Hiring interns, co-op students, and other student workers is a common practice among small and medium-sized enterprises in Ontario. Students can bring energy, fresh perspectives, and emerging technical skills to the workplace, often at a time when employers are looking to manage labour costs and develop future talent. However, student placements also carry significant legal risks if they are not properly structured.
Many Ontario employers mistakenly assume that interns and students are exempt from employment standards legislation, particularly where placements are short-term, unpaid, or connected to an educational institution. In reality, the Employment Standards Act (ESA) applies broadly, and the categories of students who may lawfully work without pay are narrow and strictly defined. Misclassifying a student worker can expose an employer to liability for unpaid wages, vacation pay, public holiday pay, penalties, and Ministry of Labour enforcement proceedings.
The ESA’s Broad Application to Student Workers
The ESA is designed to set minimum employment standards for most workers in Ontario, regardless of age, experience, or educational status. The legislation does not carve out a general exemption for interns or students. Instead, it applies to “employees,” a definition that is intentionally broad and captures many individuals who might not fit traditional notions of employment.
Under the ESA, an individual may be considered an employee even if they are described as an intern, trainee, volunteer, or student, and even if no wages are paid. Labels used by the employer are not determinative. What matters is the substance of the working relationship and whether the individual is performing work for the employer’s benefit.
This broad definition is a common source of compliance risk for SMEs. Employers may believe that a short-term placement or informal arrangement falls outside employment standards, only to discover later that the individual was legally entitled to minimum wage and other protections from the outset.
When Is a Student Considered an “Employee” Under the ESA?
In most cases, a student who performs work for an employer in Ontario will be considered an employee under the ESA unless a specific exemption applies. This includes high school students, post-secondary students, and recent graduates who are gaining work experience.
Indicators that a student is likely an employee include situations where the student performs productive work, contributes to the employer’s operations, works scheduled hours, is supervised by the employer, or replaces or supplements paid staff. Even where the student gains valuable experience, the ESA may still apply if the employer derives a benefit from the work performed.
The Ministry of Labour and Ontario courts consistently emphasize that the focus is on whether the employer receives value from the work, not whether the individual is learning or building their résumé. If the answer is yes, the ESA will generally apply.
The Narrow Exception for Unpaid Internships
Ontario law permits unpaid internships only in very limited circumstances. Outside of specific educational programs, unpaid internships are generally prohibited. This is a point that many employers misunderstand.
For an unpaid internship to be lawful under the ESA, it must meet all of the criteria set out in the legislation. These criteria are strict and cumulative. If even one requirement is not met, the intern is considered an employee and entitled to wages and other ESA protections.
The ESA’s approach reflects a policy decision to prevent exploitation and ensure that individuals who perform productive work are compensated. Employers should not assume that an internship can be unpaid simply because it is short-term or educational in nature.
ESA Criteria for a Lawful Unpaid Internship
To qualify as a lawful unpaid internship under the ESA, all of the following conditions must be satisfied. The internship must be similar to the training provided in a vocational school. The training must be for the individual’s benefit. The employer must derive little or no benefit from the individual’s activity while they are being trained. The individual must not displace employees of the employer. The individual must not be accorded a right to become an employee upon completion of the training. Finally, the individual must be advised that they will receive no remuneration for the time spent in training.
These criteria are intentionally difficult to meet. In practice, many internships fail on the requirement that the employer derive little or no benefit from the work. Where an intern performs real tasks that support business operations, this condition is often not satisfied.
Because all criteria must be met, unpaid internships outside formal educational programs are high-risk and can result in non-compliance findings during Ministry of Labour inspections.
Co-Op Placements and Educational Program Exceptions
The most common lawful unpaid student arrangements in Ontario are co-op placements that are part of an approved secondary or post-secondary educational program. The ESA provides a specific exemption for students who perform work under a program approved by a college or university.
To qualify for this exemption, the educational institution must authorize the placement, and the work must be performed as part of a course or program requirement. Informal arrangements or placements loosely connected to a student’s field of study may not qualify.
Employers should ensure that they receive clear documentation from the educational institution confirming that the placement is part of an approved program. Relying on a student’s verbal assurance is insufficient and can expose the employer to retroactive wage claims.
