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The emphasis on work experience in recruitment, especially in relation to graduates, has increased hugely in recent years. In 2015, the Independent reported that 58% of employers now rate work experience as more important than grades or a student’s personality when hiring graduates.

According to the BBC in 2013, 61% of graduates end up working for the company or firm that they have interned with. This is likely to be in part because employers will, unsurprisingly, find it much easier to judge whether an individual is a suitable fit for their business after having them work for a few weeks rather than trying to come to a verdict in a 30 minute job interview.

But while internships can be positive for both the individual and the business, there have been concerns raised that the pressure to have work experience on their resume is leading job seekers to accept internships which are unpaid and which some have argued are exploitative.

An unintended adjunct of unpaid internships is that individuals from disadvantaged socio-economic backgrounds may be unable to take up opportunities for work experience (in favour of paid work) which their more privileged peers are able take advantage of, therefore compounding their exclusion. The Trades Union Congress has previously raised concerns about unpaid internships, claiming that as many as 1 in 3 interns are unpaid despite being entitled to the minimum wage, with employers allegedly exploiting young people’s desperation to get a foot on the employment ladder.

Earlier this month, a bill from MP Alec Shelbrooke which proposed that all interns should be paid at least the minimum wage was talked out by MPs during the debate stage. However, business minister Margot James did commit to including internships in the current review of employment practices in the UK.

So what are the employer’s obligations when offering work experience and internships? If the work experience an employer is offering is for school students under the compulsory school age of 16, or if the placement is for less than 1 year and is part of a UK-based further or higher education course, then it is not necessary to pay the intern minimum wage. It is also not necessary to pay an intern minimum wage if he/she is only shadowing an individual and carries out no work themselves.

In all other cases, the responsibilities of a business depend on whether the intern can be classed as an employees or a worker under UK employment legislation, giving them protections such as the right to be paid the National Minimum Wage and to the benefits of the Working Time Regulations including paid holidays.

It is beyond the scope of this blog to examine again the various tests which establish whether an individual could be classed as an ‘employee’ or a ‘worker’ in detail, especially given the variety of arrangements that businesses have in place. However, there are some general points to watch out for. If a business’s arrangement with an intern requires the individual to carry out work without the ability to refuse certain tasks, with express directions on how the tasks are to be carried out, and with a requirement that they attend at the offices during certain hours, then it is likely that the arrangement will be that of a worker.

Merely calling someone an ‘unpaid intern’ does not affect their rights if in practice the arrangement is that of a worker. There have been a number of tribunal cases in recent years where unpaid interns have successfully argued that they are workers and entitled to the minimum wage, even where there were written contracts in place in which the interns agreed to work for free.

Care should also be taken when interns are paid back expenses incurred. If an intern receives more than what their genuine out of pocket expenses are then they will be regarded as workers and must be paid the minimum wage. Guidance from the Department for Business, Energy and Industrial Strategy has also stated that an intern who is promised that they will receive a paid job at the end of an unpaid internship must be paid the minimum wage. This is because the promise of future work is a form of reward, requiring the minimum wage to be paid throughout the ‘unpaid’ period.

Work placement and internships schemes can be beneficial both to businesses as a way to recruit the best talent that fits with their organisation and for individuals who gain useful skills and experience in an increasingly tough labour market. However, it is important to be aware of the potential pitfalls if the placement is to be unpaid. Businesses should consider what the intern will actually be doing and whether they are in fact workers and entitled to be paid the minimum wage and to work in accordance with the Working Time Regulations.

If you have any specific questions regarding your company’s work placement or internship schemes please get in touch with a member of Stronachs Employment Team.                                  

Annika Neukirch, Solicitor


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