Category Archives: Employment Law

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

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