Paid Interns and Student Employees
Many Ontario employers choose to pay interns and students, either to attract stronger candidates or to reduce legal risk. Paid interns and student employees are generally entitled to the same ESA protections as other employees, subject to limited exceptions.
This includes entitlement to minimum wage, vacation pay, public holiday pay, overtime (where applicable), and termination and severance rights. Employers should not assume that students are exempt from these standards simply because of their age or status.
Where students work part-time or on short-term contracts, compliance issues often arise around public holiday pay calculations, vacation pay accrual, and record-keeping. These are common areas of enforcement by the Ministry of Labour.
Minimum Wage Rules for Students
Ontario’s minimum wage framework includes a special student minimum wage for eligible students under a certain age who work limited hours during the school year. However, this rate applies only in specific circumstances and does not apply universally to all student workers.
Employers must ensure that a student qualifies for the student minimum wage before applying it. Applying the lower rate incorrectly can result in underpayment claims and penalties. Where a student does not meet the eligibility criteria, the general minimum wage applies.
Given frequent changes to minimum wage rates, employers should regularly review their payroll practices to ensure ongoing compliance.
Hours of Work, Overtime, and Scheduling
Student workers are generally subject to the same hours of work and overtime rules as other employees. This includes daily and weekly limits on hours of work, requirements for meal breaks, and overtime pay obligations where applicable.
Employers sometimes overlook these rules when scheduling students, particularly during peak seasons or exam periods. While flexibility may be appropriate, it must be exercised within the confines of the ESA.
Failure to accurately track hours is a common compliance issue, particularly when students work irregular schedules or split shifts. Accurate timekeeping is essential to defending against wage and overtime claims.
Termination Rights and Short-Term Student Employment
Another area of frequent misunderstanding is termination rights for student employees. Short-term or fixed-term employment does not automatically exempt an employer from termination obligations.
If a student employee is terminated before the end of a fixed-term contract, ESA termination pay may be owed unless a valid exception applies. Even where a contract ends naturally, employers must ensure that the agreement is drafted correctly to avoid unintended liability.
Probationary periods, when used, must also be carefully structured. Terminating a student during probation does not eliminate ESA obligations unless the statutory conditions are met.
Record-Keeping and Documentation Requirements
Ontario employers are required to maintain detailed employment records for all employees, including students. This includes records of hours worked, wages paid, vacation pay, public holiday pay, and dates of employment.
Inadequate record-keeping can significantly weaken an employer’s position during a Ministry of Labour investigation or employment standards claim. Where records are missing or incomplete, the Ministry may accept the employee’s evidence regarding hours and pay.
Employers should treat student employment records with the same level of care as records for permanent staff.
Best Practices for Employers Using Student Workers
Ontario employers can reduce legal risk by clearly identifying whether a student placement is paid or unpaid and confirming the legal basis for that classification. Written agreements should accurately reflect the nature of the relationship and comply with ESA requirements.
Employers should also ensure that supervisors understand the limits of unpaid placements and do not assign interns work that undermines the exemption. Regular compliance reviews are advisable, particularly for organizations that rely heavily on student labour.
Where uncertainty exists, seeking legal advice before onboarding a student worker can prevent costly mistakes.
Compliance Starts Before the First Day of Work
Interns, co-op students, and student employees can be valuable contributors to Ontario workplaces, but they are not exempt from employment standards law simply because they are learning or temporary. The ESA’s protections apply broadly, and the exceptions are narrow.
For Ontario SMEs, the key to compliance is understanding that good intentions are not enough. Proper classification, documentation, and adherence to statutory standards are essential from the outset of any student placement.
Employers who take the time to structure student arrangements carefully are far better positioned to avoid disputes, investigations, and unexpected liability down the road.
Haynes Law Firm: Providing Comprehensive Legal Support to SMEs in Toronto & Across Ontario
Ontario employers considering the use of interns, co-op students, or other student workers should ensure that their practices comply with the Employment Standards Act and related legislation. Paulette Haynes, founder of Haynes Law Firm in Toronto, has extensive experience advising Ontario small and medium-sized enterprises (SMEs) and can review student placement arrangements, contracts, and workplace policies to help reduce risk and ensure compliance before issues arise. To book a consultation, please contact the firm online or call (416) 593-2731.
