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Internships: when does NMW apply?

There has been some publicity lately on HMRC’s crackdown on unpaid internships – more, perhaps, at the behest of interest groups and media pressure than of interns themselves, but no matter. It is as well to know that internships (like interns themselves) are not all created equal, at least as far as the National Minimum Wage (NMW) rules go. It’s best to know the differences before HMRC comes visiting and tells you.

Those outside the NMW rules are:

  • Students
    Neither work experience students of compulsory school age, (i.e., under 16) nor students required to do an internship for less than 1 year as part of a UK-based further or higher education course are entitled to the NMW.
  • Shadows
    The NMW does not apply if an internship only involves shadowing an employee, and no work is carried out by the intern, who merely observes.
  • Voluntary workers
    Volunteers are outside the NMW rules if both of the following apply:

    • They are working for a charity, voluntary organisation, associated fund raising body or a statutory body and
    • They are unpaid, except for limited benefits such as reasonable travel or lunch expenses.

For any other internship there is a strong likelihood that the intern will count as a “worker” and therefore caught by the NMW rules. In particular it is not possible to “opt out” of NMW by agreeing with the intern that he or she will not be regarded as a worker. Nor does it matter whether the arrangement is described as an internship, a work placement or as work experience: if the person is a “worker”, NMW applies.

So what’s a “worker”? Essentially – anyone who is required to do work for you who isn’t doing it on a self-employed basis. So typically a worker

  • Has some form of contract (not necessarily written) or other arrangement with you to personally do work or provide services;
  • Has no (or only a limited) right to subcontract the work;
  • Is obliged to turn up for work, and for whom you are obliged to provide work during the term of the arrangement.

The giving of a reward for the services – even if that’s only the promise of a contract or future work – is a further indication of being a worker. So the fact that internships are frequently promoted as stepping stones to future careers could in some cases be significant.

Workers are also entitled to certain Employment Rights apart from the NMW. These include:

  • protection against unlawful deductions from wages;
  • statutory paid holiday and rest breaks;
  • not to work more than 48hours per week (although they can opt out);
  • protection for “whistleblowing” and against unlawful discrimination
  • not to be treated less favourably if working part-time

They may also be entitled to Statutory Maternity, Paternity and Sick Pay.

David Whiscombe

Consultant

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