Internships

Confusion can often arise in the engagement of Internships and what is considered true work experience verses duties for compliance of NMW. In a recent announcement from the government, they stated an intention to crackdown on unpaid internships, so what do employers need to consider?

Internships can be a beneficial way for businesses to offer experience of workplace ethics and processes typically for those requiring a higher level of qualification connected to gaining experience for a professional career.

Generally, where the internship forms part of the requirements for their qualification, for example, an employee studying law is required to spend a short period of time working in the profession as part of their course, this attendance will count towards their studies and NMW does not need to be applied.

Work experience can also be a collective term that is used to describe, both an internship and other forms of work experience, such as engagements of those at compulsory school age.

Students doing work experience as a required part of a UK-based further or higher education course are workers who are exempt from the minimum wage, as long as the total time of their placement does not exceed 1 year.

NMW will not apply to any engagement that involves students/individuals observing work practices by shadowing members of staff performing specific tasks.

NMW will not apply to anyone working in a voluntary capacity provided the following conditions are met:

• They’re working for a charity, voluntary organisation, associated fund raising body or a statutory body
• They do not get paid, except for limited benefits (for example reasonable travel or lunch expenses)

With the exception of study placements identified above, employers will need to ensure that wording in agreements do not suggest there are expectations on the part of the intern or other types of work experience individuals, outside of what has been mentioned previously, to perform any duties or ‘special projects’ connected to the business. This will also include any offers of future work on the proviso that they undertake unpaid tasks.

Entitlement to the minimum wage does not depend on what someone is called, the type of work they do, how the work is described (such as ‘unpaid’ or ‘expenses only’) or the profession or sector they work in. What matters is whether the agreement or arrangement they have with you makes them a worker for minimum wage purposes.

Where no NMW rules apply, the employer can agree to reimburse any out of pocket expenses, the amount of which can be accessed on a case by case basis and naturally on production of receipts.

Remember, innocent mistakes can lead to costly penalty charges. If non-compliance with NMW rules is discovered employers will need to calculate underpayments at the rates in force for the current year and not previous years rates.

HMRC can take any of the following action:

• Issue a notice to pay money owed, going back a maximum of 6 years
• Issue a fine of up to ￡20,000 and a minimum of ￡100 for each employee or worker affected, even if the underpayment is worth less
• Take legal action including criminal legal proceedings
• Pass on the names of businesses and employers to the Department for Business and Trade (DBT) who may put them on a public list.

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