Under the current law interns are classed as workers, with two big exceptions. Interns are not classed as workers, and therefore are not afforded the protection of national minimum wage (NMW), where:
- the intern is studying at an accredited college or university and is receiving credit for undertaking the internship (the Student Loophole); or where
- the intern is shadowing employees and not carrying out work themselves (the Shadowing Loophole).
The Student Loophole accounts for a large proportion of the longer-term unpaid internships that are particularly common in the fashion and music industries. The Student Loophole allows interns to perform tasks that paid employees would otherwise have to do (something that would usually afford them worker status) without having to be paid NMW.
In light of this, Chris Holmes (a Conservative life peer) has called for a ban on unpaid internships that last longer than four weeks. He is also pushing for HMRC to do more to crack down on unpaid internships, especially as they are often "hidden in plain sight" (i.e. they are advertised). This is in addition to his private member's bill to limit unpaid internships (which, incidentally, has just had its second reading in the House of Lords). Chris Holmes has reiterated that this is a diversity and inclusion issue as so many young people (the group most likely to undertake internships) are automatically disqualified before even applying, because they could not afford to work without being paid.
It remains to be seen whether there will be any movement in this area.
For further discussion on the pros and cons of unpaid internships please see Helena Rozman's article in HRZone by clicking here.
Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
