Enternships

Today we have a guest blogger – Danvers Baillieu of Winston & Strawn LLP – who shares his insights into the legal aspects of using interns (or enterns!) in your business in the UK:

At the Bootlaw session in April, I addressed the topic of using interns in a business.  This is a interesting area, because everyone wants to do it but there are no hard and fast rules and no easy guidelines for you to follow: it’s a grey area.

The shades of grey apply particularly in relation to the requirements of the National Minimum Wage Act 1998 (NMWA 1998) – the introduction of which was a key manifesto pledge of New Labour in the 1997 election, back in the day when they actually tried to keep their manifesto pledges.

The NMWA says that anyone who is a “worker” – not an employee – is entitled to the minimum wage – currently, £5.73 for workers over 22 and £4.77 for 18 to 22 year olds – and in the Act, worker means:

“an individual who has entered into or works under (or, where the employment has ceased, worked under)—

(a) a contract of employment; or

(b) any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual;”

Section 54(3), NMWA 1998

Or, in plain English, it means anyone who works for you in any capacity, but is not employed by someone else to work for you – so your lawyer, accountant and plumber are all excluded if that was your concern.

Against this backdrop, the main justification for having an unpaid intern is they are under no obligation to you to perform any work or service, in contrast to the obligations of an employee to turn up and do the work he or she is given.  This is very simple to demonstrate where you have a young person, probably still in education, doing a shadow placements, and are there only to observe (but of little relevance in this context) – but notoriously, in certain industries, there are people working hard, for free, doing essential work which means they are completely relied upon – and this is almost certainly in contravention of the NMWA 1998.

If you are going to give someone meaningful tasks to perform, it makes sense that they should be given the chance to learn as much as possible – so time spent on shadowing, training and other non-productive tasks will show clearly that you are offering something more fulfilling than simply unpaid work.  In this respect, interns should keep learning or accruing valuable experience and it should be recognised that the marginal benefit of working for free runs out pretty quickly, in weeks rather than months, although will depend very much on the task being performed – the more mundane, the shorter the timeframe.  Once this period is up, it is time for the intern to move on or for you to bite the bullet and start paying (at least the minimum wage!).

From a practical and legal perspective, interns should not be put under too much pressure to work long hours – in particular, they may need to be working in the evenings to make ends meet so you should not expect to take precedence over that.  You do have the option to help out, and if there are discrete projects where they could be paid by the hour and which otherwise might be outsourced (e.g. making sales calls, data entry etc) then there is no reason not to offer that to them.

If your arrangement was ever looked at by HMRC, which is responsible for enforcement of minimum wage rules, the decision would turn on the facts of the case.  If you were investigated, the chances are you would be given the opportunity to compensate your interns and agree to comply with the rules going forward before any penalty is levied.  However, once that concession has been made, the “interns” would retrospectively be viewed as being employees and, depending on length of service, employment law issues could also kick in which might be more expensive to handle if you have previously ignored them.

If you want to contact Danvers about this here are some ways of getting hold of him:

Work profile: www.winston.com/dbaillieu / LinkedIn: http://www.linkedin.com/in/danvers

Twitter: www.twitter.com/danversbaillieu / Personal blog: http://danversbaillieu.blogspot.com

You can also check out: www.bootlaw.com