Many thousands of people are undertaking internships in organisations across the UK and a significant proportion of those are unpaid. But what does employment law say about interns, and might there be change coming?
What is an internship?
Internships are defined as periods of short-term work usually – but not always – carried out by young people in the period between finishing study and commencing full-time employment. However, as long as employment rules are followed, a person can apply to be an intern at any point in their career.
What do the figures show?
Internships are becoming more common as the world of work changes. Research carried out by the Sutton Trust shows that more than half of graduates said they had completed at least one internship – an increase of 12% since 2018.
Almost six out of ten employers say they offer internships – an increase on the 2018 figure of 48%. This figure increases for London to eight out of ten employers.
37% of internships are now paid the National Minimum Wage (the figure was 27% in 2018) but the percentage on less than the Minimum Wage has also grown, from 9% in 2018 to 23% today. About 20% were not paid at all.
Overall, 35% of graduates have completed an ‘unpaid or underpaid’ internship, an increase of 8% from the 2018 figure.
The concept of internship is affected by class; graduates who come from working-class backgrounds are less likely to undertake an internship than middle-class. The gap between them is now 20%.
Interestingly, four in ten unpaid interns rely on financial support from their parents to cover expenses involved in their role. This is a significant rise on the figure of 26% in 2018. And when it came to how graduates learn about internship opportunities, only 10% found theirs through an open advertisement.
The figures showed that when it came to the opinions of employers, only 1 in 5 said that they wanted things to continue as normal. Four of out of ten said they wanted unpaid placements banned.
When asked, 75% of employers who offered internships say a ban on unpaid internships would not adversely affect the number of opportunities they provide.
What does the law say?
There’s no official definition of the term; nor is there any requirement regarding their duration. This means, as an employer, the key issue will be understanding the individual’s employment status and whether they need to be paid.
By law, you must pay any intern who counts as a worker. This will be the case if they:
- have agreed to carry out work for you, even if this was just through a verbal contract;
- are required to work during set hours;
- have been promised any sort of benefit, such as future employment.
Where this is the case, you must pay them at least the minimum wage. You must do this whether they work full or part-time. However, there are some situations where these rules don’t apply.
Exceptions
You don’t have to pay an intern the National Minimum Wage if they’re:
- working for a charity, voluntary organisation or statutory body, and they receive limited expenses but no actual pay;
- work-shadowing, as this means they’re only observing and will not carry out work themselves.
If someone is undertaking an internship or placement for educational reasons, you don’t have to pay the National Minimum Wage if:
- their internship or placement lasts less than a year and is part of a UK-based further or higher education course;
- they’re of compulsory school age.
A change in the law?
On 10th October 2024, the government introduced the flagship Employment Rights Bill. Alongside this, they published the Next Steps to Make Work Pay, which outlined the process by which the reforms introduced by the Bill would brought into force.
As is commonplace in employment legislation, secondary legislation will be required to implement many of the reforms.
Next Steps to Make Work Pay sets out the plan’s three sections, including:
- Section 1: The government’s vision and objectives for Make Work Pay
- Section 2: Employment Rights Bill
- Section 3: Wider reforms: government plans to deliver measures sitting outside the Employment Rights Bill
In Section 3, paragraph 48 addressed the question of unpaid interns.
“Delivery of Make Work Pay commitments via existing powers and non-legislative routes (autumn 2024 onwards)
For many Make Work Pay commitments, powers already exist to deliver our reforms and therefore do not need to be included in the Employment Rights Bill. This includes our commitment to tightening the ban on unpaid internships where we will launch a Call for Evidence by the end of the year.”
Once the submissions to the Call for Evidence have been collated and processed, the government will respond, and we may see changes to the proposals.
How can we help?
Until the government publishes its response, businesses are advised to continue administering internships as the law currently permits. If you are considering internships, or already operate them and would like legal advice on how to do so within the law, speak to our Employment Law team, who will be happy to guide you on this matter.