By Hollie Whyman
The number of internships in the UK has increased considerably in recent years; particularly in highly competitive industries such as fashion, the charity sector, and media.
For many students and graduates, getting meaningful work experience via an internship is an essential way of enhancing their employability and skills; helping them get that all important 'foot in the door'.
For businesses, taking on interns is a cost-efficient way to bring fresh ideas to the table and extra hands to boost productivity levels.
However, whilst some internships are paid, many are not. In some industries there have even been reports of interns having to pay companies in order to secure an internship position. This has inevitably led to controversy that internships are exploitative. Morality aside, businesses will be acting unlawfully if they fail to pay their interns the minimum wage in circumstances where their interns are entitled to the statutory protection associated with being a 'worker'.
You may well be considering taking on an intern over the summer holiday. So how do you ensure your business complies with the law and gets the best from its intern?
Do interns need to be paid?
In short, companies will need to pay the minimum wage to interns who work under a legally binding contract whereby the intern is obliged to personally perform work or provide services to the business. Such interns will be legally classed as 'workers'. They will also be entitled to annual leave along with other statutory rights. For instance, maximum working hours and protection against discrimination.
Whether or not an intern is in fact a 'worker' (and so should be paid) is not necessarily easy to determine. Whilst some relationships will be entirely voluntary and some clearly contractual, others will sit in the middle and be difficult to determine. Indicators of a contractual relationship (and so a 'worker' status) would be:
- Blanket expenses payments paid to the intern regardless of expenses incurred. (This could be construed as consideration for services rendered);
- Obligations for the intern to work certain hours and days and to perform certain tasks; and/or
- A promise of paid work at the end of the internship.
However, an intern will not need payment if they are:
- Only 'work shadowing', which involves observing and not carrying out any valuable work;
- On a work experience placement as part of a UK-based higher or further education course. Or, are of compulsory school age; and/or
- They are volunteering for a charity and receive no reimbursement other than for expenses actually incurred.
Should I pay my interns?
Interns should be paid the minimum wage if they fall into the definition of a 'worker'. The government has recently launched a crackdown on unpaid internships. And, in response to the recent Taylor Review, it promises to "improve the interpretation of the law and enforcement action taken by the HMRC in this area to help stamp out illegal unpaid internships".
It has also been reported that the government has recently sent out more than 550 warning letters to companies. This is in addition to setting up enforcement teams to tackle repeat offenders. Failure to comply with the law could lead to a government fine or even criminal sanctions. (Although there havenâ€™t yet been any prosecutions.) The interns themselves may have employment-related claims for unpaid wages spanning back up to six years.
There has also been a lot of bad press around exploitation and the barrier that unpaid internships represent to social mobility. Often only individuals who live in bigger cities or have financial support from their families are able to take up intern positions once rent, bills, travel, and other living costs have been taken into account.
The wider concern is that entry-level jobs are disappearing. Posts previously offered to new graduates are now being carried out by interns for free or at very low cost. Furthermore, the recruitment of interns often lacks a transparent and fair process and so internships are too frequently awarded based on personal connections rather than merit.
The net is closing in on unpaid internships.
Consumers are also paying more attention to businesses' employment practices as publicity around the issue increases. Accordingly, it makes sense to stay ahead of the curve and to pay minimum wage to your interns; even if you are 100% confident that they are not entitled to it. Not only is this likely to engender high levels of motivation and loyalty from your interns, it will also avoid any criticism that the business is profiting from unpaid work or potential claims.
This article was first published by CWB on 26 June 2019.
For further advice, or to discuss your case, please contact Hollie Whyman at firstname.lastname@example.org or on 020 7870 3882.