A recent rise in the amount of unpaid internships in Germany has become a controversial subject both in the political discussion as well as of recent court decisions. Desperate Job seekers willing to do anything to get hired meet companies that try to minimize their personell costs, a behaviour much criticized and coming under the legal scrutiny of labour courts. A recent decision of the Landesarbeitsgericht Hamm, shows, that employers must be careful when agreeing such unpaid internship.

In the case decided by the court a 19 years old school graduate started an unpaid internship in October 2012 with a large retail chain. The internship was renewed a number of times, and in March 2013 both parties agreed, that the intern was entitled to receive a formal apprenticeship as of September 2013. In July 2013 – however – the intern terminated the contract and demanded the payment of EUR 10,00 per worked our (altogether 1728 hours). In the court of first instance she was awarded EUR 17.000,00, since according to the labour court the company had unfairly taken advantage of her situation to deny her a fair payment.

The court of second instance was of different opinion. It held, that the intern was searching for a job for a long time already and that she received certain financial payments from the federal unemployment agency. This was seen as decisive and the court further argued, that the governmental subsidy would have been successful, had the intern not prematurely terminated the contract.

Employers welcoming this decision and seeing it as an opportunity to raise the number unpaid internships must - however - be careful. The judgement only is applicable in cases, where the intern receives social security payments (and is thus not employed without any financial payment) and in cases where the ultimate goal (long-term employment) is not just an unsure promise.

The judgement reconfirms the view held by previous court decisions which stated, that in most cases of voluntary internships (which are not part of a school or college education) a reasonable and fair remuneration must be paid. An exception can only be made in cases where the internship lasts only a very short time or where the intern is mainly educated and does not work in a way, which gains profits for the company.

Employers are therefore well advised to regularly pay a fair remuneration to interns (which in most cases are regular employees anyhow), otherwise they have to face substantial payment obligations and (since these cases publicized) image risks.