interns or, as we call them outside London, people on work placements!

There has been much recent publicity about the position of interns. There are basically two issues, one legal and the other social. The legal point relates to the fact that interns are often (but not always) unpaid or low paid and so National Minimum Wage issues arise. The social point (not considered further here) has had particular significance recently following a Cabinet Office paper (Opening Doors, Breaking Barriers) launched by Nick Clegg on 5 April 2011 – the media were quick to charge the unfortunate Mr Clegg with hypocrisy as he claimed to be wanting to stop unpaid internships, which generally help children of the wealthy and well-connected to get a head start while he had himself worked as an intern in his early days in politics.

So what is an intern? There is no legal definition. Essentially an intern is just a person who works in a temporary position, with an emphasis on training rather than merely employment. In some ways, therefore, an intern is like an apprentice. Some interns are paid but often they are not – which is where the legal point comes in.

If an intern counts as a “worker” for the purposes of the minimum wage legislation then the law requires payment of the minimum wage unless a specific exemption applies. However, as many have discovered, the exemptions from the minimum wage are narrow (for example, there is no exemption for disabled people in supported work, which can lead to problems for charities helping such people as well as for the disabled people concerned).

There are specific exemptions for students doing a first degree (or a teacher training course) where the course involves working for not more than 12 months, for government accredited apprenticeships, for some volunteer work and for certain work-based training schemes. However, there is certainly no specific exemption for interns. Thus in November 2009 the Reading employment tribunal ruled that an intern paid on an expenses-only basis was a “worker” for purposes of the minimum wage legislation who was therefore entitled to pay at least in line with the national minimum wage, including holiday pay (Vetta v London Dreams Motions Pictures Ltd).

It is the precise definition of “worker” in the minimum wage legislation which is therefore most important. It includes any person who works under a contract of employment or under “any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual …” (National Minimum Wage Act 1998 s.54).

In an Institute for Public Policy Research paper published in July 2010, one of the co-authors pointed out that:

“There is a mistaken belief that employers can take on people on a voluntary basis if both sides agree – but that’s not what the law says. If an intern is doing work for a company, then they need to be paid- it’s as simple as that. In practice, this isn’t what happens because employers don’t understand the law and enforcement agencies are turning a blind eye. This is a real shame for all those hugely talented young people who can’t rely on their parents to fund an unpaid internship. We should be doing much better for these young people.”

In addition to the Cabinet Office and IPPR papers noted above, the Low Pay Commission’s recent (April 2011) report to the Government on the National Minimum Wage includes a recommendation that the Government take steps “to raise awareness of the rules applying to payment of the National Minimum Wage for those undertaking internships, all other forms of work experience, and volunteering opportunities. In addition, we recommend that these rules are effectively enforced by HMRC using its investigative powers”.

It seems unlikely that the subject will now go away. The BBC website (23rd April 2010) notes that Prime Minister David Cameron recently said he is “very relaxed” about giving work experience to personal acquaintances while in contrast Deputy PM Nick Clegg says he is “not relaxed about this at all”. Sound advice given the increased interest in this subject is that a prudent employer thinking of taking on an intern should carefully consider all relevant aspects, not least the legal aspects – and all the more so if they are or might be in the public eye.