Should you be paying your interns?
It’s a well-known fact that internships are an ever-increasingly popular route into a graduate job. Just over one third of graduates recruited by businesses in the Times Top 100 Graduate Recruiters had previously done an internship with their employer. In fact, in some professions such as journalism, they are virtually the only route into employment. 83% of new journalists have completed an internship, a staggering 92% of which were unpaid.
This begs the question – should they be paid the national minimum wage?
If they are workers, yes. But currently only a quarter of employers pay their interns the NMW. So what’s going on?
It seems that the confusion comes from the fact that the term internship has no status under the NMW legislation. Instead, you need to look at the rules on volunteers and voluntary workers which are not particularly clear. In summary:
- Volunteers and interns are entitled to the NMW if they are workers;
- They will not be a worker if they have no form of contract and receive no remuneration or benefits for providing their services;
- There are specific exemptions from the right to the NMW for school-age children; student work placements; people work shadowing; and voluntary workers employed by a charity, voluntary organisation, associated fund raising body or statutory body.
The following types of interns are all likely to be workers (although it always depends on the facts) and so entitled to the NMW:
- an unpaid intern who has been promised paid work;
- an internship with a verbal agreement to work a certain number of hours a week;
- someone on work experience who receives a financial reward (more than just reimbursement of travel or lunch expenses).
Remember too, an intern is not exempt from the NMW just because they are willing to work for free.
Interns are particularly vulnerable and less likely to complain about pay, as so many of them are dependent on the hope that the internship will ultimately lead to a full-time job. But that’s not a get out of jail free card – it’s a criminal offence not to pay someone the NMW. If caught, employers can face a financial penalty of up to £20,000, and BIS have the power to name and shame employers for failing to pay. That’s not to mention the risk of claims for unlawful deduction from wages or breach of contract.
Last week, the Social Mobility and Child Poverty Commission published its second annual State of the Nation Report which recommends that unpaid internships be made illegal – so watch this space for future developments in the law. But for now, the next time you recruit an intern, have a careful think about whether they are entitled to the NMW like all your other workers.
For more information on this topic, check out the guidance on interns and the NMW.