Internships are a way for some students to get their foot in the door of a profession which they want to pursue. Because of recent legislative changes, the issue of paying interns has become more complicated.

What is an intern?

An intern is a student or trainee who works for a business or organisation to gain work experience. There are many reasons why somebody would consider becoming an intern. If a potential trainee doesn’t have the necessary qualifications for a role, then they might choose an internship. Some interns view the sector they wish to enter as a closed shop and that working as an intern is their only route in.

Often, an intern will be not be paid for their work. There is no legal definition of an intern so whether they are entitled to earn the minimum wage depends on whether they are classed as a worker, an employee, or if they are doing work experience.

Here are the current “definitions”-

If the intern is classed as a worker

If the intern is classed as a “worker” by HRMC, they have a contract of employment. Workers are covered by some basic employment rights but not as many as employees. If the intern is taking part in a formal work placement, then they are likely to be classed as workers.

Worker’s rights include the right to be accompanied during a disciplinary or tribunal. They have the right to earn the National Minimum Wage and they are covered by Working Time Regulations

If the intern is an employee

An intern is considered as an employee if their employment contract obliges them to carry out work for the company or organisation and also obliges the company or organisation to provide work for the intern. If an intern carries out this work, or completes duties that an employee would, then they are considered an employee.

Employees enjoy additional rights to workers including the right to equal pay, the right to not be unfairly dismissed, and the right to receive redundancy payment.

If the intern is doing work experience

Work experience is an opportunity for students to get a feel for what working life is like. An intern who is on work experience should actually not be doing any actual work. They could be there to shadow an employee for a few hours a day. Alternatively, they could only be there learning for a short period of time, for example one or two weeks.

As no actual work is carried out, interns on work experience are not entitled to the National Minimum Wage and other rights.

However if there is a promise of future work, then the employer must pay the intern for the time that they spend there.

If the internship is a part of a higher education “sandwich” placement, then they are not entitled to the Minimum Wage. If the placement is for longer than the standard one-year placement, then they are entitled to the National Minimum Wage for the time that they spend at a company over that point.

We can help

Internships are controversial – some think that they are a way to exploit impressionable young people and others think that poorer people are excluded from the chance of becoming interns because of the low or non-existent pay.

That’s just one side of the coin though. We all know as employers that, no matter how suitable someone appears at interview, we really do not know if that person is suitable for the company or capable of doing the work until a few weeks in. Those few weeks will cost your company tens of thousands of pounds – it’s a big gamble.

If you have interns already or would like guidance on the accounting-related aspects of internships, call us today on 01932 704 700 or email to speak to your usual contact partner.

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