Interns and the National Minimum Wage

Although there are, as yet, only a few decided cases on this point in the employment tribunals, a number of organisations, including Arcadia Group and an international media corporation, have reportedly settled demands for the national minimum wage (NMW) made by former interns. It would appear that such companies have heeded the warnings given last year by government lawyers that many employers were breaking NMW requirements by not paying interns and that “most interns are likely to be workers and therefore entitled to the NMW”.

In these straightened economic times many businesses offer intern-ships as a way of getting menial tasks done without having to actually pay anyone to do them.  Whilst they rely on the stream of recent graduates and school leavers who are desperate for relevant work experience to fill their c.v.s to get such work done for free, they do so at their peril as if they are not careful such interns may be able to establish that they are actually ‘workers’ and thus entitled NMW for all hours worked and there will also be a National Insurance liability as well as liability to give paid holiday.

The key to determining whether someone is truly an intern (i.e. a volunteer) or a worker (or even an employee with all the rights and benefits associated with employee status) really depends upon whether or not a contract to perform work has been entered into and therefore any business minded to offer intern-ships should ensure that there is no evidence of any binding contract between the parties which means that there must be no mutuality of obligation and no consideration given (i.e. no pay).

Any written document should state clearly that there is no intention to create legal relations between the parties.  There should be no obligations placed upon the volunteer whatsoever, only recommendations and expectations.  The wording should be such that any hours of work should be expressed as “suggested hours of work” or that “the usual commitment” expected from a volunteer is a certain number of hours per day/week.  If expenses are to be paid, then it should be clear that these are only to cover the volunteer’s expenses and do not constitute pay for work.  Further any expenses should be stated to be payable only if the volunteer performs work but that there is no obligation upon the volunteer to do so.  Whilst the business can ask the volunteer to give as much notice as possible to terminate the intern-ship, there must be no contractual notice obligations.

In order to avoid any pitfalls businesses should be very careful not to make any demands upon their interns but to simply rely on the fact that the interns want to do the work in order to improve their c.v.s and therefore are very likely to perform the work requested of them on the days and times that the business suggests they do so.

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About Belinda Lester
I am the managing director and founder of Lionshead Law a specialist employment law and HR consultancy company.

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