Liz Isles, a senior consultant at employment specialist Croner, explains how to navigate legal issues when employing interns.

Liz Isles, a senior consultant at employment specialist Croner, explains how to navigate legal issues when employing interns.

With so many graduates and young people out of work and recruitment slow to pick up, internships and work experience are a popular route for those looking for a foot in the door to their chosen career.

There are also significant benefits for smaller employers, offering them a pool of talented new faces at a time when budgetary constraints mean they may be struggling to take on permanent staff.

However, while the benefits are clear, SMEs must be aware that from a legal standpoint interns can be considered either workers or employees. This means that they are often covered by the same employment legislation as the rest of the workforce, including the National Minimum Wage. As failure to comply with these regulations can lead to costly employment tribunals and hefty fines, it is crucial that businesses know where they stand before offering work experience or internships.

Is an intern a worker or an employee?
"Internship" is a general term which can result in difficult situations from an employment law perspective. Depending on the way that an intern is treated during his internship, he can either be considered an employee, a worker, or to be undertaking work experience.

A worker
A worker is legally described as ‘an individual who works under a contract of employment, or undertakes to perform work personally for another where the relationship is not one of client or customer’. Workers are covered by some basic employment rights but not as many as full employees.

Individuals employed under a formal work placement are therefore likely to be considered workers. This is often the case with internships, which are more formal than work experience with those involved usually undergoing a proper selection process.

Workers are covered by laws including the right to be accompanied in disciplinary and grievance procedures as well as rights under the Working Time Regulations in respect of holiday and crucially, payment of the National Minimum Wage (NMW). 

An employee
A worker could be considered an employee if there is an employment contract based on mutuality of obligation, i.e. the employer is obliged to provide work and the individual has to carry it out. As a result, employees enjoy a wider range of rights including the right to equal pay, the right not to be unfairly dismissed and the right to receive a statutory redundancy payment.

As a result, if an individual on an internship undertakes responsibilities that would usually be undertaken by an employee, he or she may be deemed to be so, and would therefore enjoy these additional employment rights.

Work experience
Work experience is an opportunity to watch and learn to gain workplace experience, with no work undertaken by the individual.  For example, if an individual is just going to come to a place of work for a few hours a day, to get a feel for “office life”, this may not be considered work.

However, the more those on work experience or interns actually do for the employer, the more likely it is that they will be considered to be working. Most interns will be looking to impress the employer in the hope of getting a permanent job, so they are likely to undertake real work at some point.

In order to ensure that an intern doesn’t become a worker or employee, companies should follow a few basic principles. Do not ask the individual to carry out specific tasks within set hours, on a regular pattern; encourage work shadowing; and limit the work experience to a short period of time, e.g. one or two weeks, as the longer it lasts the more likely it is to attract entitlement to the minimum wage.

Other situations to be aware of
Occasionally interns could be referred to as volunteers. However in the majority of cases this is unlikely to be the case. In order to be protected from paying a volunteer the NMW the worker must undertake work for a charity or voluntary organisation.

Students undertaking work experience as part of a “sandwich” course in association with a higher education establishment will be exempt from the NMW, provided the placement does not exceed one year.

Don’t give up on internships
While the law around internships may sound daunting, employers shouldn’t shy away from taking on these individuals. They can provide a valuable resource, not to mention a way of supporting those trying to break into their chosen career. But it is crucial that employers understand the law surrounding interns and take all necessary precautions to avoid tribunal claims and fines.

See also: Disability and discrimination: know the law