Internships have increasingly come under the political spotlight following the 2017 Taylor Review of Modern Working Practices, which condemned unpaid internships as “an abuse of power and extremely damaging to social mobility”. Both the Low Paid Commission and the Social Mobility Commission have also called for an end to unpaid Internships, stating that their “damaging impact… on social mobility cannot be understated”.
However, despite such criticism, internships continue to be a popular arrangement, with more than 50 per cent of graduates surveyed in 2018 believing that undertaking an internship would help them secure their job of choice and more than 27 per cent worried they would lose out because they couldn’t afford to undertake an internship.
Is the intern a worker?
Recent developments in case law and government guidance have made it clear that just labelling someone an ‘intern’ or a ’volunteer’ will not determine what their status is.
If there is a verbal or written agreement for an intern to personally provide a service, rather than just shadowing or work experience, then there is an increased risk that the intern would be regarded as a worker.
Examples of interns who were found to be workers by the court have included advisers, design assistants and a widely reported case of an intern who managed other interns, was responsible for a team of writers and scheduled articles for a publishing company (by all accounts doing more than the owner, who was on holiday for much of the ‘internship’).
Should the intern be paid a wage or remuneration?
Carrying out work or providing a service on its own is not enough – the intern would also need to be paid a wage or remuneration of some kind to qualify as a worker, giving them rights to be paid the national minimum wage, receive holiday pay and have protection from discrimination, to name a few.
It’s simple – just don’t pay an intern and then they won’t have any employment law rights. Not quite. The government has issued guidance that ‘remuneration’ is interpreted very widely and could include:
- a promise that the intern will be taken on at the end of internship;
- a promise of payment or a percentage of any profits made;
- a bonus related to the services provided by the intern; and
- expenses in certain cases.
Should you pay expenses?
Paying genuine expenses (such as travel/subsistence or living costs) that enable more people to take up internships can only be a good thing and are unlikely to affect the intern’s employment status.
However, paying expenses that are not actually linked to genuine expenditure will almost certainly be viewed as remuneration for the work/services provided and the intern will be deemed a worker.
Moral and practical considerations
Lastly, you should consider whether internships (unpaid in particular) will attract the diversity of interns that you want to introduce into your company. Research has shown that BAME candidates, as well as those less financially well off, are less likely to apply for unpaid positions.
If you do decide to pay interns then you should also ensure that they are set up for correct PAYE deductions, they are accruing holiday and they are being paid the national minimum wage.
Matthew Hendra is an associate in the employment law team at Royds Withy King