Chinwag's Practical Guide to Internships: Making it Legal

For the debt-riddled graduates flooding the jobs market, an internship is an essential bridge to full-time work and enthusiastic young, relatively cheap, talent has its own rewards for employers. But stay on the right side of the law.

Employment law can be a tricky business and the fallacy that an internship equals free labour could potentially land a company in hot water.

There are a few basic legal rules worth bearing in mind should you wish to offer an internship.

Danvers Baillieu, technology lawyer at Winston & Strawn LLP and Bootlaw founder addressed this very issue at a Bootlaw meetup evening earlier this year:

"The shades of grey apply particularly in relation to the requirements of the National Minimum Wage Act 1998 (NMWA 1998)"

Under the National Minimum Wage Act (NMWA 1998), anyone who is a worker, that is a person who is employed by you and no one else, must be paid, the minimum wage and according to the act a worker is defined as:

“an individual who has entered into or works under (or, where the employment has ceased, worked under)" is an employee and must be paid accordingly.

Exemption from the rule are builders, accountants or other types of contractors. The minimum wage for over 22 year olds is £5.73/hour (£229.20/week based on 40hrs) and £4.77/hour (£190.80/wk) for 18-22 year olds.

Things aren't quite that straight forward. Unless a salary is involved, an intern isn't actually obliged to work for you and when an intern works for a longer period of time, without any pay, it's in contravention of the NMWA 1998, section 54(3). There's no definite cut off period when you are no longer legally allowed to have unpaid workers in your organisation either, so you can see how companies go astray.

For a young person who is still at school or university working for free can be invaluable. Shadowing or training offers added value to education, and a possible short cut to a career, that a paid job couldn't necessarily provide.

It's up to HM Revenue & Customs to enforce minimum wage laws and they make their decisions on internships based individual cases. It basically comes down to whether an intern is providing you anything. According to HM Revenue & Customs, "officially the national wage doesn't recognise internships but if an intern is providing you with work then they're entitled to a wage."

If it's work shadowing and they're not actually "doing anything" there's no legal obligation to provide wages. 

If your company were to be investigated by the HMRC you would be given the chance to compensate your interns and an opportunity to comply with the rules. From there the intern would then be considered a worker and employment laws would come into effect.

Offering a basic wage with some structure to their work day makes for motivated interns as much as sitting someone in front of a computer with nothing to do all day doesn't.

Above everything else internships allow you to effectively "audition" someone for a permanent position within your organisation and it lets you see exactly how they would perform in the job.

Picture courtesy of dirtyhamster. Some rights reserved.