Summer’s here, and along with the sunshine will come summer interns for many businesses around the UK. But how should you pay them? Do you need to pay them at all?
In order to know whether you need to be paying interns, you first need to establish the correct employment status for the internship that you have advertised. This is because “intern” is not an official status. Depending on the type of internship you are offering, the intern could be entitled to pay and further rights.
What is an internship?
Almost everyone has heard of internships. Perhaps you have even been an intern at some point in your life. But a varied approach to the employment practice over the years has skewed the definition for some. If your own internship was based on tidying up, making the tea and not getting paid, you could be forgiven for thinking that’s normal.
An internship is a fixed period of work experience. It is typically of interest to students, graduates or those seeking a career change. It should provide an insight into a specific field or industry and typically offers on-the-job training. If an intern has performed well during their internship, you may wish to offer them a contract of permanent employment when the internship ends.
An internship is not intended to be used to increase labour or resource by means of little to no budget. A falsely advertised and poorly implemented internship is exploitative and illegal. In fact, to crackdown on illegal internships the Department for Business, Energy and Industrial Strategy has issued thousands of letters to UK businesses who run the risk of landing in hot water by underpaying interns.
Even with the above explanation, we know that employment status can be confusing. So to make sure you remain on the right side of employment law, we recommend a refresh on the rules for offering internships at your business.
When an intern should be paid
UK Government advice states that if an intern is carrying out the duties of a worker, then they are entitled to the National Minimum Wage (NMW) and will be entitled to paid holiday leave.
Exceptions to paid internships
Whilst most internships these days will qualify for NMW, there are some exceptions. Student internships that last for less than one year, and that are part of an accredited course (not ones that are arranged independently from the course), do not have to be paid. And neither do school work-experience placements. The student needs to be in full-time education for this to apply.
Although in this instance pay is not a legal requirement, we believe it to be a good incentive.
Other types of internships that don’t require pay include voluntary workers for a charity or fundraising body, and those who partake in shadow work which is for observation purposes only. If the intern is truly a volunteer they will have agreed to work for free and be able to come and go as they please. It has been known for employers to call a worker a volunteer. But be warned, HMRC take a very dim view of not paying NMW.
Do interns need a contract?
We believe it is best practice to have a contract for each person who works for your business, including interns. This is because a professionally drafted contract sets out the employment status and entitlements.
Additionally, contracts are a great way to communicate rules and expectations to workers. If any questions or doubts arise, they should do so before work begins.
If you’re preparing for an intern this summer and have some questions about the process, contact your local HR Dept today. We’ll help you legally recruit your new hire and advise on a comprehensive induction and training plan that is unique to your business.