Interns: Best practice and legal risks

Interns: Best practice and legal risks

Thursday 22 December, 2011

Internships are on the increase in the workplace and are no longer the preserve of the creative industries. An employer should consider its legal obligations towards interns and not simply regard them as an obligation-free source of unpaid labour.

Interns benefit from a placement because they have an opportunity to gain work experience, to test drive a career and to enhance their CV. This topic is not without controversy. Interns often work longer hours than paid staff to try to prove themselves and unions sometimes contend that interns are being exploited. The government has highlighted that unpaid internships tend to favour the well-connected and is encouraging the use of paid internships to increase social mobility.

What rights do interns have in law?

The legal status of interns is not clear-cut, as there is no legal definition of an "intern". Legal status is important because it determines the extent of any employment rights. The label given by an employer to an intern is irrelevant because it is what happens in practice that affects their legal status. Where there is a contractual obligation on an organisation to provide work, and on the intern to carry it out personally for a wage, that intern may be an employee or a worker:

• Employees have the widest range of rights, such as the right to claim unfair dismissal or a statutory redundancy payment.
• Workers have more limited statutory rights, such as the right to paid annual leave, rest breaks, the right to receive the national minimum wage (NMW) and protection in respect of whistleblowing.
  Should interns be paid?

Claims for unpaid NMW are commonly brought by interns. An employer is required to pay the NMW rate (currently £6.08 per hour) to all workers, with limited exceptions for school-age children, those undertaking a work placement as part of their education and volunteers for charities. The consequences of failing to pay the NMW to interns who are workers are potentially serious; the employer may be required to pay back pay of the NMW for the whole time the intern has worked for them, and may be liable for a criminal penalty. The government is now encouraging paid internships irrespective of whether they qualify for the NMW and HM Revenue & Customs is considering targeted NMW enforcement in 2012 in sectors where internships are common.

Tips for reducing the legal risks

If an intern is doing work, the chances are that they are protected as a worker. It is possible to engage an intern in such a way that they do not attain worker status but care should be taken. The areas to watch out for are highlighted below. It would be unrealistic to expect to avoid all the potential risk factors and each case must be considered on its individual facts:

1. Interns should be shadowing work rather than working. Their contribution to the work place should be minimal.
2. Flexibility in the relationship is vital. Any documentation with the intern should avoid language that makes the arrangements sound contractual.
3. Interns should not be closely controlled. They should be free to refuse a particular task. Learning objectives should be discussed rather than a job role imposed.
4. Hours in the workplace should be a recommended minimum commitment rather than required hours of attendance.
5. There is no safe minimum or maximum length of time for an internship to last. If the placement is for a year or more, then this might give rise to claims for unfair dismissal.
6. If the employer pays an expenses allowance, this may be construed as wages for an employee or worker. Payments to cover out-of-pocket expenses incurred should be reimbursed against receipts.
7. Perks that could be viewed as payment in return for work done should be removed.
8. The provision of clothing or equipment to an intern is unlikely to result in them being deemed to be a worker if it is reasonable and is required for them to perform their role.
9. An employer should treat interns as it would its workforce. Having a dedicated mentor and clear guidelines for dealing with any problems should reduce the chances of disputes arising.

Should there be a contract in place?

There is no legal requirement for there to be an internship agreement, but the existence of such a document may clarify matters. The type of paperwork the employer will need to have in place will depend on the status and nature of the internship. If the employer will be treating an intern as a worker then it can issue a short-term employment contract which refers to the NMW and any obligations on the worker to carry out specific tasks. If no work is being done, the employer can provide a document to the intern that clarifies the reasonable expectations of the parties: dates of the internship; suggested hours of attendance; specific learning objectives; the mentor's name; work-related expenses; health and safety issues; and confidentiality terms.

Peter De Maria is a partner in the London City office of Doyle Clayton. He is experienced in all aspects of employment law. He has particular expertise in advising on the enforcement of restrictive covenants, team moves and bonus claims in the High Court

Originally published by Thomson Reuters GRC. © Thomson Reuters

This article originally appeared on the Compliance HR website and in its newsletter.