Are unpaid internships still legal?

A question of supply and demand

The demand for internships has increased dramatically over the last two years. This is mainly due to the recession, which saw unemployment among 16-24 year-olds rise to more than one million by the end of 2009. This meant that many in this age group needed some solid work experience on their CVs.

Under challenge. According to the TUC, only one-third of internships are offered on a paid basis and it’s questioning the legality of this type of arrangement. So what implications might this have for your business?

The legal status of interns

At present, “interns” don’t have any specific legal protection. This isn’t necessarily a problem for you providing that the work opportunity they’ve been given is a genuine internship within your organisation. It must be a clear-cut role that mainly involves them shadowing an experienced member of staff, i.e. they don’t carry out any work of value in their own right.

Do they get any payment at all?

Apart from the reimbursement of any business-related expenses, e.g. for travel, interns don’t have the right to be paid. But neither are they under any legal obligation to turn up each day, i.e. there is no contract of employment.

Just like them. On this basis, interns attract a similar status to volunteers. However, just as their supply has rapidly increased, the way employers are using them has also changed, and they have sometimes been seen as a cheap source of labour.

So are interns really “workers”?

The risk here is that once an employer starts to exert any control over an intern, i.e. by stating hours or giving them work of their own to do, they become a “worker” and accrue basic employment rights; even if that wasn’t the intention.

Hidden financial implications

There will be financial implications too. At the very least, the intern will be entitled to receive the National Minimum Wage (NMW). From October 1 2010, the NMW increases from:

• £5.80 p.h. to £5.93 p.h. for those aged 21 and over

• £4.83 p.h. to £4.92 p.h. for 18-20 year-olds; and

• £3.57 p.h. to £3.64 p.h. for workers aged 16-17.

Smooth running relationship

A formal legal challenge about the status of internships has now been threatened. But until this happens (or the government clarifies the law in this area) you can continue offering them, provided the relationship is a genuine one.

Tip 1. At the start, agree how the internship will work in practice, i.e. flexibly. Also, state whether expenses will be reimbursed and if so, what they’ll cover and any limits on what you’ll pay.

Tip 2. You canreduce the risk of an intern gaining worker status by ensuring that staff don’t act in a way that implies an employment relationship, e.g. asking them to carry out work in their own right.