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Internal conflict - interns and your organisation

Many of you will be engaging interns this Summer. Interns are in the public eye, with concern about their use being raised by the Low Pay Commission.

As we approach the traditional summer holiday period for students, many of you will be engaging interns.  Interns are very much in the public eye, with concern about their use being raised this year by the Low Pay Commission and it is reported that the Government have recently referred 100 companies to HMRC for investigation to see if they are breaking the law by their use of unpaid interns. If you do use interns it is important to consider how they are engaged and used by you.   

Cases where the organisation got it wrong

The Employment Tribunal decision of Keri Hudson v TPG Web Publishing Ltd in 2011 is a good example of where an employer got their engagement of an intern completely wrong.  Ms Hudson began work for a website called ‘My Village’ having agreed to an unpaid intern role as a means of developing her experience in her preferred area of work. Over the course of the time she worked, she gradually found herself with increasing responsibilities overseeing a team of writers, training and delegation, collecting briefs, scheduling articles and hiring new interns.  Ms Hudson was required to be in the office between 10am and 6pm and did not receive payment other than for expenses.  When she subsequently left the company, she pursued a claim for unpaid wages under the National Minimum Wage Act 1998.  She succeeded and was awarded £1,025 (five weeks work for the company and the pro-rata holiday pay), because she was found to meet the criteria necessary to be considered a worker.

Another example is the case of Vetta v London Dreams Motion Pictures Ltd where the Claimant was awarded £2,000 because it was found that he was carrying out the same/similar tasks to the paid assistants within the company.  This was despite the fact that the Claimant had signed specific agreements to confirm that he would be reimbursed on an expenses only unpaid basis, thus at first glance waiving the right to a salary. 

When is an intern not an intern?

Intern is not a legally-defined status. In practice, what is key where you wish to genuinely engage unpaid interns, is to ensure that these individuals are not employees or workers. Identifying when someone is genuinely an employee is important for key rights, such as the right not to be unfairly dismissed.  However many of the day-one rights are given to the wider category of workers. If an intern falls under the legal definition of worker, they are entitled to many rights, importantly including to be paid at least the minimum wage. 

If an individual is genuinely a worker they have the right to:

  • Payment at the National Minimum Wage;
  • Protection from unlawful deductions from wages;
  • Pro-rata holidays determined by the number of days they have worked;
  • Rest breaks;
  • The right not to work more than 48 hours per week; and
  • The right not to be subjected to any detriment for raising these rights.

Whilst most of you will provide an intern with regular breaks, standard hours of work, and many of the usual rights and protections afforded to a normal member of staff, if your interns are in fact a worker or an employee that will provide important rights of redress should they believe any of the above has not been provided.

Somebody is a worker under the Working Time Regulations if they have entered into a contract of employment or any other contract, whether express or implied and (if it is 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.

The case law has shown that an intern may fall into this classification if:

  • They were required to attend the workplace at set times and cannot leave the premises when they wish;
  • The employer is obliged to provide work for the individual;
  • The individual is obliged to complete that work;
  • The employer is reliant upon the work that the intern has been provided; or
  • The role is very likely to result in a permanent position being offered.

Discrimination

Importantly protection against discrimination applies to an even broader category of people.  It covers anyone with a contract personally to do work (which might cover many interns who are not even workers). The definitive Supreme Court decision on volunteers, X v Mid Sussex Citizens Advice Bureau confirmed that the EU Framework Directive on discrimination is ‘not directed to voluntary activity’ however it was less clear on interns. The Judgment looked carefully at the European Directive’s wording and did observe that it covers access to vocational training including practical work experience. We would expect there to be further attempts to bring interns within the protection of the Equality Act and it is possible (although far from certain) that these may succeed even with unpaid interns.

So what should you do about interns?

There is some considerable pressure from political groups and the trade unions to move away from the use of unpaid internships which can limit access to the well-off.  In 2011 the coalition government launched its Open Doors policy which established a commission on social mobility and child poverty.  One purpose of this is to persuade businesses to make their internship and recruitment arrangements fairer and more open.  One approach to interns, is to pay them at least the minimum wage and to be upfront about treating them as workers or employees, albeit those engaged on a short-term basis.

Alternatively if you wish to retain the use of unpaid interns, and reduce the risks of their having rights:

  • Do not require the individual to attend the workplace at set hours.
    You can suggest when they may want to be in, but do not sanction them if they do not do so.  If your business operates between the hours of 9am and 5.30pm you can impress on the intern that they may not be able to access the premises should they choose to attend outside of these hours!
  • Do not seek to prevent the individual from leaving the premises.
    It can be stressed that the internship will generally only be of benefit if they are actually on site and able to act in the role of an intern.
  • Do not provide any salary at all
    Interns can be reimbursed for any expenses they have genuinely incurred during the course of the internship period, but they should not be provided with any benefit or pay.
  • Do not set targets.
    A good internship role will have a balance between developing the skill set of the individual whilst giving them a ‘real world’ view of what is expected of an employee within your company.  This will not prevent work being assigned to them during the course of the internship but it is important to ensure that in providing this work you do not treat the intern as an employee in expecting it to be completed.
  • Do not leave the intern unsupervised.
    General practice is to allow for the intern to shadow one or a number of your employees.
  • Do not imply that the intern role is precursor to a permanent role.
    Although should you feel the intern has potential as an employee this can be raised once the internship period has formally ended.
  • Keep the engagement short.
    The shorter the engagement the better. The longer the engagement the greater the scepticism you are likely to face in asserting it is a genuinely voluntary intern arrangement.

Get the documentation right

Possibly the most important point of all is to get the documents you use right.  Whilst it will need to reflect reality, a well drafted intern agreement (using the correct terminology) can lay out clearly what is expected of the intern and provide you with clear documentary evidence of the basis on which they are being engaged.

If this is an issue of concern to you, we are happy to help you with reviewing your arrangements or documents, or helping draft some documents for you.

Phil Allen, Partner, phil.allen@weightmans.com