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News added on 26.11.2018

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Internships and work experience

When do internships have to be paid?

A survey by the Sutton Trust has revealed that 27% of graduates have undertaken unpaid internships, with many having to rely on money from their parents and second jobs to get by, even though unpaid internships are generally unlawful. What else does the survey reveal and what does the law say about internships?

The survey of graduates and employers commissioned by the Sutton Trust also reveals that:

  • 39% of graduates in their 20s have undertaken an internship
  • 46% of employers reported offering internships, with large employers twice as likely to offer them as small businesses
  • of the employers who offer internships, 48% reported offering unpaid placements
  • 53% of unpaid internships were over four weeks in length and 11% were over six months.

The survey also found both employers and graduates were confused about the law as it applies to unpaid internships. 47% of graduates thought unpaid internships were legal in most situations or they weren’t sure and, when provided with a series of scenarios, around a third of employers didn’t know whether the situation would be legal or not.

Interns will be entitled to the national minimum wage (NMW) or national living wage (NLW), as applicable according to their age, if they fall within the statutory definition of a “worker”, i.e. they work under an employment contract, or any other contract, whether express or implied, and (if it’s express) 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 by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual”.  If the intern is contractually obliged to work personally for the business, the definition is likely to be satisfied and they will be entitled to the NMW/NLW. This will normally be the case where they’re expected to carry out set work or tasks during set hours in accordance with a manager’s instructions. Even if the intern offers to work for no pay, you can’t agree that the internship will be unpaid if they would otherwise qualify for the NMW/NLW, as the worker can’t contract out of their statutory NMW/NLW rights. Those entitled to the NMW/NLW will also have a statutory right to 5.6 weeks’ paid annual leave, calculated pro rata according to the length of the internship.

The exception where the NMW/NLW doesn’t need to be paid is where the intern is merely observing or shadowing a role to gain experience of the working environment, without undertaking any actual work themselves. Such work shadowing placements are likely to be very short in duration.

In addition, as protection from unlawful discrimination applies as early as the recruitment stage, the selection processes for internships need to be fair, transparent, based on merit and open to all. In particular, make sure you advertise them publicly rather than filling them through informal networks, e.g. don’t just offer them to the friends and family of existing staff as this practice not only locks out individuals who don’t have the relevant connections, it could also constitute unlawful discrimination.

The survey was published on the same day as a Private Members’ bill to ban unpaid internships over four weeks in length, the Unpaid Work Experience (Prohibition) Bill, had its second reading in the House of Commons.

Nearly half of employers who have offered internships have done so on an unpaid basis. However, unless the intern is merely work shadowing, they need to be paid at least at national minimum or national living wage rates and they will also accrue paid annual leave. Make sure your recruitment processes for internships are fair, transparent and based on merit and that you advertise them publicly rather than filling them informally. Otherwise, you risk a claim of unlawful discrimination, not to mention losing out on the opportunity to recruit talented young people.

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