Unpaid internships are back in the news just as we are coming up to the end of the academic year. Tens of thousands of students at all levels will be looking for their first permanent job having completed their courses or will be seeking work experience to bolster their CVs.
Internships can be a valuable experience for both the individual and the employer but not if they involve exploitation.
MPs have voted in support of a Ten Minute Rule Bill which would make it an offence for employers to take on unpaid interns. Ten Minute Rule Bills are largely a way for MPs to highlight issues and very rarely become law because of lack of Parliamentary time; however the vote of 181 to 19 in favour shows that there is real concern in this area.
The key issue is as to the status of interns and whether they are entitled to be paid the national minimum wage (NMW).
There are some exemptions under the NMW legislation in particular in relation to work experience placements undertaken by:
• school children of compulsory school age; and
• students if this is part of a UK-based higher education or further education course and the placement is for a period not exceeding a year.
Equally those involved in what is termed “Work Shadowing” do not need to paid – this is on the basis that no work is being undertaken; the individual is just gaining general experience of the world of work usually for a very short period.
Then there are volunteers. They are performing work but are under no compulsion to do so.
This leads us back to interns. Titles are largely irrelevant; calling interns “volunteers” or “unpaid interns” does not alter their true status. In reality whether they have any form of written contract or not the majority of interns are either employees or workers and are entitled to be paid the national minimum wage for all their hours of work. As employees/workers they also have many other employment rights such as entitlement to paid holiday and protection from discrimination.
Towards the end of last year HMRC announced that it would be targeting employers who were advertising internships to make sure they are paying the NMW. Employers should not underestimate the time and disruption that an investigation by HMRC can cause to a business and then there is the penalty if there has been a breach. Moreover once HMRC start an investigation it may spread wider than just compliance with the NMW.
During the height of the recession particularly new graduates may have been prepared to work for nothing for a period in the hope of being offered a permanent position. Now the recession is coming to an end attitudes are likely to change. Employers should ask themselves whether the best candidates want to work for an organisation that is not prepared to pay them even the minimum wage – how people are treated at the start of their employment sets the scene for the whole of the relationship.
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