Are you thinking about offering internships or work experience placements to students or graduates? On the Recruiter blog, you can see that there are many benefits for both employers and young people when these types of placements are offered. If you are still to be convinced, you can remind yourself of the benefits for employers who offer internships. And creating meaningful work experience programmes has its advantages, too.
However, as an employer, you need to make sure you don’t get caught out by not offering the National Minimum Wage (NMW) or National Living Wage (NLW) to those young people who are entitled to receive it.
Over the years, the question of payment for internships has been widely discussed and, in certain cases, some well known employers have been called out for what many regard as unfair treatment of their interns.
Some employers have been accused of exploiting young people – taking them on as free or cheap labour. These are employers who are aware of the requirements for whether they need to pay the young people they offer placements to, or not – but choosing instead to bend the rules and look for loopholes so that payment is either minimal or non-existent. Some employers have also relied on the fact that students and graduates might not be aware of their rights when it comes to particular types of internships and so a wage isn’t paid to them.
Students and graduates who have been treated in this way are within their rights to report such employers to the HMRC but, understandably, not many of them feel brave enough to go through the process.
But, of course, there are also many employers out there who are simply unaware of the laws surrounding the payment of interns or those on work experience. When someone is regarded as a particular type of ‘worker’ then they must be paid as such. It is the responsibility of employers to make themselves aware of the law and make sure young students and graduates receive at least the financial compensation they are entitled to for their work.
Why Employers Should Pay Their Interns
Aside from the fact that, in some situations, you will be breaking the law if you don’t pay National Minimum Wage or National Living Wage, not paying interns means you could be missing out on some of the UK’s best young talent.
Unpaid internships are only open to those young people that can afford to do them and lots of young people are not in a position, financially, to be able to afford to work for free.
Especially if you are in a city such as London where the cost of living is so high, many young people are automatically excluded from applying for your positions. They simply can’t afford to work for a few weeks or months without being paid so they won’t even apply for your internship vacancies.
Paying your interns fairly means you are opening doors for many more young people so that they get the opportunity to experience the workplace. It also means you can build yourself a reputation as being one of the good guys in investing in young people. This can be a real boost for any future recruitment you will need to do because more students and graduates will want to apply for your vacancies.
When You Should Pay Your Interns
As an employer, you might have been thinking about offering work shadowing opportunities and / or creating internship and work experience programmes so that you can invest in young people and also gain access to potential future talent.
What you need to make sure of is that you are working within the law. An entitlement to at least the National Minimum Wage depends on the contractual agreement with the employer. It does not depend on the job title you choose to give. Advertising an opportunity with the label of ‘work experience,’ for example, does not necessarily mean you are exempt from paying the National Minimum Wage.
So, what are the situations where you need to be paying your interns?
- An Intern On An Oral Contract – Contracts can be oral as well as written. If you take on an intern and they are working agreed hours, carrying out specific tasks, for payment, then that intern must be paid at least minimum wage.
- Unpaid Intern With A Promise Of A Job Afterwards – If you take on an unpaid intern and you are going to guarantee them a position within your company afterwards then you must pay that intern at least the minimum wage for the duration of the internship. Just because you have labelled it an ‘unpaid internship’ doesn’t give you the right to not pay your intern.
- Work Experience With Travel Expenses – If you create a work experience programme and offer travel expenses for the duration of the programme, and you still pay that amount to your work experience staff even if they don’t need it (perhaps they walk or cycle to work), then you must pay at least the minimum wage.
- Asking Someone To Sign An Agreement For Unpaid Work – other reward as payment. Depending on the nature of your company, you might want to work with someone and offer them payment in the form of goods or percentage of future profits from the work that was done. Even if the person you take on for this role signs an agreement saying they are happy with this arrangement, they must still be paid at least the minimum wage. Any reward, even if it isn’t cash, is regarded as payment and so your staff member is not regarded as a volunteer. Rather, they are a worker.
When Are You Not Required To Pay Interns?
Not all interns, work experience staff or voluntary workers need to receive a wage when you invite them to your place of work. There are situations when there is no legal requirement to pay the minimum wage. Let’s take a look at those situations:
- For some degree courses, students are required to do work experience or industrial placement for up to 1 year. As this is part of the course, you are not legally required to pay minimum wage to your work experience students. This is not to be confused with students who are taking a gap year. Any young person taking a year out to work and fund their studies or other financial commitments must be paid at least the minimum wage.
- If you are offering opportunities for young people who are of compulsory school age to come into your company and experience the workplace for a couple of weeks or so, you are not legally required to pay them a wage.
- Work shadowing. Work shadowing is where students and young people enter your workplace to find out a bit more about particular roles by observing and asking questions. As they are not carrying out specific work duties, you are not required to pay minimum wage.
- If you are participating in Government schemes that help people get back to work or give young people some work experience so that they can get work in the future, you are not legally required to pay the minimum wage.
- If your organisation is a registered charity and you take on students and young people as volunteers, you are not legally required to pay them the minimum wage. You should take note here that no monetary payments must be made apart from necessary expenses, otherwise your volunteer then becomes a ‘worker’ and you will be legally required to pay them minimum wage. As you will know, many charitable organisations are operated by paid staff as well as volunteers so you need to be aware of the distinctions between employees and volunteers.
What Is A Volunteer?
Lots of students and young people like to do volunteer work for various reasons. It could be a way of gaining work experience so that they can apply for future jobs and careers with this work on their CV. Voluntary work can give young people valuable transferable skills.
Other students and graduates will volunteer for charities or cause that they care passionately about. They want to feel they are doing their bit for that cause to make the world a better place and because they care so much about that cause, they want to give their time voluntarily.
As an employer, you need to make sure your volunteers remain as such so that you do not inadvertently break the law.
Even if you agree a set amount of hours, volunteers can come and go as they please and do not need to work to any type of contract. If you have students and graduates volunteering at your charity or organisation and you promise them paid work in the future, once they have gained some experience then you will need to pay them at least the minimum wage. They will no longer be a volunteer even if you have advertised the role as such.
Advertise Your Internships, Placements Or Voluntary Positions
Offering young people the opportunity to do internships, meaningful work experience programmes or voluntary roles within your company or organisation is a win win situation. This article is not meant to put off employers from creating programmes but rather to highlight some of the legalities surrounding them with regards to when you are legally required to pay those working for you.
For further guidance and practical examples of situations where you need to – or don’t need to – pay your interns or work experience staff at least minimum wage, you can read this Government advice. Keep in mind that if you are hiring an Apprentice, the minimum wage brackets differ from the National Minimum Wage and the National Living Wage and, in many situations, these Apprenticeships will be funded.
If you are thinking about offering internships or work experience placements, you can register for free with E4S and gain access to thousands of students and young people who are looking to gain experience of the workplace and learn more about their chosen future career paths.