Interns – great source of labour – not unpaid volunteers!

The use of internships is rising rapidly and becoming a common route into work, particularly for young graduates. In April, a study was published that suggested that the number of internships has doubled since 2010. Of these, they estimate that one in five is unpaid.

Public interest in unpaid internships has been steadily building, with concerns focusing on whether  unpaid internships are legal.

Whether an unpaid internship is legal depends upon the nature, length and arrangements for each. Some businesses consider interns to be volunteers, so they are not entitled to the minimum wage. But there are a growing number of employment tribunal cases where interns have successfully argued that they should be classed as workers, not volunteers, and so are entitled to be paid the minimum wage.

The consequences of failing to pay the minimum wage to interns who are classed as workers are potentially serious. The organisation could be required to pay up to six years of backdated minimum wage to each worker, fined and publicly ‘named and shamed’ as a business that fails to pay the minimum wage.

As a general rule, if the intern has to carry out tasks personally and follow instructions (rather than just shadowing someone), they are likely to be classed as a worker. There have been calls for HMRC, which enforces minimum wage compliance, to crack down on unpaid internships as a potential source of tax revenue.

Given the legal and public relations risks, businesses that have unpaid internships should consider changing this practice. Doing so may lead to better quality candidates applying for internships and potentially becoming employees in the future.