Employers breaking the law on unpaid internships, report claims

Employers are “almost certainly” breaking the law with unpaid internships, according to a new report.

Unpaid internships are common in sectors such as politics, media and the fashion industry. But the report from the thinktank Institute for Public Policy Research (IPPR) and campaign group Internocracy warns that employers mistakenly believe that there is a grey area around internships in minimum wage legislation – allowing them to take on unpaid interns so long as both sides know it is a voluntary position.

However, this is simply not the case: the National Minimum Wage Act 1998 states that anyone doing work for an organisation must be paid at least the minimum wage. This is regardless of how a job was advertised, what the job title is or whether there is a contract in place. Charities, voluntary organisations and statutory bodies are able to employ unpaid voluntary workers but private companies are not.

The Why Interns Need a Fair Wage report says private sector firms are offering unpaid, expenses-only internships that almost certainly could not be described as “work experience”. In its 2010 report to Government, the Low Pay Commission said there was evidence to indicate “systematic abuse of interns, with a growing number of people undertaking ‘work’ but excluded from the minimum wage”.

Last month the CIPD said employers should pay interns a minimum of £2.50 an hour to prevent exploitation. Research by the institute found that more than one-third (37%) of internships are currently unpaid.

Kayte Lawton, report co-author and research fellow at the IPPR, said: “Too many employers don’t understand the law when it comes to hiring interns. 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.”

This confusion among employers leaves them open to claims for back-dated pay from former interns, she warned.

Resources on internships

Internships: key considerations for employers

Legal Q&A: Managing interns

Tips on using interns

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