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.
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.
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.
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.
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.
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.
We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer
22 June 2020 • 9-minute read
How to start a clothing business. It can be an all-consuming process but with that first sample run and customer sale comes great…
19 November 2020 • 2-minute read
Landlords could be hit by another massive tax raid, as the Office of Tax Simplification outlines its recommendations for an overhaul of…
6th Floor99 Gresham StreetLondonEC2V 7NG
Sol House29 St Katherine's StreetNorthamptonNN1 2QZ
© Copyright 2021 Simply Business. All Rights Reserved. Simply Business is a trading name of Xbridge Limited which is authorised and regulated by the Financial Conduct Authority (Financial Services Registration No: 313348). Xbridge Limited (No: 3967717) has its registered office at 6th Floor, 99 Gresham Street, London, EC2V 7NG.