Fashion Intern has created an employment guide to provide a clear structure on what the law states. Whilst this is a guideline only, the consequences, however, are clear and employers should note that there are no circumstances in which an individual who is contributing to the commercial aspects of your business should do so without being paid at least the National Minimum wage.
https://www.gov.uk/employment-rights-for-interns
https://www.gov.uk/government/publications/pay-and-work-rights-complaints
Nature of Relationship is key:
By law, an individual’s employment status is determined by the nature of the relationship given to that individual by an organisation. An interns rights depend on their employability status and there is a grey area surrounding whether someone is regarded as a worker, volunteer, undertaking work experience or work shadowing. It is imperative that an organisation is clear as to how they are engaging their staff. An individual’s employment status determines their rights and their employers’ responsibilities in law.
Definition of a worker
The definition of a worker means they have an arrangement to do work, their reward is for money or the promise of future work, they have set hours and have to attend even if they don’t want to and they are relied upon by an employer who has work for them to do as long as the arrangement lasts. If an individual is going to be required to work specific hours, on certain days and to undertake specific tasks, they are deemed as a worker and not volunteer by law. A worker is entitled to getting the national minimum wage.
Definition of a volunteer
In order for an individual to be considered a volunteer under employment law, the nature of the relationship must be truly voluntary, with minimal obligations on the part of the individual. In general, a volunteer is someone who has an arrangement which does not entitle them to a financial reward for work they perform. They do not have to turn up for work if they don’t want to. Businesses cannot avoid paying NMW where due saying that it doesn’t apply or by drawing up a written agreement that says someone is a volunteer when they are in fact a worker by law.
Definition of an Intern
The term intern has no legal status under minimum wage law. Entitlement to the minimum wage does not depend on what someone is called, the type of work they do, how the work is described (unpaid, expenses), or the profession they are in. What matters is whether the agreement or arrangement they have with you makes them a worker for minimum wage purposes. You should pay an intern if they are graduates studying undertaking internships or whether they are students performing work that is not related to their course, such as help finance their studies or during a gap year. If an organisation needs an intern as part of its essential working requirements and the focus of the relationship is on productivity rather than personal development then they are regarded as a worker.
Definition of a work placement
A work placement refers to a student spending up to a year working in the industry as part of their university course. Work placements not exceeding one year undertaken by students as part of a UK – based higher education can be exempt from the National Minimum Wage. Work experience generally refers to a specified period of time that a person spends with a business, during which they have an opportunity to learn directly about working life and the working environment. If work experience only involves shadowing an employee for a short period and no work is carried out by the individual then they are not eligible for Minimum wage.
Best practice guide
Businesses should foster a professional, hard-working and friendly environment for individuals to thrive in. Under no circumstances should anyone be victimised, harassed and suffer emotional or verbal abuse. Regardless of whether someone is regarded as a volunteer, on work experience or an intern, Fashion Intern recommends paying National Minimum wage after 4 weeks. Put simply, unpaid internships are blocking opportunities for people who cannot simply afford to work for free which in turn limits the industry and the potential of employers. Through widening the access to internships you automatically increase the pool of talent. If you cannot commit to paying those who fall under the student placement wage you should ensure that they are not out of their own pocket from undertaking a placement at your organisation.
What an internship should look like if you are not paying NMW
1) The training is similar to that which would be given in a vocational school. If a company’s internship programme is structured around a classroom or academic experience, it is more likely to be viewed as an extension of the intern’s educational experience.
2) The training is for the benefit of the intern. This means that an intern is able to observe the practical application of what the individual learned in school to the workplace and such exposure will enhance the intern’s marketability in the industry.
3) Interns do not displace regular employees but work under close observation. Occasional or incidental admin work is acceptable however as long as such work does not unreasonably replace the educational objective of the intern and effectively displace regular employees.
4) The employer that provides the training derives no immediate advantage from the activities of the interns.