Internships

Interns can cause confusion for some companies when it comes to considering payment of wages.

On the outset it may appear that you are assisting others to gain relevant experience, perhaps as part of their work-experience or work-placement and therefore it is not necessary to pay wages. However, work-experience and work placement are not legally recognised terms, therefore employers need to be sure to stay within the law when using interns.

The National Minimum Wage Act 1998 requires that “workers” be paid the national minimum wage.

The key to determining whether an individual is a “worker” or whether then can correctly be classified as an unpaid intern is to consider whether or not they will be carrying out any “work”. The term “work” is very loosely defined, in reality anything the individual does other than simply shadowing and watching others at work is likely to fall under this term. Even basic tasks such as photocopying or opening post are likely to be viewed as work, meaning that minimum wage is likely to be due. 

Recently HM Revenue and Customs have been targeting companies offering internships to ensure they are offering appropriate compensation, in 2012 736 employers were found to be in breach of this. It is therefore extremely important that employers correctly classify all individuals; otherwise they could be found to be breaking the law.

If an employer is satisfied that an individual will be an intern, details of the agreement should be put in writing. A sample letter can be found here.

If an employer feels they will actually be hiring a “worker”, it would be recommended that they issue the individual with a fixed term contract.