Internships – a legal minefield?

The use of internships has come to the fore over the last year or two. However what constitutes an internship is contested, with no agreed legal or social definition of the term. This makes the use of internships a legal and ethical challenge.

The debate centres on the role of internships and whether or not they should be paid. With no definition of “internship” the term has been used to variously describe a short-term placements making tea and doing photocopying; to medium-to-long-term activity managing specific pieces of work. Similarly there have been substantial differences in whether the payment, ranging from no payment or expenses only to national minimum wage and beyond. It could be argued that these ambiguities make internships attractive to employers; however exploiting this also opens up the employer to risk.

As stated earlier the definition of an internship is contested. Lawson and Potter (2010) recognise this and shy away from providing a definition but do suggest the key features of an internship to be length, time commitment, work expectations and contribution. They suggest that an internship should last for a substantive period of time, generally 3 months or more; that the intern work set hours, potentially full-time; the intern must complete a specified piece of work and that their progress on this is monitored and evaluated; and that they make a significant and valuable contribution to the organisation, usually by undertaking work that otherwise would have been completed by a paid member of staff (Lawson and Potter, 2010: 4-5).

These features highlight two issues which are of interest from a legal perspective; firstly the requirement to work set hours, thus implying that there is an element of obligation on the part of the intern and control on the part of the employer; and secondly that they undertake work usually undertaken by paid staff. Both of these points raise questions about whether the intern is an employee for purposes of the National Minimum Wage Act 1998.

Two concepts relating to staff are defined in the National Minimum Wage Act 1998. The first is that of “worker” and the second is that of “employee”. The concept of worker is quite broad and includes the narrower term of employee. To be considered a worker an individual must be working under a contract of employment or other contract which requires them personally to carry out the work. The Employment Rights Act 1996 defines an employee as someone who works under a contract of employment. Case law has drawn out a number of tests which are used to identify if someone is an “employee” including whether a mutuality of obligation exists; whether the employer has control over the work of the employee as well as whether a contract of employment exists and whether the individual must personally carry out the work. The terms worker and employee are particularly relevant as employees are entitled to more employment rights than workers, for example only employees are entitled to claim unfair dismissal; and are entitled to redundancy pay amongst other rights. Applying these tests to the key aspects of internships as defined by Lawson and Potter (2010) it can clearly be seen that an intern could be conceived to fall within the definition of worker, and potentially also employee. This is important, not only from the financial perspective of entitling the intern to national minimum wage, but also from the perspective of the additional rights which accrue from being employed rather than a volunteer.

The issue of payment of interns, although not the definition of intern itself, was considered in the only case on internships so far, Employment Tribunal case Vetta v London Dream Motion Pictures (2009, unreported). While Ms Vetta had applied for a film production internship post advertised as offering expenses only, the Tribunal found that workers engaged on an expenses-only basis are entitled to payment at least in line with the national minimum wage plus payment for the holiday they accrue. This would appear to clarify the position that unpaid or expenses only internships, where the intern is clearly doing work that benefits the organisation, are unlawful in terms of the National Minimum Wage Act 1998. At this juncture it is useful to note that failure to pay national minimum wage when it is due is a criminal offence in terms of s31 of the Act.
So what of the argument that interns and actually a type of volunteering. Again there is no legal definition of volunteer per se, however case law in this instance is more helpful. In X v Mid Sussex Citizens Advice Bureau [2009] EWCA Civ 340 on 10 March 2009; and Melhuish v Redbridge CAB IRLR (2005) 419 it was confirmed that volunteer agreements can be binding in honour only, i.e. they are not contractual; and that volunteers can only be paid reasonable out-of-pockets expenses. This position is also emphasised in Migrant Advisory Service v Chaudri EAT/1400/97 (28 July 1998) which highlighted that employers cannot escape their employment obligations by calling someone a volunteer, the tribunals will look behind the term to determine the actual nature of the role.

However for those organisations that engage volunteers a further complication exists in terms of the National Minimum Wage Act 1998. In trying to ensure that “true volunteers” i.e. those who wish to voluntarily donate their time and expertise, are not unintentionally caught by the provisions of the legislation, the Act defines a “voluntary worker” as “a worker employed by a charity, voluntary organisation, an associated fund-raising body or a statutory body; who under the terms of his employment is entitled to no monetary payments of any descriptions except reasonable expenses incurred in the performance of his duties; and no benefits in kind of any description other than the provision of some or all of his subsistence or reasonable accommodation related to his duties.” (s44(1) National Minimum Wage Act 1998). The question arises as to whether or not an intern constitutes a voluntary worker for purposes of the Act. Key amongst the issues here is the intention in relation to the internship, if there is an element of obligation on the part of the intern and control on the part of the employer, then this would likely be seen as an employment rather than a volunteering relationship and therefore would not fall under the definition “voluntary worker”. If the arrangement is less prescriptive with the intern under no obligation as to hours or work; the organisation would still need to be careful not to fall foul of the provisions around expenses and benefits in kind by only paying out-of-pocket expenses and limiting benefits-in-kind to those which are necessary for the role. Provision of additional benefits-in-kind or unsolicited expenses might be considered as payment and therefore imply an employment relationship (Melhuish v Redbridge CAB IRLR (2005) 419)).
Thus it can be seen that there are key differences between an intern as defined by Lawson and Potter (2010) and a volunteer as defined in case law. The most substantive of these is the difference in expectation or obligation. Volunteers are bound in honour only whereas the expectation on an intern (even where it is not contractual) appears to constitute a more substantial obligation. That obligation (to work set hours, on specific pieces of work as directed by the employer) would seem to indicate that in most circumstances an intern will fall within the definition of worker for the purposes of the National Minimum Wage Act 1998, as confirmed in Vetta v London Dream Motion Pictures (2009, unreported). The need for clarification of the law in this area would appear to be obvious, the question is whether there is political will to change it?

