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The employment law implications of taking on interns

As applications for work experience placements and internships starting in the Summer and Autumn are in full swing, we consider the employment law implications of taking on interns. 

Work experience placements and internships can give students and graduates a valuable introduction to the world of work and improve employability no end. For an employer, it is often a useful way of assessing a potential job applicant’s skills and aptitudes over a longer period of practical observation than a normal application process can allow. So it can be a win win situation for all involved, but employers must be careful to ensure that they are operating in line with employment laws. 

Whereas work experience placements most often attract school leavers or pupils, internships typically follow university graduation and are increasingly required before a person can enter particular professions. There are so many different models, from purely voluntary altruistic activities and charitable placements to those which clearly involve a contractual relationship of some kind, whether these are badged as “internships” or not. UK legislation is not geared to addressing these arrangements so it can be difficult to identify the legal status of an individual and what an organisation’s obligations are. The CIPD has produced a useful guide for employers available on their website. Click here to read the article. We set out below our guide to the legal framework.

Do you have to pay an intern? 

National minimum wage (NMW) legislation applies to workers but not to volunteers so determining whether an intern should be paid at least the national minimum wage primarily depends on whether he/she qualifies as a “worker”. Interns will be entitled to be paid NMW if they are workers and no specific exemption applies to them (see below). A worker is defined as someone who either works under a contract of employment or any other contract (express or implied, oral or in writing) where the individual undertakes to carry out work or services personally. So an organisation can use unpaid interns if they are genuinely undertaking the placement on a volunteer basis. 

Volunteers typically have no contractual relationship with the organisation and are free to come and go as they please with no obligation to provide work or to perform it. Work shadowing, for example, is more likely to be classified as a volunteer arrangement whereas, if the individual is being given sole responsibility for specific tasks, this will be more likely to suggest a “worker” relationship, which would require the payment of at least the NMW. You will have to examine what it is you are asking your interns to do and assess whether they are realistically doing a job with certain expectations of quality, timekeeping, attendance etc built in, rather than observing others doing their job. 

A worker would qualify for at least NMW unless a specific exemption applies. 

School-age work experience students are not eligible for the NMW and work experience placements of less than a year’s duration undertaken by students as part of a UK-based further or higher education course are also specifically exempted from the NMW regulations. Interns over school age who are not doing the placement as part of such a course may qualify if they are deemed to be a “worker”. 

“Voluntary workers” (those who work for charities, voluntary organisations and associated fund-raising bodies and statutory bodies) are specifically excluded from entitlement to the NMW provided they receive no benefits in kind (other than reasonable subsistence or accommodation) and no monetary payment other than reimbursement of expenses actually incurred. As a minimum, reasonable travel expenses should be met by the organisation but the Government has indicated that an internship that may lead to an offer of paid employment could qualify the intern for NMW on the basis that the promise of a paid job is a reward for work so organisations should be wary of using internship programmes as informal (and unpaid) probation periods. 

All organisations should take care in deciding not to pay an intern or other volunteer. Backdated pay can be payable if it is found that NMW should have been paid but, more importantly, if it is found that an organisation has deliberately failed to pay the NMW, it (and any officer of the organisation responsible) could be liable for a criminal penalty. 

The increased use of unpaid internships in certain sectors has attracted criticism that their use results in employment priority to those whose families are able to support them while they carry out the unpaid placements. As a result, the Government is encouraging organisations to pay interns whether or not they are legally obliged to do so and the HMRC is increasingly attentive to examining the matter. 

Can an intern make a claim for discrimination? 

Under the Equality Act 2010, individuals “in employment” are protected from discrimination, victimisation or harassment in the workplace. This is defined as employment under a contract of employment, an apprenticeship or a contract personally to do work so employees, workers, and consultants who are required to perform the work personally all have the right to bring Employment Tribunal claims for discrimination. 

A number of cases involving various Citizens Advice Bureaux in the last decade have ruled that advisers could not bring discrimination claims in the Tribunal as they were volunteers rather than workers or employees. In 2000, the European Council rejected a proposal seeking to cover volunteers when they set out the Equal Treatment Framework Directive. During 2009 and 2010, when the Equality Bill was passing through Parliament, the government refused to extend protection to cover volunteers. 

At present, therefore, volunteers have no specific protection from discrimination, although, a student undertaking a work experience placement as part of vocational training who suffers discrimination, may be able to bring a claim against their training provider. 

So, again, much will hinge on whether your intern is classified as a volunteer or a worker. 

One thing that is worth noting is that, under the Equality Act 2010, an employer is potentially liable for the harassment of any of its employees by any third party. If a volunteer harassed an employee during the course of the employee’s employment and the employer failed to take reasonably practicable steps to prevent this (and the employer knew this had happened to this employee at least twice previously), the employer could be liable. It is therefore essential that all interns and volunteers are required to abide by an organisation’s equal opportunities policy. 

What do we do about health and safety, confidentiality and data protection? 

Obligations under the Data Protection Act 1998 are the same for interns and other volunteers as they are for employees. Similarly organisations are obliged to protect the health and safety of all employees, contractors and members of the public who are affected by their operation. Organisations should adopt the same policies and procedures in relation to health and safety and data protection for interns and other volunteers as they do for paid staff.

The nature of work experience is that often the individual can have access to reasonably sensitive information even if they are only with an organisation for a short time. It may therefore be appropriate for interns to be asked to sign a confidentiality agreement to promise to keep confidential any confidential information they become aware of during a placement. This can be particularly important to protect clients’ information and pricing information that may be useful to competitors.

Should we have a contract in place?

To minimise the risk of the intern being found to be a “worker” organisations should avoid creating a legal contract where the individual undertakes to carry out work or services personally. However, it is sensible to have in place an agreement which does not demonstrate the intention to create legal relations but which does set out what the organisation and the intern hope to achieve from the arrangement.

There are clear business advantages to providing work experience placements and internships but it is important that organisations make sure their programmes are set up so that any legal risks are managed. 

Top Tips

  • Do not make payments that could be interpreted as wages for work carried out and minimise any other perks that could be construed as other consideration
  •  Make sure any payments to cover expenses are clearly identified and that receipts are required 
    Ensure that there is no sanction if the individual does not attend work at specific times and for a specific minimum period, or if the individual decides to leave at any point
  • Ensure that there is no obligation for you to provide work and for the individual to do it (build in leeway for providing opportunities for observing rather than requiring actual work to be carried out)
  • Ensure that they are permitted to decline any tasks they are asked to carry out and that, if they do carry out the work, that the tasks are not at a level they should reasonably be paid for doing
  • Prepare an appropriate document setting out the arrangement using flexible and non-legalistic language such as “likely”, “suggested” and “anticipated”, ensuring it specifies the intention not to create legal relations and refers to learning objectives rather than duties
  • Ensure that the intern agrees to abide by equal opportunities and health and safety policies, provides consent for processing of his/her data and signs a confidentiality agreement

Kirsty Rogers

Partner - Executive Partner (Manchester) & Head of Client Development

I oversee the firm’s approach to client relationships across the commercial side of the business, whilst maintaining my core role as an employment lawyer.