Why do we still have unpaid interns?

As the government considers banning the widely criticised practice, the CIPD calls for increased awareness and enforcement

So many people have spoken out against the use of unpaid internships – from the pages of newspapers to the corridors of parliament – that you would be forgiven for thinking they were a thing of the past. But you would be wrong: between 70,000 and 100,000 unpaid internships are estimated to take place in the UK each year, and more than 40 per cent of young people who have carried out an internship have done at least one unpaid stint.

Not only is this widely regarded as detrimental to social mobility, it is also, in many cases, against the law. And now, four years after the issue reached national prominence following research by the Sutton Trust and eight years after the CIPD called for a ‘training wage’ for young people experiencing their first taste of the workplace, it seems the government may be ready to act.

In its February response to issues raised by Matthew Taylor’s Good Work review into employment practices, HMRC said it had sent more than 550 warning letters to companies over the previous three months.

Promising to “improve the interpretation of the law and the enforcement action taken by HMRC in this area to help stamp out illegal unpaid internships”, the government reminded employers that interns classed as workers must be paid at least the national minimum wage (NMW), while interns classed as either workers or employees must be paid the base amount for either the NMW or the national living wage, regardless of experience or internship length.

The problem facing both the government and, to an extent, employers is that unpaid internships have become so endemic in certain industries – including financial services and many creative sectors – that it is practically a given that candidates will have some form of work experience before they take on their first role. 

The number of internships offered by top graduate recruiters has increased by around 50 per cent since 2010, says the Institute for Public Policy Research (IPPR). And nearly half of the employers it surveyed said candidates who lacked internship experience would have ‘little or no chance of receiving a job offer’ from their company’s graduate programme – regardless of academic qualifications.

However, that doesn’t mean that experience has to go unpaid, say campaigners. According to the Sutton Trust, an internship in London, excluding transport, costs more than £1,000 a month, and £827 in Manchester, meaning opportunities to gain valuable work experience are beyond many on low and middle incomes. 

“Fifty-eight per cent of advertised internships are in London, so those who cannot afford to move to the capital for the length of the internship are shut out of these opportunities,” says Carys Roberts, IPPR research fellow. 

“Any intern expected to be in a place of work at particular hours, and who does meaningful work rather than shadowing, is entitled to the NMW for their age group. But this law is frequently broken.”

So when is an intern not a worker? Stephen Woodhouse, employment solicitor at Stephensons, says that, unlike an ‘employee’ or ‘worker’ – the meaning of which are contained in employment legislation – there is no recognised definition of an ‘intern’. Almost all interns will either be ‘volunteers’, ‘workers’ or ‘employees’. 

When considering an individual’s employment status, the courts will always look behind the label and consider several factors to determine the true status of the relationship. “The amount of control an employer exerts over the intern will be key,” Woodhouse says. “The greater the control, the more likely it is that they will be an employee or worker.”

Legal exemptions linked to education include work experience placements not exceeding one year undertaken by students as part of a UK-based higher education or further education course, which are specifically exempt from the NMW. 

Similarly, those undertaking work placements who are of compulsory school age are not eligible for the NMW. But work experience, or an internship, that is not part of a course may qualify for the NMW if the intern is a worker over compulsory school age. 

The individuals People Management spoke to, however, said that even when they had undertaken internships advertised as ‘paid’ or ‘expenses paid’, companies had avoided paying them when the internship ended. Some employers were unaware that their interns should be paid, but others were exploiting the lack of clarity in the law to avoid paying them, the Sutton Trust found. 

Many have called for internships to be enshrined in employment law. Ben Lyons, co-founder of Intern Aware, says: “Paying interns is a vital step to making workforces more diverse and inclusive, but sadly the government’s proposals represent a piecemeal solution to the problem of unpaid internships. Employers and young people need legal clarity, which is why the government should require internships lasting at least four weeks to be paid.” 

The government has yet to grant internships legal status. Lord Holmes’ Unpaid Work Experience (Prohibition) Bill has not yet reach the committee stage, having had its second reading in October 2017. 

But Lizzie Crowley, CIPD skills adviser, says that, rather than banning unpaid internships, all interns should be paid the NMW, and calls for better enforcement and awareness of the existing laws. The recruitment process for interns should be the same as the process for any regular employee, with the role advertised to set out the tasks, duties and pay as a job description would, she adds.

“Employers should offer high-quality, paid training opportunities and consider special programmes – including contextual recruitment – to make sure everyone can access internships, whether they can afford to work in London for free or not,” Roberts says. “The payoff is a more diverse, and larger, talent pool.”

“I was given £22 a week”

Sue (not her real name) is a drama student in her last year of university who is working on a dissertation about unpaid internships in the arts. 

“Over the summer, I did two unpaid internships that ran alongside each other. I was contributing work, so I believed I was considered a worker. I did the maths and found out that, for the hours I put in, I would have been paid more than £2,500 for the work I did at both internships. In reality, I was given £22 a week for one internship to cover expenses.  

“I think unpaid internships help you in your future career, and that’s the issue. Everyone realises it’s unfair not to pay someone for work but, if you take the moral high ground, someone else will take your spot. I think a lot of companies aren’t aware of the law, and they’re just allowing this practice to continue. 

“There are also a lot of other dynamics at play when it comes to unpaid internships in the arts. In theatre, there is a guilt economy where you know the theatre provider doesn’t have a lot of money, so you don’t want to ask for payment. If you look at the current social climate, there is a real push for diversity in the arts, but there is also a massive contradiction because a majority of the jobs in the creative economy are done by people in a more advantaged socio-economic group. As a middle-class person, you do feel very embarrassed speaking up.”