- HR Strategy and Culture
- Are unpaid internships legal? And what exactly is an intern?
Internships in the news
You’ve probably heard all the noise about internships lately; to recap, last week the government announced new guidelines for employers who hire interns, with certain sectors, in particular, coming under fire. It’s estimated that there are 2000 unpaid interns in the U.K so government ministers have sent 550 warning letters to address the problem, (this has been an ongoing conversation for a year, but they’re really cracking down now). It’s been proposed that Theresa May should honour her commitment to social mobility and require any internship lasting more than 4 weeks to be paid at the National Minimum Wage (click here for details).
It’s argued that unpaid internships are a necessary step for students and graduates to get the experience needed to pursue their chosen career path, but many feel it hugely unfair that young people should basically be paying a company to get that experience whilst the company benefits from free labour. The Sutton Trust estimate the living costs of an unpaid internship to be around £1000 per month, meaning that gaining the necessary experience is just too expensive for some and really creates inequality and a barrier to social mobility. In turn, this narrows the talent pool that businesses can draw on for recruitment, not to mention narrowing the diversity of thought in your company. Show me a company of any size that would reject new eyes and diverse perspectives on the challenges they face, (particularly if those challenges are ways to reach or sell to a diverse audience) and I’ll eat my HR hat.
Business minister Andrew Griffith said “Employing unpaid interns as workers to avoid paying the national minimum wage is against the law and exploitative. No one should feel like they have to work for free to get the skills and experience they need to get ahead”.
What does “internship” mean?
“Internship” has a few different interpretations. An internship can be used to cover an unpaid work placement or volunteer or someone who is formally taken on to work as a trainee or an apprentice.
Work experience or a “work placement” provides the opportunity to shadow a professional in a specific industry and is mainly observational. It can be an informal agreement with no contract required. These terms have no legal status on their own but all the circumstances have to be right for no payment to be made. It’s normally undertaken during a holiday or as part of a university degree. Interns are usually set tasks to complete during their term, sometimes contributing to projects and ventures.
Volunteers are not tied into a contract of employment but should sign a volunteer agreement for clarity of what’s expected from both parties. Volunteers are unpaid and undertake the work freely by choice.
Apprenticeships have the primary purpose of training a person to do a particular job, although they do combine both training and working. Apprentices are required to sign a contract which is usually for a fixed-term and outlines the skill which they will be learning.
What’s legal and what will put you into hot water
There are a few specific circumstances where an unpaid internship will be legal and due to the confusing variety of definitions, not paying an intern may breach Minimum Wage laws and young people are now fighting back and claiming unpaid wages for internships undertaken up to 6 years previously. Generally speaking, the only time an internship can legally be unpaid is if the intern is under 16 and working for a charity (with expenses paid), or if the intern is a student and the work is part of a course they are taking at college or university. This is, in fact, the perfect time to undertake an internship, so that on graduation (or degree level qualification) the student already has experience of a real workplace and is ready for a graduate role.
A spokesman for the taxman said: “Employing unpaid interns as workers to avoid paying the national minimum and living wage is against the law and exploitative. HMRC always takes action to ensure workers receive what they are entitled to.”
Consequences for businesses that get it wrong include fines amounting to double the amount the intern should have earned in the first place, public naming and shaming and HMRC can even bring criminal proceedings. Yikes.
Apprenticeships are a great solution!
Small (and medium) businesses can benefit from taking on younger staff whilst also staying compliant with the law.
The Apprenticeship Levy that came into being in 2017 was good news for small businesses, who can now access funds to pay for apprenticeship training even though they haven’t paid the levy. Businesses with less than 50 employees won’t pay any apprenticeship training or assessment costs if they employ apprentices under the age of 19, and if they’re new to apprenticeships, they can apply to receive a VAT free apprenticeship grant of up to £1,500 to assist in employing a new recruit aged between 16 and 24! A great solution!
Students and young people can add real value to your business, with fresh perspectives and high energy.
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If you’re still unsure about the legalities around internships, our HR consultants can help.
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10th Oct 2014