Is the tide turning on unpaid internships?
Mark Clayton, January 08, 2018
Maybe there is a need to develop a specific status for interns and the like. I recall that there was/is a more defined notion in Europe.
Read More Peter Copping
January 08, 2018 15:06
It is particularly difficult to decipher which employment status category interns fall into
A recent survey of 5,000 people conducted by the Social Mobility Commission found that the majority of the UK public support the introduction of a ban on unpaid internships that last more than four weeks. A massive 72% of people backed a ban on what some have termed the ‘exploitive practice’ of using unpaid interns.
Employers often promote internships as a way of allowing individuals to gain valuable industry experience. It also creates a useful pool from which businesses can recruit their future talent. However, during a recent debate in the House of Lords unpaid internships were compared to a form of modern slavery.
This is not the first attempt by members of parliament to ban unpaid internships. However, previous attempts have been rejected by ministers, who argued that it would “undermine existing employment laws”. So what did they mean?
Those who are employed to work personally for someone else may already qualify for rights such as the National Minimum Wage (NMW). That is because, unless they are genuinely self-employed and the person they are working for is their ‘client’ or ‘customer’ they are likely to be classified as a ‘worker’. While workers don’t have the same level of employment rights as employees they do enjoy certain significant rights, including the right to be paid the NMW.
This means employers who are engaging unpaid interns may be breaching NMW legislation. As most employers will know, the financial penalties for breaching the NMW can be significant and there is also the undesirable prospect of being publicly ‘named and shamed’.
But what does this debate highlight about the state of the law in this area as it stands?
The law recognises three main categories of employment status – employees, workers and self-employed – each with different rights. There are a vast range of different types of working relationships, from the purely voluntary to those that are clearly reflective of an employer/employee relationship. Businesses are left trying to decipher which of the three categories (if any) individuals fall into, which can feel like trying to fit a square peg into a round hole. This is particularly true in the case of interns, for whom there is no legal definition. Often it will not be immediately apparent what their employment status is (particularly to the untrained eye), resulting in unwary employers taking on potential liabilities.
The evolution of the gig economy and new working arrangements have changed the landscape, resulting in arrangements that don’t neatly fit the existing categories and a need for the law to catch up to make it easier for businesses to understand their legal obligations.
This problem has only been underlined by the recent raft of disputes around individuals' employment status, involving the likes of Uber, Hermes, Pimlico Plumbers and Addison Lee, to name a few. All of these cases have demonstrated two points – it’s important to document the relationship in the right way, recognising the legal reality of the obligations on the intern and the organisation. And to ensure that how that relationship actually works on a day-to-day basis remains in line with what is on paper.
Mark Clayton is an employment solicitor at Kuits Solicitors