Since our last blogpost about Fair Pay For Interns, there have been a few developments which could make you, as an employer, think twice about advertising unpaid internships.

In that last blog we set out the arguments for and against fair pay for interns – but now there is a *very* strong “argument against” to add to the list of reasons why companies should not offer internships without remuneration…

Your company could find itself being investigated by Her Majesty’s Revenue & Customs…

Last week, Jo Swinson, the Minister for Employment Relations and Consumer Affairs in the Department for Business, Innovation and Skills, handed over the details of one hundred companies alleged to be breaking the law on unpaid internships to the HMRC.

Intern Aware

The list of unnamed companies accused of being on the wrong side of the law was drawn up by Intern Aware, a group which campaigns for fair, paid internships on behalf of graduates in the UK.

The list is said to contain household brand names, PR firms, accountants, architects and companies from the media, retail and fashion sectors.

Ms Swinson thanked the group for their findings and said the details would be treated as intelligence by the HMRC. Anyone found using unpaid interns to operate in full time positions when the National Minimum Wage should be applied will be found to be in breach of the law.

Speaking to Sky News after the not-yet-named-but-possibly-to-be-shamed list was handed to the HMRC, Gus Baker, a director of Intern Aware, said:

“Young people who worked hard at school, who worked hard at university, who have done everything right and played by the rules are being told after they graduate that they can’t get into the industries they want unless they work for free in unpaid internships. It excludes young people who can’t afford to work for free.”

Intern Aware say they are happy that their list has been put into the hands of the HMRC, but pledge that still more needs to be done to redress the balance and get fair pay for interns.

Mr Baker estimates that around 100,000 people in Britain are working in unpaid roles, and says that the “fair pay for interns” movement is gathering pace, not just in the UK, but in the United States, France, Canada and Australia too.

Internships Valuable For Young People

A spokesperson for the Department of Business, Innovation and Skills said: “Internships can be a valuable way of helping young people get into work and realise their ambitions. The law on the National Minimum Wage is clear. If somebody on a work experience placement or internship is a worker under NMW legislation, then they are entitled to the minimum wage.”

Ms Swinson says that more work needs to be done to enforce minimum wage law. It is essential, says the Liberal Democrat MP, that a distinction is made between genuine work experience positions, volunteering opportunities and internships, where a student or graduate is effectively doing a job that would otherwise need to be filled by a paid employee.

Anyone not complying with the law on internships was attacking the National Minimum Wage said Ms Swinson.

The legal definition which sets the boundaries of what is “work” and what is “volunteering” or “work experience” includes details such as whether there are set hours, the placement is for an extended amount of time, and whether a defined role has been set for the position rather than it being a purely observational role.

Harrods & Reading FC

Last December, Harrods, the famous London retailer, had to cough up £1,800 after Interns Aware helped a marketing graduate who had worked at the department store for three months in an unpaid position.

Harrods claimed it was an isolated mistake which had come about due to the 21 year old graduate from Ealing being “misclassified” as a volunteer. The reclassified intern was reimbursed for over 270 hours work at the National Minimum Wage rate.

More recently, the Independent newspaper highlighted a twelve month internship as a “Performance Analyst” at Reading Football Club which was advertised as paying neither a wage nor even expenses. The role also required the “successful” applicant to work unsociable hours and fork out expenses to attend every Reading game, home and away.

The cash-rich club seemed unrepentant, with a spokesman for Reading saying:

“Internships are an important part of career progression and experience building for any individual starting out on the path to their dream job. Football is happy to offer such a great opportunity, we receive a huge number of requests and it is beneficial to all parties to have formalised the process.”

Fair Warning

Last year, the HMRC clawed back over £4 million worth of wages for more than 26,000 people who it deemed to have been underpaid by employers.

So, be warned! If you as a recruiter are even thinking of advertising an unpaid internship, then get ready for a knock at the door by someone from the HMRC…