Job boards in the charity sector are filled with volunteering opportunities and, more recently, unpaid graduate internships. The justification for seeking this type of workforce is clear but, aside from stunting diversity within the sector, charities should be aware of the differences in law between employees, workers and volunteers. As recent case law has proven, getting it wrong could be costly.
Legal status of volunteers and interns
The legal status of an individual is critical because it determines the extent of any statutory employment rights that they have:
1. Employees work under a contract of employment and have important legal rights, such as the right to claim unfair dismissal or a statutory redundancy payment. The following factors are generally indicative of an employment relationship:
- the employee is obliged to do the work personally for the employer
- there is mutuality of obligation, i.e. the employer is obliged to pay a wage or remuneration for the employee's work
- the employer has control over the way the employee carries out the work.
2. Workers are sometimes considered a half-way house between an employee and self-employed contractor. While not entitled to the whole range of rights held by employees, the law offers workers some key protections, e.g. the right to paid holiday leave and to receive the national minimum wage (NMW).
3. The legal status of volunteers and interns is not clear-cut because there is no universal definition. Their nature, length and work arrangements vary enormously and the relationships range from the purely voluntary to those that are clearly contractual. Due to there being no steadfast rule, it is difficult for organisations taking on volunteers and interns to appreciate the legal obligations it may owe them.
Controversy of unpaid internships
Due to the increasing trend of internships being unpaid, there has been much controversy that interns are being exploited and that internships favour the socially and financially advantaged.
Volunteers and interns will only be entitled to NMW if they are workers and no exemption applies to them. Generally, they will not fall within the definition of a worker if they have no form of contract and receive no financial remuneration or benefits in kind. However, it has long been established that the written terms of any engagement will not necessarily determine status; a tribunal will look beyond them if there is evidence to show that it does not reflect the true relationship between the parties.
Government guidance suggests that the reimbursement of reasonable expenses is unlikely to make a volunteer or intern a worker. However, it goes on to give examples of interns who are entitled to NMW.
- An intern who is told that they will be paid “expenses only” for the first three months, but is promised to be taken “on the books” at the end of the internship.
- An intern who receives “travel expenses” despite walking to work.
- An intern who is paid no salary but is promised a percentage of profits.
Case law indicates that judges are likely to take a similarly critical approach and determine that some 'expenses only' interns are workers (see Vetta v London Dreams Motion Pictures Ltd ET 2703377/08; Hudson v TPG Web Publishing Limited (2011, unreported).
A stern warning from the courts
The price of getting legal status wrong was stressed in the recent ECJ decision of King v The Sash Window Workshop Ltd C-214/16 ECJ. An employment tribunal held that Mr King was a worker and so entitled to paid holiday leave but, on appeal, the case was referred to the ECJ in order to clarify whether an entitlement to paid leave could be carried forward indefinitely. The ECJ held that it could and a worker cannot therefore be stopped from bringing a claim for unpaid holiday just because a new holiday year starts. Accordingly, the employer is on the hook to compensate Mr King for unpaid holiday stretching back several years.
In light of this decision, the charity sector should be alive to the costly consequences in denying a worker’s legal status – particularly where it fails to pay NMW or full entitlement to statutory holiday pay.