HM Revenue and Customs has launched an initiative to address the issue of unpaid internships. This follows on from a concern that the grey area between volunteer and worker status has been exploited to avoid paying interns.
HMRC is targeting industries that are well-known for engaging unpaid interns, such as the arts, media and legal fields, to ensure they understand their obligations and the implications of unpaid labour.
The Sutton Trust’s research into Britain’s 70,000 interns found that out of 10,000 graduates working as interns, a fifth were unpaid. They are calling for interns whose placements last longer than four weeks to receive the national minimum wage, putting an end to any possible exploitation of this young and hard-working market.
If you have an intern programme, or hope to engage an intern in your organisation, here are a few things you’ll need to consider.
When does an intern become a worker?
The government lays down clear guidelines that set out the difference between paid and unpaid interns.
Internships that are part of educational placements don’t count as employment. Neither does job shadowing (provided the intern is just observing, not actually carrying out the role). An intern may simply be classed as a volunteer if they are working for a certain type of organisation (for example, a charity) and are unpaid.
If you’re considering an internship programme, seek advice from your legal team or HMRC, as it is possible to inadvertently ‘upgrade’ an intern into a paid worker.
Be aware of ‘the promise of future work’. If an organisation engages an intern with the promise of an employment contract after the internship, then they’re classed as a worker immediately. If you ever provide your intern with paid opportunities, this could give them employee status.
Before setting up an intern or volunteer scheme, create a volunteer agreement for your interns and volunteers, which sets out the relationship, but is clearly not a contract of employment. The National Council for Voluntary Organisations offers advice about drawing up agreements. The agreement is based around expectations rather than obligations – always keep this distinction in mind. When you’re creating this, establish what the intern will get from your organisation.
What’s in it for the intern?
The levels of engagement required to complete an internship can be astonishing. In return for experience and growth, the intern brings commitment, enthusiasm and a fresh perspective.
John Stacy Adams developed Equity Theory, which recognises that we all have different reward motivators. For an unpaid intern, these will be very different to a paid employee. Even intrinsically-motivated employees will count their salary as one of their motivators, whereas most interns enter into a different type of reward agreement.
What does an unpaid worker get in return? An internship is regarded as a de facto rite of passage in some sectors, which is something the Sutton Trust wants addressing. We all know that working as an intern can break the experience cycle (you can’t get a job because you don’t have experience, and you can’t get experience because you haven’t had a job). However, does it also need to break the bank? Offering the minimum wage for a short-term placement still gives you superb value for money, while recognising the intern’s contribution.
How to ensure your internship programme is ethical
If you’re managing an unpaid programme, keep the duration short and the benefits high. Genuine volunteering must be of mutual benefit. Legally, this can’t involve remuneration (travel and meal expenses may be reimbursed, but never as a fixed amount). However, the intern or volunteer needs to get something tangible in return. This could range from access to research documents to learning how an industry works.
Also consider the response of employees who can feel threatened by unpaid or low-paid labour. You don’t have any intention of replacing employees with interns, but that doesn’t mean eyebrows won’t be raised, especially if you’re launching a new scheme.
You can prevent suspicion by delineating roles carefully. Any internships or volunteer opportunities must supplement and not supplant ‘paid-for’ tasks. A good way to check this is by applying a ‘core task’ test to an intern’s role description. If any element of the business would cease to function if that intern wasn’t in place, then it’s a core task and should not be delegated to a volunteer member of the team.
Employees in media or arts fields will remember their internships only too well, so should have empathy towards these industry rookies. It’s all too culturally normal to pass on the less pleasant or menial tasks to an intern. Vary their tasks when possible: think about Hackman and Oldham’s five job characteristics, as repetitive tasks have a negative effect on all workers, paid or not.
For some, any sort of voluntary position may seem infeasible or unobtainable. People from less privileged backgrounds don’t necessarily have the resources to sustain periods of unpaid work. Think about how your organisation might open up internships to candidates from a variety of backgrounds. Some organisations provide accommodation, and you can reimburse expenses. Offer hours that fit in around paid work.
Or, as both HMRC and bodies such as the Sutton Trust advise, simply pay them. It may still feel unethical to offer a graduate a low wage; however, if it opens up future opportunities, both parties may consider this an acceptable compromise.