Do you need to pay interns? Here is how to stay on the right side of the law when hiring an intern.
In recent years, "internship" has become something of a buzz word around the employment market. Depending on who you listen to, it's either a new phenomenon sweeping through a variety of industries, or it's an age-old path to employment given a new name.
Despite attracting some negative press, internships (when run properly) have proven to be a highly successful method of boosting business and tackling the runaway youth unemployment. However, with no specific legal status, employers need to be aware of their obligations when hiring an intern.
The biggest issue of contention around internships is whether they should be paid positions or not. Unfortunately there is no definitive answer to this question, no matter what some commentators claim. "Intern" is not a recognised legal term and as such any intern classification must fit into existing legislation.
In practice, that means you must establish which of the three national minimum wage categories your intern will fit into: worker, volunteer, or voluntary worker. This will depend on what sort of organisation you are and what the intern is doing during the placement.
Any intern who falls into the worker category must be paid at least national minimum wage for the hours they have worked (£6.08 for workers aged 21 years old and above, £4.98 for workers aged 18 to 20 years).
A worker is anyone deemed to have a contract with your organisation, whether written, implied, or oral. Having set hours; an obligation to fulfill those hours and complete tasks; and individual responsibility for work are all aspects that can make an intern a worker. It's also worth noting that if you use an internship purely as a trial period for a potential employee that would automatically make the intern a worker.
Some interns, however, will be categorised as volunteers and as such are exempt from national minimum wage. A volunteer can volunteer for any kind of organistion (not just charities).
However, an individual cannot simply nominate themselves as a volunteer and waive their right to pay: their role must fall under the national minimum wage volunteer definition. In the context of an internship this would mean the intern is free to come and go as they please, undertakes only small tasks under close supervision, and is under no obligation to complete any work.
It's worth noting that a host organisation can have a written agreement in place with a volunteer outlining various parts of their arrangement without this amounting to a contract. According to Business Link this can include: the ethos of your organisation; opening hours or attendance expectations; what is expected of the volunteer; your organisation's rules and procedures; insurance indemnity provisions for them
Volunteers can be reimbursed any out of pocket expenses they incur while volunteering, however any exchange of money or benefits deemed to be payment in kind for work undertaken would make the intern a worker and as such entitled to national minimum wage.
A voluntary worker is exempt from the national minimum wage and can have a contract and an obligation to perform work.
However, only charities, voluntary organisations, and fundraising bodies may hire voluntary workers.
There is also a specific exemption from national minimum wage for students undertaking an internship as part of their studies, so if you're hiring a current student undertaking an industrial placement, they are not entitled to national minimum wage.
When devising your internship programme, you need to work out whether you expect your intern to be an independent, active member of staff from the word go; or whether they will be learning the ropes for their internship period, undertaking tasks to supplement their learning and gaining meaningful experience.
If it's the former, you should expect to pay national minimum wage; if the latter, then expenses may be more appropriate.
Naturally, there is nothing to prohibit a business paying an intern national minimum wage or above if the intern is a volunteer, but when a company (particularly an SME) is already dedicating a large amount of resources to the training and development of an intern this is not necessarily feasible.
Andrew Scherer is marketing manager at Inspiring Interns, which helps companies to access the best graduate talent through internships.