Internships and the law - what you need to know

  • By Josh Hall
  • 11 August 2010

Internships are in the news again. A recent report has suggested that thousands of employers are breaking the law by hiring unpaid interns and treating them as employees.

Most public sector bodies use unpaid interns in apparent contravention of the law – so it is entirely reasonable that some firms should be unclear about their obligations. But, if you want to avoid an employment tribunal, it is important that you stay on the right side of the law.

What are interns?

Many businesses hire interns, either to help them out with necessary tasks or in the hope of training up potential new employees. Internships are temporary positions, traditionally developed with the intention of providing on-the-job training to young people or those wishing to change careers. In their traditional sense they can therefore be thought of as similar to apprenticeships.

Today, though, while many businesses operate ‘genuine’ internships that provide interns with training and advice, many thousands of others simply think of these schemes as a way to get free labour. It is sadly very common for firms to take on interns for extended periods, pay them nothing, and maintain no intention of hiring them at the end of their placement.

What does the law say?

The number of interns has risen as a result of the recession, with many graduates considering it the only way to get into employment. As a result, there has been increased scrutiny of this area.

Many thousands of businesses are likely to be breaking the law by taking on unpaid interns. Despite confusion, the legal position is actually quite clear. Most interns are likely to be classified as workers, and will be entitled to be paid at least the National Minimum Wage as a result.

Interns who have set hours, or who have a schedule of work, will almost certainly be classed as workers. Yet many businesses fail to pay these individuals – or pay them only expenses.

Can I still hire interns?

Of course. Businesses are still free to hire people to fill temporary positions, and there is no legal obligation to provide a permanent contract at the end of the internship.

But it is important to remember that, if your interns have the characteristics of workers, you will have to pay them properly. There are stiff penalties for firms that fail to do so.

What about work experience?

Although many internships are more accurately characterised as employment, genuine internships and work experience placements do still exist. These tend to be shorter engagements, and will generally see the individual taking on a wider range of tasks.

If you are interested in offering work experience placements you might consider contacting your local school or college, through which these are often arranged.

What are the risks?

Businesses that fail to abide by National Minimum Wage legislation face severe financial penalties. If one of your interns believes that they are being underpaid, they can take you to an employment tribunal. If their claim is upheld, you can be forced to pay up to six years’ worth of back wages.

There are also less tangible risks for British industry. Many commentators have suggested that the practice of hiring unpaid interns is bad for business in general. It devalues the work that these individuals do, and can lead to a fragmented, two-tier workforce. Properly remunerated employees almost always perform more efficiently.

Employment law can be a confusing area. If you are in any doubt, make sure that you seek independent legal advice.

Read more about: Staying legal