PhD scholarship students aren't employees, Federal Court confirms

An essential component of employment is an obligation to serve. Service involves the supply of a person’s labour in satisfaction of a contractual obligation. The person must not just attend the workplace but must be obliged to perform work for the benefit of the employer. This is known as the ‘work-wage bargain’. The employee has promised the employer they will work, and the employer assumes an obligation to pay the employee in return for the work performed pursuant to that promise.

In Burt v University of Sydney (2026), a doctoral student who was party to a scholarship contract entitling him to a stipend argued he was an employee covered by the university's enterprise agreement. He argued he performed valuable research work for the university, and was subject to significant supervision and control under the scholarship contract. The contract provided for an annual payment of $26,288 and paid leave entitlements, and made work performed outside of the degree subject to the university’s approval.

The Full Court accepted that the university derived substantial benefits from postgraduate research. Research students contributed to knowledge creation, enhanced institutional reputation and could assist the university in attracting funding.

However, the Court ruled the relationship lacked an obligation to serve that is characteristic of the employment relationship. The fact the scholarship could be withdrawn in response to unsatisfactory research progress did not amount to a contractual obligation as it did not bind the student to service or create liability for him if he did not do so.

The student undertook research primarily to obtain a qualification and advance his own education, by his own voluntary commitment, rather than to fulfil obligations owed to the university. The scholarship payment was of a fundamentally different character to wages, and was designed to provide financial support to students undertaking research degrees and to assist with living expenses. It was a form of educational assistance rather than remuneration paid in exchange for work performed. The paid leave was not payable upon termination, unlike under an employment agreement, and was designed to promote productivity towards educational outcomes.. The degree of control exercisable by the university, such as imposing supervision, hours of work and work location, was relevant only as far as the work was performed.

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