The summer months are often peak season for organisations to take on students for work experience placements or as ‘interns’. In today’s highly competitive job market, particularly in the creative industries, many businesses have queues of willing individuals lined up who are happy to provide free labour in exchange for gaining valuable experience and skills.
It may appear to be a ‘win-win’ situation for both parties: the intern gains experience to enhance their CV and the business plugs the labour gap during peak holiday season. However, the arrangement is not without its risks for employers. What are the common pitfalls and areas of risk?
Employment status of interns
The arrangements for engaging interns will vary enormously between different organisations. Some are paid; some unpaid or expenses only. They can be short-term arrangements for a couple of weeks, or last for several months. This can result in difficult questions of employment status: are the interns simply volunteers? Or are they potentially ‘workers’, or even ‘employees’, with the appropriate statutory rights afforded to that status? This will depend on an analysis of both the contractual documentation (if any) and of how the arrangement works in practice.
Labelling individuals as ‘interns’ will not prevent them from being regarded for legal purposes as a ‘worker’, if the reality of the arrangement is that the individual is engaged (whether under an express or implied, written or oral contract) to provide personal service to the organisation and there is sufficient ‘mutuality of obligation’ in the arrangement. If the interns are actually performing tasks of work rather than merely shadowing staff they may be regarded as ‘workers’. Interns could therefore be subject to various statutory protections, including rights under the Working Time Regulations 1998 and an entitlement to be paid the national minimum wage.
Working time rights and the national minimum wage
Interns who are deemed to be ‘workers’ will be protected by the statutory rights to minimum daily and weekly rest breaks, paid holiday and maximum working hours under the Working Time Regulations 1998. They will also be entitled to be paid the national minimum wage (NMW).
Certain organisations (charities, voluntary organisations, associated fund-raising bodies and statutory bodies) are exempt from paying the NMW to ‘voluntary workers’, as defined in the legislation, provided certain conditions are met. Such workers can receive no monetary payment other than the reimbursement of expenses and no benefits in kind other than reasonable subsistence or accommodation.
However, if an intern meets the test for being a ‘worker’ and does not fall under the statutory definition of a ‘voluntary worker’, they will be entitled to be paid the national minimum wage at the appropriate rate for their age. Further information is available from the BIS guidance “National minimum wage: work experience and internships”
Rights of genuine volunteers
Interns who are genuine volunteers and who do not fall within the definition of a ‘worker’ will not be entitled to be paid the national minimum wage and will not be entitled to the other statutory protections applicable to workers. They will not be covered by the employment provisions of the Equality Act 2010, unless they are undertaking a work experience placement as part of a UK-based higher education or further education course. They will still, however, have rights as a data subject under the Data Protection Act 1998, be entitled to health and safety protection during the placement, and must be subject to the appropriate background checks from the Disclosure and Barring Service if they are engaged to work alongside children or vulnerable adults.
Practical steps to reduce liability
If you recruit unpaid interns to your organisation, there are a number of things you can do to reduce potential liability:
• Document the arrangement properly and be careful to avoid any suggestion of ‘worker’ or employment status, keeping it an informal and flexible arrangement.
• Avoid making any payments that could be construed as wages. Limit payments to actual expenses (payable on proof of receipt) and limit the availability of perks.
• Restrict the duties and limit any obligations imposed on interns to avoid the suggestion that they are doing more than simply observing and gaining experience.
• Keep the arrangement under review and ensure that your staff do not regard interns as unpaid assistants or promise them paid work on the successful completion of the internship.
Elizabeth Stevens is a professional support lawyer at Birketts LLP.
