The hidden costs of offering internships or work experience

If you take on unpaid interns (including those on work experience), you may be at risk of having to pay them the National Minimum Wage (NMW) if you ask them to do work which you would otherwise have a paid employee undertake.

The HMRC has publicised it having helped 167 interns reclaim nearly £200,000 in wages. That averages out at a hefty £1,197 per intern.

If somebody on a work experience placement or internship is deemed to be a worker under NMW legislation, then they are entitled to the minimum wage. HMRC encourages those on work experience/internships to name and shame ‘bad’ employers. When they do so, HMRC will fast-track investigations against them.

This all seems very harsh on employers who genuinely want to help people get on the job ladder by giving them work experience.  It may even put employers off offering work experience/taking on interns at all.

The key for employers is to make sure interns and those on work experience are not “workers” under NMW legislation. In brief, the definition of a “worker” is likely to catch someone who comes into your office on work experience or as an intern and undertakes tasks (including admin related) which you would otherwise have paid someone to do (but not an independent contractor or genuine volunteer).

Businesses should make sure they have the right contracts in place and do not fall foul of the “worker” definition. The Department for Business, Innovation and Skills (BIS) has published a useful guide for employers who offer work experience, placements and internships.

If you need advice or have any questions in relation to the above, please Contact David Greenhalgh on 020 3603 2177.

This article/blog is for reference purposes only. It does not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking or deciding not to take any action.