Against the backdrop of the recession and the forthcoming Olympic Games the number of volunteers and interns in the UK is rising rapidly. However, the increase in the number of unpaid interns has led to controversy and brought publicity to the question whether interns should legally be paid the NMW or not. 

It has been suggested that internships favour the socially advantaged who can afford to work without being paid. This prompted the Government to publish a strategy entitled ‘Opening doors, Breaking Barriers: A Strategy for Social Mobility’ which intended to encourage companies to pay interns whether or not they qualify for National Minimum Wage (NMW).

The Government also recently received a report from the Low Pay Commission which recommended that ‘the Government takes steps to raise awareness of the rules applying to the payment of the NMW for those undertaking internships, all other forms of work experience and volunteering opportunities’.  

Together with a recent announcement from HMRC in November of an intention to crack down on NMW abuses and carry out spot checks in the fashion industry where internships are common, these reports combined with recent case law on this point are coming together to create a perfect storm or at least flag pertinent questions that businesses with interns need to address. 

What employment rights do interns have? 
If an intern qualifies as a ‘worker’ they are afforded certain statutory employment law protection. Case law has held that although an Employment Tribunal will look at a number of factors when determining whether or not an intern is a worker, two particularly important factors are whether: 

• the intern is required to personally perform the work or services; 
• and/or there is an obligation on the intern to perform the work and in return an obligation on the company to provide that intern with work.

It is worth noting that although the above factors are also relevant to the test as to whether an individual is an employee or not, an individual must pass a much higher test in order to be classed in law as an employee. 

Although workers don’t qualify for as many statutory rights as employees, they do qualify for certain important rights (which employees also qualify for) such as the right to the NMW. 

The consequences for failing to pay the NMW if an intern is found to be a worker are clearly financial in terms of backdated claims for payment of wages (up to six years arrears, though if you are still an intern after six years you should perhaps be questioning your direction in life) but also there is the possibility of criminal penalties, if the employer has been found to have wilfully neglected to pay the NMW.

So when are interns entitled to be paid the NMW?
Interns will be entitled to be paid the NMW if they are workers or employees and no specific exemption applies to them, such as that of student work experience placements undertaken as part of a UK-based higher education or further education course.

Two cases have dealt specifically with this tricky area:

Vetta v London Dreams Motion Pictures Ltd 2008
A production company engaged a self-employed production designer who in turn, took on the claimant as an intern on an "expenses-only" basis to work as her assistant. The expenses were paid by the production company. The Employment Tribunal found that the intern was a worker and therefore entitled to the NMW from the production company on the basis that it was clear that the claimant ‘carried out all of the tasks that one would have expected of an assistant in that position and should have been paid at least NMW.’ The Employment Tribunal awarded the claimant in excess of £2,000 for unpaid wages and accrued holiday pay. 

Keri Hudson v TPG Web Publishing Ltd 2011
This recent case concerned an intern who worked for a publishing company for two months and was responsible for a team of writers, scheduling articles and hiring new interns.  She was also held to be a worker and entitled to be paid the NMW and holiday pay. This case attracted a fair amount of publicity and the National Union of Journalists who supported the intern’s case encouraged other interns who believe they are entitled to be paid to contact them. 

Comment
The result of these cases is that employers should be mindful of their obligations before taking on interns particularly since interns, as a result of the publicity behind this subject, will now be more aware of their rights.  If they are genuinely interns shadowing employees to gain an insight and experience of their chosen field, don’t demand work from them.  If on the other hand, you do want them to carry out ‘real work’ as opposed to shadowing others, then be mindful of the likely obligation to pay the NMW.

Practical tips
Although there is no sure-fire way to avoid an intern qualifying as a worker, the following tips will help companies to a certain extent:

• Reduce obligations on the part of interns e.g. give them the opportunity to refuse to undertake tasks and ensure that they are not carrying out ‘real work’ which a paid worker/employee would ordinarily undertake.
• Avoid using language that makes the arrangement sound contractual e.g. ‘usual’ hours of work and ‘suggested duties’.
• Treat interns fairly to reduce the likelihood of disputes.

For further information on the above issues contact Kerrie Hunt, Partner, Thrings Solicitors at khunt@thrings.com or tel: 0117 930 9564