INTERNSHIPS - 15.02.2018

How to make sure your internships are legally compliant

WHAT’S AN INTERNSHIP?

There’s no legal definition of an internship and the term can be used to describe any type of work experience placement. They’re particularly common in business sectors such as media, journalism, information technology, fashion and politics. They enable the intern to spend a specified period of time in your business to gain valuable training and work experience, which in turn enhances their employability and skills. From a business perspective, they offer you a way to access new talent and possibly to assess the intern for future permanent paid employment. Some internships offer the intern the chance to try their hand at particular tasks, others simply provide an opportunity to watch and learn through informal work shadowing.

Pro advice 1. Although internships typically take place between completing further education and entering a profession, they can be at any stage of an individual’s career. Don’t place age limits on internships as that’s age discriminatory.

Pro advice 2. Internships are normally short term, lasting anything from a week to several months. You can decide the duration, but it’s better to fix this at the outset.

LEGAL STATUS

The legal status of an intern determines the extent of any statutory employment rights they have, i.e. if they’re an employee or a worker. Unfortunately, their legal status is somewhat of a grey area, as there’s a wide range of different types of relationship available. If an intern satisfies the definition of a “worker” , they will benefit from a number of statutory employment rights, including those relating to the national minimum and national living wage, paid holiday, rest breaks and maximum working hours and protection from unlawful discrimination. A “worker” is defined in s.230(3) Employment Rights Act 1996 as any person who works under a contract of employment or any other contract, whether express or implied, and whether oral or in writing, whereby the individual “undertakes to do or perform personally any work or services for another party to the contract whose status is not ... that of a client or customer of any profession or business undertaking carried on by the individual” . The same definition of “worker” also appears in the Working Time Regulations 1998 (SI 1998/1833) and the National Minimum Wage Act 1998 (NMWA) and there’s a wider definition of “employment” in s.83(2) Equality Act 2010 which includes both workers and a wider category of individuals who are genuinely self-employed, provided their contract obliges them to perform the work personally. In addition, depending on the reality of the working relationship, the intern could satisfy the definition of an “employee” working under an employment contract, with all the associated employment law rights and protections that apply there.

Pro advice. If the intern is neither a worker nor an employee, they will be a volunteer. A volunteer undertakes work for no financial reward (other than reasonable expenses) and they don’t have to turn up if they don’t want to. In most cases though, interns will be either workers or employees.

NATIONAL MINIMUM WAGE

Internships might be offered on a paid or unpaid basis. The key issue is whether they’re entitled to be paid the national minimum wage (NMW) or national living wage (NLW). This depends on whether they fall within the definition of a “worker” in the NMWA . The job title you give them doesn’t prevent them from qualifying for the NMW if, in reality, they’re a worker. Where the intern is obliged to perform work or tasks for the business personally, the definition is likely to be satisfied and they’ll be entitled to the NMW, or NLW if they’re aged 25 or over. Likewise, a placement that may lead to an offer of permanent paid employment is likely to result in the intern being deemed a worker, because the promise of paid work is a form of reward for the work undertaken by the intern.

Pro advice 1. If the intern is only informally observing or shadowing another employee to gain experience of the working environment, without performing any work themselves, they won’t be a worker and won’t be entitled to the NMW or paid holiday.

Pro advice 2. If all you are offering is a pure work shadowing placement, use our offer of voluntary internship letter (see Follow up ). You must then ensure the intern has no personal responsibility within the business, isn’t required to deal directly with clients and doesn’t carry out any work. Also, don’t pay them any more than actual out-of-pocket expenses.

Pro advice 3. If the intern does satisfy the “worker” definition, use our offer of paid internship letter (see Follow up ). Our letter is drafted on the basis that the intern is a worker and so is entitled to the NMW and paid holiday. Do be aware though of the risk that they might also satisfy the “employee” definition, in which case they would need an employment contract. An employment tribunal will look beyond the contractual documentation to determine the true agreement between the parties as a matter of fact if the documentation doesn’t reflect the reality. In practice, avoid any mutuality of obligation and ensure you don’t exercise a significant degree of control over what the intern does and how they do it.

Pro advice 4. Work experience placements not exceeding one year undertaken by students as part of a UK-based higher or further education course are specifically exempt from the NMW. Similarly, workers undertaking work placements who are of compulsory school age are not eligible for the NMW.

Example. Meera is engaged as an intern under an oral contract on an “expenses-only” basis to work as a journalist for a publishing company for three months. As she’s undertaking duties for the business, including research and writing articles, she’s likely to be a worker and entitled to receive the NMW and not just her expenses.

A formal internship programme under which you pay at least the NMW is likely to provide greater benefit to your business as you can require the intern to undertake work, give them more responsibility and require them to perform to a certain standard. Unpaid internships could also be damaging to your business reputation.

OTHER ISSUES

• Recruitment. Recruit interns in the same way as employees, i.e. through open advertisement rather than reliance on connections, as it widens the pool of possible talent and enables the best candidate to be selected on a fair, objective and non-discriminatory basis.
• Work and supervision. You’ll benefit more from internships if you don’t assign routine or menial tasks that don’t make use of the intern’s skills and abilities. Devise a structured work and training plan, which sets out clear goals and objectives, and ensure the intern has a supervisor to mentor them and provide feedback on their progress as assessed against the plan.
• Intellectual property and confidentiality. Intellectual property rights created by interns who aren’t employees won’t automatically vest in the business, so make sure your agreement with them includes an assignment of intellectual property rights if they’re likely to create intellectual property during their internship. Also, require them to adhere to confidentiality matters to protect your sensitive information.
• Health and safety. You must ensure, as far as reasonably practicable, that persons not in your employment, but who may be affected by your undertaking, are not exposed to risks to their health and safety. Include interns in your health and safety policy and ensure they’re covered by appropriate liability insurance.
• Data protection. You have the same data protection obligations towards interns as you have towards employees, e.g. relating to meeting the conditions for processing their personal data.
• References. On completion of the internship, ideally provide them with a reference detailing the work they’ve undertaken and the skills and experience they’ve acquired to assist with their future employment. There’s no legal obligation to do this, though.

Offer of voluntary internship letter

Offer of paid internship letter