming a trial can be unpaid

Businesses sometimes ask a prospective worker to do a trial shift or complete sample work for free. Short assessments may be possible in some circumstances, but if the person is doing real productive work for your business, the main risk is that the time should be paid.

This is where founders often get caught. A hiring process can easily become unpaid labour if the candidate is doing tasks that benefit the business rather than simply demonstrating skill in a limited way.

FAQs

Can a business have unpaid interns in New Zealand?

Sometimes, yes, but only where the arrangement is genuinely for learning or work experience and the intern is not really functioning as an employee. If the intern is doing regular productive work under your control, payment obligations may apply.

Can a for-profit business use volunteers?

Possibly, but the facts matter. The more structured, regular and business-critical the role is, the harder it is to maintain that the person is a genuine volunteer rather than an employee.

Does a contractor always have to be paid?

A contractor's right to payment usually depends on the contract. But a business should not assume work can be unpaid unless that is clearly agreed and legally sensible. If the arrangement is really employment, employment obligations may override the label.

Is a written agreement necessary for unpaid work?

It is strongly recommended. A written agreement helps define the purpose of the arrangement, payment and expenses, confidentiality, supervision, health and safety, and how the arrangement ends.

What should a business do if an unpaid arrangement has changed over time?

Review it straight away. If the person is now working like staff or producing regular business value, you may need to move them onto an employment or contractor arrangement and update your documents accordingly.

Key Takeaways

• Unpaid work in New Zealand is judged by the real relationship, not just the label used in the paperwork.
• An unpaid intern or volunteer may still be legally treated as an employee if they perform regular productive work under business control.
• Contractor arrangements should reflect a genuine independent business relationship, not a renamed employment role.
• Before you sign, use the right written agreement and cover scope, payment, expenses, confidentiality, intellectual property, privacy and health and safety.
• Review arrangements regularly, because a lawful work experience placement can become a risky employment situation if the role drifts over time.

If you want help with worker classification, internship and volunteer agreements, contractor terms, or confidentiality and IP protections, you can reach us on 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.