Generally, an internship or work experience is undertaken by students, graduates or those seeking to gain some experience in a particular area.
In recent years the Department for Business, Energy and Industrial Strategy has issued thousands of letters to UK businesses who run the risk of underpaying workers classified as interns or work experience along with having some targeted campaigns.
Who is entitled to the national minimum wage?
It is vital for employers to understand what the term ‘intern’ means in their organisation as the title does not prevent them from qualifying for the national minimum wage if they are a worker. However, ’work shadowing’, which does not involve any work being performed, will not qualify for the national minimum wage.
Workers aged 16 or over are entitled to national minimum wage protection. The definition of 'worker' is wide. Whether someone is a worker does not depend on what job title they are given, they are generally classed as workers if:
- they have a contract or other arrangement to do work or services personally for a reward;
- they are expected to work set hours;
- they are actually performing work for the employer rather than just ‘work shadowing’; and
- their reward is money or benefits in kind (including the promise of contracts or future work).
Whilst most internships these days will qualify for national minimum wage, those excluded include volunteers, au pairs, workers on a Government employment programme, those under compulsory school age undertaking work experience, students on work placement for up to one year, participants in European Learning Programmes or Government Schemes and those undertaking work shadowing or on Jobcentre Plus six week work trials.
The Government provides guidance on national minimum wage, work experience and internships. The guidance contains a section on unpaid work trial periods.
What happens if you get it wrong?
HMRC, tasked with enforcing employers' obligations to pay workers at least the national minimum wage, has focused on making sure employers get it right and levelling penalties plus naming and shaming when employers have made mistakes; however minor.
Where HMRC finds that an employer has not been paying the national minimum wage, arrears must be paid immediately and a fine may be imposed (up to 200 per cent of the arrears owed, with a maximum of £20,000 per worker). It is also a criminal offence and criminal investigations will be considered where appropriate.
The best advice is:
- make sure you understand before you take someone on as an intern what they will be doing, agree elements of the arrangement in writing and that those arrangements are followed in practice; and
- review your historic engagement of interns to ensure past compliance with national minimum wage – HMRC can look back six years for non-compliance.