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An honest return

Written by Adam Pescod on Monday, 07 October 2013. Posted in Employment law, Legal

With companies under the spotlight for their use of unpaid interns, employers would be wise to brush up on the legalities of such arrangements

An honest return

Unpaid internships are a thorny issue at the best of times, but they have been the subject of fairly close scrutiny of late. Back in April, employment minister Jo Swinson handed the names of 100 companies to Her Majesty’s Revenue & Customs (HMRC), all of whom were accused of using unpaid interns in paid roles. This came shortly after a major retailer attracted criticism for taking on a significant volume of work experience staff at one of its outlets, but denied they were a replacement for paid workers.

And only last month, technology giant Sony forked out £4,600 to an intern who claimed that the work he had performed for the firm merited payment. Whilst it didn’t end up at tribunal, Sony’s decision to part with the money before the case was heard was quite telling. Aside from revealing apparent malpractice, it also raised some important points about the legalities surrounding unpaid work placements and internships.

Indeed, if one is to take the law on internships down to its most basic level, an intern’s entitlement to the National Minimum Wage (NMW) hinges on whether he or she can be legally classed as a ‘worker’. Michelle Last, senior associate at law firm Stevens & Bolton, offers some clarity on this. “Whether somebody is a ‘worker’ or not is subject to a statutory test,” she explains. “You are essentially looking at whether somebody has committed to perform work personally for a business or organisation and they are not operating a business themselves. It is therefore a fairly low test.”

In this sense, the nature of the work undertaken by an unpaid intern should not be akin to that typically performed by an employee. “The types of activity you would expect an unpaid intern to perform are sitting in on meetings, observing and learning, reading files; that kind of thing,” explains Last. “But in contrast, if the employer needs to engage interns to perform tasks that they would otherwise have to be paid for, then that person is likely to be a worker who is entitled to be paid the NMW.”

Why, then, did Sony end up paying Chris Jarvis, the 25-year-old game art and design graduate from the Norfolk University of Arts? “That is an extreme case where you have an individual who is working set hours and is performing work that clearly should be done by a paid employee,” says Last. “It involved a graduate in video games design who was engaged in an on-going unpaid internship. He was expected to turn up for work from 9.30am to 6pm and do the work that should have been performed by a full-time fully paid employee testing 3D artwork for games.”

Last also highlights an episode involving the chief operating officer of Facebook, Sheryl Sandberg, as an example of when the lines can become blurred. “An advert was posted by a member of Sandberg’s team for an unpaid intern to work alongside her, and naturally candidates would be attracted to the position as she has such a high profile,” Last explains. “However, the position was unpaid and the intern was asked to have things like design and web skills, and be able to commit to a regular schedule. That was a US case, but in the UK it is likely that such a person would be classed as a ‘worker’ and that person would be entitled to the National Minimum Wage.”

Of course, taking on an unpaid intern can be of great value to an employer. On the one hand, it provides an opportunity to tap into the rich pool of talent emerging from our universities, and at no additional cost. Graduates may bring fresh ideas to the table and reinvigorate a workforce currently struggling for creative spark. In addition, a well-intentioned internship programme can shed positive light on a company’s approach, notably if it is seen to be acting as a stepping stone for the career of aspiring business leaders.   

Nevertheless, this could all count for nothing if the terms of the internship aren’t laid out clearly from the outset, and adhered to.  “When looking to fulfil the legal requirements, it may be useful for employers to focus on the reason for taking on the intern in the first place,” says Last. “Does it derive from an altruistic desire to afford young people the opportunity to experience their first foray into the employer’s area of business?”

Understandably, Last suggests it often pays to put everything in writing, but adds that this will ultimately be redundant if words aren’t matched with action. “Whilst it is useful to have a contract, you have to be clear and sure that the contract reflects reality,” she says. And the same applies to the hours of work, which should serve as a guideline to the intern as opposed to an obligation. This was particularly relevant in the Sony case, according to Last, who adds that such sticky situations can be evaded by making it clear – again in writing – that the hours are not binding. “I think that is probably the safest way of dealing with that particular issue,” she says.

Recent events could certainly lead one to speculate whether abuse of the law governing internships is more widespread than first thought. However, Last believes that the Sony case demonstrates that interns are now more in tune with the legalities, and employers should be extra vigilant as a result.

“National Minimum Wage legislation has been around for over a decade, but with the recession, the issue of young workers being exploited by UK businesses has really come to the fore,” says Last. “With the press targeting issues such as the abuse of zero-hour contracts and internships, there is more of a risk that individuals are more aware of their rights, and where they have to go to pursue those rights.” 

About the Author

Adam Pescod

Adam Pescod

EB's former editor, Pescod was tasked with ensuring these hallowed pages are rich with excellent, engaging and error-free stories, all written with the entrepreneur in mind. Pescod previously plied his trade penning pieces about pubs and pints. He is also a sucker for alliteration. 

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