Jun 6

Are your interns entitled to a salary and annual leave?

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With the summer approaching, students or those just leaving higher education, are going to be on the lookout for internships or work experience placements to enable them to gain valuable work experience and improve their CV ahead of any future job application.

Typically these schemes have been unpaid, or the employer simply offers to pay travel or lunch expenses, and organisations have been accused of taking advantage of people without a job and bypassing the laws on the minimum wage.

Tribunals are taking up the cause and a number of recent legal cases seem to say that an intern who does work that would be paid work if done by an employee or contractor, can be a ‘worker’ for the purposes of national minimum wage law. If they are a ‘worker’, you must pay them at least the relevant national minimum wage for their age – even if they are prepared to work for nothing.

Identifying workers

The law defines a ‘worker’ for the purposes of national minimum wage law as someone who has either:
• A contract of employment with you, or
• A contract with you under which they must personally perform work or services for you. The contract can be in writing or expressed orally or implied from the circumstances.

Using this definition, it is usually relatively simple to determine whether an intern is personally providing a service, and thus entitled to the national minimum wage. The fact that there may be no formal written contract in place and that their title or role is described as work experience/internship/voluntary work makes no difference.

A clear example of where an intern would not be personally providing a service, and thus not entitled to the minimum wage, would be where they are simply learning a job by shadowing a member of staff, no work is carried out by the intern, they are simply observing – they would find it difficult to show they were actually providing a service to the organisation.

Exceptions

It is important to be clear about those students who would not be classified as a ‘worker’ in the eyes of the law and therefore would not be entitled to the national minimum wage:
• students on work experience for fewer than 12 months as part of their course
• students on work experience who are still under the school-leaving age (but not school-leavers working in the UK during a gap year)
• some apprentices and some volunteers

An intern is more likely to be classified as a ‘worker’ during their placement if:
• their placement lasts more than a few weeks
• the placement may lead to an offer of permanent, paid work
• the employer is obliged to give them work to do, and they are obliged to do it
• it is real work of the sort a paid employee or contractor would be asked to do
• the business is relying on their specific skills in the tasks they undertake – for example, a marketing student might be asked to draft a market research proposal to put to an external agency
• they cannot come and go as they please

For example, in one legal case a 21-year old worked as an intern on a publishing business’ website for two months. She worked from 10am to 6pm each day, and had been promised payment. At the end of the two month period the company argued she had been working as an unpaid intern.

The Employment Tribunal upheld her claim that she was a ‘worker’ for the purposes of the NMW, even though she had no written contract. She was clearly doing proper work, of real benefit to the business, which would have been done by a paid employee or contractor if she had not done it. It therefore said she should be paid for her work.

In that case, the intern was doing valuable work. Work can be less valuable but still amount to real work – for example, opening or delivering post, stuffing envelopes or photocopying.

Right to paid holidays

As we have established, the majority of interns will be providing a service and thus deemed to be ‘workers’ who will attract at least the national minimum wage. In addition, those ‘worker’ interns will also be entitled to at least 5.6 weeks’ paid holiday per year – or, more likely, the pro-rated equivalent to reflect their part time or short term contracted status. This holiday may be taken during the internship or the intern may be paid in lieu of their accrued but untaken holiday at the end of the internship.

Either way, ensuring your intern is allocated the correct amount of holiday entitlement is as important to remember as paying your intern the national minimum wage.

Consequences of ignoring the law

It is important to know if, based on the reality of the relationship, the intern is a ‘worker’ and therefore entitled to the national minimum wage. The consequences of non-payment can be serious – the employer can be required to pay six years backdated pay and could face criminal charges if found to have wilfully neglected to pay the national minimum wage.