Offering internships - what you need to know

Friday 27 January, 2012

By Helen Thomas - helen@consumerchoices.co.uk

How to offer internships but remain on the right side of employment law.

In tough financial times, it is easy to be convinced that hiring interns is a cheap and easy way to up the productivity of your company while limiting the staffing costs. After all, many internships are unpaid. However, by not paying your intern, you could be inadvertently breaking the law. Unpaid interns cannot be treated like regular employees.

Do you have to pay interns?

In recent years it has become commonplace for businesses to hire interns - and in fact, for many graduates, it is considered the only way to get a foot in the door of your chosen career.

However, “internship” is a general term to cover a variety of positions - and as such, an intern could be considered to be a worker, an employee or to be undertaking work experience. Which of these categories your intern falls into affects their rights to pay and other benefits.

Work experience interns are the only placements that do not immediately meet the requirement for paying the National Minimum Wage (NMW). Though you’ll have to be careful to stick to the guidelines to ensure your work experience interns don’t slip into the employee category, or you’ll face the possibility of fines and a damaged reputation.

Work experience - the guidelines:

Work experience is an opportunity to observe and learn in order to gain understanding of the workplace and industry. If the work being done is seen as taking on regular responsibilities that would usually be done by an employee, it is unlikely to qualify as work experience.

The Chartered Institute of Personnel and Development (CIPD) argues that if an intern is contributing to an organisation, they have a list of duties and are working set hours, then technically they should be paid.

Other guidelines include:

• Keep it varied - no repetitive daily tasks, there must be variation in duties given so that the intern is really getting experience of your organisation, not just becoming a seasoned envelope stuffer.
  
  This doesn’t mean you can’t incorporate some of your administrative duties. After all, they exist in every company and are likely to be an element of most jobs your intern will have in their future career - so getting experience of them is valid.
• Encourage work shadowing - work experience should be an opportunity for the intern to learn about a business through observation as well as participation.
• Keep it fairly short - the longer the placement, the more likely it is to be viewed as employment.
• Time off - interns should be given time off to attend interviews or complete study obligations.
• Sandwich year - internships for students on a “sandwich” year are exempt from NMW requirements, as long as the internship is for no longer than one year.
• One year max - once any intern has been with a company for more than 12 months, they automatically get employee rights - including the option of claiming for unfair dismissal.

When is an intern a volunteer?

An intern can only be classified as a volunteer if they are working for a not-for-profit organisation.

A common misconception about internships

The Institute for Public Policy Research (IPPR) conducted a study that found many companies wrongly believe that as long as both the employer and intern know a position is voluntary, then they are allowed to recruit interns to carry out any unpaid work.

Unfortunately, these employers could find out the hard way that this isn’t the case. If an intern believes they are being exploited, they could take the employer to a claims tribunal - which could award up to six years’ worth of back pay.

But unpaid internships are win-win, right?

Not quite. Assuming you can navigate the legalities of unpaid internships, everyone should be happy, right? You get extra hands for free, and interns get much-needed experience giving them a foothold on their career path. Last year, 58% of interns were offered full-time, paid positions at the end of their internship.

However, there are many who believe that unpaid internships only serve to increase the great wealth divide.

Only those who can afford to take an unpaid position will be able to benefit from the leg-up on the career ladder that these positions can offer, leaving a whole raft of talented, qualified and eager - but less well off - people missing out.

That can only be to the eventual detriment of the industries that internships are most prevalent in - such as media, politics, and creative sectors like fashion and marketing. What if the next Alexander McQueen or Boris Johnson (or preferred politician of your choice!) never gets their chance because they couldn’t afford to work for free?

So, if your company can afford to pay interns the minimum wage, you should seriously think about it, as you will be opening your internships up to a much wider pool of potential talent.

Organisations such as Internocracy work to raise the quality of internships so that both interns and the companies recruiting them can get the most out of a placement. They also advocate the gradual phasing out of unpaid internships in order that all of our bright young things can benefit from the opportunities that internships can offer.

Internocracy offer free guidance materials for employers offering internships.

The positive side of internships

As an employer, it would be easy to think that internships are more trouble than they are worth if you are using your existing staff time to support and manage interns, and it feels like you aren’t actually getting much work out of them. However, when well planned, internships can be extremely useful, bringing hard work, enthusiasm, a fresh approach and new ideas to your company.

They give great opportunities for the next generation to cut their teeth in your industry and learn the trade. Plus, internships can be an excellent way to source new staff for your company and effectively give you an opportunity to try before you buy – allowing you to see how someone works and establishing their skills, personality and competencies prior to offering them a suitable role.

Given that firms spend an estimated £5,000 recruiting each new staff member, this feels like an approach that may bring a higher success rate than an impersonal 30-minute interview.

So don’t rule out offering internships just yet – your company could benefit more than it may initially seem.