Rosemarie McIlwhan
Lecturer in Law
School of Law, The Open University

Rosemarie is a research consultant with the Third Sector Internships Scotland programme http://www.3rdsectorintern.com

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8 thoughts on “Internships – a legal minefield?

  1. kris says:

    We talk about making the professions “more diverse” but those in the know will know that the way to get one’s foot in the door is by way of a strategic internship – which, invariably, will be unpaid.

    The hard truth is it’s difficult to get a pupillage without serious pro bono (and by “serious” I mean full-time self-funding and abroad) and/or by a series of mini-pupillages.

    Training contracts at top firms generally require a summer internship.

    The days of open-access journalism via local papers have also evaporated, with aspiring hacks having to intern for free at the major papers.

    The young poor and anyone whose acquired bills and family responsibilities cannot afford to participate – and therefore are excluded.

    Who wins? Young people who have parents able to fund the requisite internships.

    Even if the law re internship payments is changed – I have the feeling those in power will simply find another way to shut the gates.

  2. craigeeeeee says:

    I love this post – Really great overview with specific references to both cases and statutes as well (something which official sources, like Business Link and Direct.gov, fail to provide).

    My two cents on the answer to your question is: No, there is no political will to change it. With the introduction of mandatory workfare schemes (which I believe are now exempt under the National Minimum Wage Act s.3?) and senior politicians, football clubs, and other people who should know better providing longer and longer internships on “lunch and travel expenses only”, I believe that the political will is firm in favour of more and more unpaid work.

    However, something is changing… Both the number of people who are getting more active with their employment rights (such as Ms. Vetta or the tribunal case of Nick Thomas-Webster v. Press on Feature Limited in 2011) and the number of instances where (possibly by HMRC action?) where it has been discovered that unpaid interns have been paid backpay plus holiday pay (Arcadia Group and TalkbackThames lately) are becoming more common.

    I think the tides are changing, but I certainly don’t think the political will of anyone is doing it.

    • Rosemarie McIlwhan says:

      If (as both comments suggest) there is no political will to change then two questions arise:
      1. How to create that political will?

      2. Is there a leadership role for the legal professional in ensuring that all legal internships are fairly paid with transparent and equal access for all?

      • craigeeeeee says:

        1) It’s not just an issue of political will – though unpaid work experience schemes and a Government who do not want to tackle illegal unpaid work head-on (Infact, they’re quite complacent about it all). I think there is a fundamental culture shift, which I think this article does a good job of explaining, to some extent:

        http://blogs.independent.co.uk/2012/06/27/how-we-all-started-working-for-free-3/

        Because this is a cultural shift, it’s going to be harder to change than more enforcement and political will. If there is to be change, it will have to be tackled by an un-relenting senior politician. Anyone willing to do that? Thought not.

        2) I don’t understand what you mean — are you asking me if such a person exists within the legal profession? If they do, they’re doing a god-awful job of it. Law is one of the worst industries for unpaid work.

      • Rosemarie McIlwhan says:

        To clarify the second point – should the legal profession (as a body that helps to promote and enforce law, and some might argue ethical behaviour) be doing something about this now or should they wait until new laws are brought in that require internships to be paid? (If such laws are ever made).

      • craigeeeeee says:

        They should be doing something right now as a matter of urgency. The legislation’s already there, it’s just not being enforced.

        The law and ethics are never normally far from each other, but are by no means synonymous in many respects.

        Unpaid work and the legal profession, for me, is not a matter of ethics but a matter of legality. It’s illegal, and that’s the bottom line. The legal profession should be whiter than white on this, and very often they’re not.

        If the legal profession does not curb unpaid work, then we’re making the most exclusive profession more exclusive by putting up barriers to candidates (myself included) who can’t afford to work unpaid under the guise of “work experience”, or don’t have the families rich enough to support them.

        Instead of following my passion for practicing law (That awkward moment when you thought you’d be a judge, and you didn’t go to Eton/Oxbridge), I thought I’d do a PhD by taking up a Graduate Teaching Assistant position… Only, I realised that you have to do hours and hours of unpaid lecturing work. Worst thing? It’s totally legal – Univeristies are registered charities. That is an ethical issue.

        Can’t work as a legal professional; can’t write as a legal professional; my law degree and masters is basically a piece of wall-art.

  3. Very nice article, totally what I wanted to find.

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