Member Article

Law firm warns on use of unpaid interns

Employers using unpaid interns could face referral to HM Revenue and Customs (HMRC) amid concerns they may be breaking the law by flouting National Minimum Wage (NMW) legislation, warns Oxley & Coward Solicitors LLP.

The Rotherham firm is urging business to get its house in order on interns, while calling for clear guidance from HMRC given the ambiguity in the law.

The warning comes after 100 employers were referred to HMRC by employment minister Jo Swinson following a campaign by Intern Aware on the issue.

The 100 are being investigated under the NMW Act 1998 which currently requires workers over 21 to be paid £6.19 per hour.

The law allows unpaid work to be carried out by interns or those completing work experience, where an employer is offering a brief ‘taster’ of their firm or industry.

Problems arise in the grey area between genuine short-term placements and longer term roles that come with a right to payment - but where none is being made.

Such internships have been branded “exploitative and often illegal” by Intern Aware, who are calling for all work experience placements to be paid.

The situation is presented as unscrupulous employers taking unfair advantage by sourcing free labour from people anxious to give themselves an edge in a competitive job market; but is far from being so clear cut.

Work experience can be beneficial for both intern and employer alike, so long as they comply with existing employment legislation.

Those exempt from NMW include:

* Interns of compulsory school age

* Students undertaking a work placement (of up to one year) as part of their course

* Volunteers

* A charity worker

* Work shadowing – where the individual is not expected to perform any duties

Interns not exempt should be paid the NMW, but the ambiguity of what the law allows, particularly in terms of work placements for students has led to an increase in enquiries on the subject to Oxley & Coward, amid concerns raised by law abiding employers.

“We are seeing increasing numbers of employers worried about HMRC investigation if they offer unpaid work experience placements and the fear for those eager to secure such placements must be that employers may be far less willing to offer them,” said Oxley & Coward employment law expert Amy Cusworth.

“Ambiguity occurs where a short term internship becomes a real role which should command payment under the NMW, but the intern does not get paid.

“While true a lack of guidance is compounding the problem, this is unlikely to be accepted by HMRC as an excuse and employers need to get their house in order or face the consequences.”

This was posted in Bdaily's Members' News section by Mark Lane .