An internship is a form of work experience where the intern obtains ‘on the job’ experience in their chosen career. The length and arrangements for internships vary greatly and there is no formal definition of an ‘intern’ under UK law. Whether an intern is entitled to be paid for their work, and gains other employment-related rights, will depend on how the relationship is managed. As people leave various tiers of education school, college or university an internship is often a way of easing into employment.
The use of unpaid internships has become an increasingly contentious issue. It has been called an “abuse of power by employers and extremely damaging to social mobility”. Employers considering unpaid internships need to consider both the legal and reputational risks.
Use of paid internships can help to address the potential impact on workforce equality and diversity, as the pool of candidates is not limited to those who are able to support themselves financially whilst undertaking unpaid work.
Employment status and the national minimum wage
In the UK, all workers above compulsory school age are entitled to the relevant national minimum wage (NMW). A worker means someone who works under a contract of employment or any other contract under which they undertake to perform work personally for an employer that is not their client or customer.
Whether an intern is a worker will turn on the facts:
- Where they are only shadowing and not carrying out work, they will not be a worker and will not be entitled to the NMW.
- If they are working on a genuinely voluntary basis and do not receive any financial reward or benefit in kind for the work they perform, they will likely not be a worker and therefore not be entitled to the NMW.
- If they are carrying out work and the employer exerts some control over the way that they perform their work (for example, a requirement to work set hours or days), it is likely that they will be a worker and entitled to the NMW.
The label which is used to describe the relationship does not determine employment status or whether an intern is entitled to the NMW. For example, calling an intern ‘unpaid’ or a ‘volunteer’, even if the individual agrees to this, does not prevent them from qualifying for the NMW if the situation means they are entitled to it.
Enforcement and risks
Employers potentially face significant legal, financial, and reputational risks if they fail to pay workers (including interns) the NMW. The worker can bring claims in the employment tribunal in relation to the employer’s failure to pay the NMW. HMRC can require the employer to pay the total underpayment (calculated at current rates) plus a fine up to a maximum of £20,000 per underpaid worker. The Department for Business and Trade may also publicly name and shame the employer.
Advice for employers
Before advertising an internship, employers should consider the purpose of the internship, how they intend to manage the relationship in practice, and whether the intern is likely to be a ‘worker’ and therefore entitled to the NMW.
Given the increased scrutiny of unpaid internships, businesses should consider that offering paid internships makes better business sense.
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