With the summer holidays coming up fast, employers may be thinking about offering work experience or internships to students, taking on temporary workers as holiday cover or bringing in some extra staff to provide support during a busier period.
We set out below the answers to some of the common questions organisations have about temporary summer or student workers. If you have a different question or would like further information regarding temporary workers, work experience or interns, please get in touch with a member of the CMS employment team.
What is the difference between a worker and an employee?
Broadly, a "worker" is someone who enters into a contract to personally perform services, where the other party to the contract is not their client or customer (i.e. they cannot be said to be genuinely self-employed). The contract need not be in writing, but can be implied. In general, it is a lower threshold to meet than qualifying as an employee, which specifically requires there to be an express or implied contract of service or apprenticeship between employer and employee.
The definition of “worker” therefore widens the net to a larger group with statutory employment rights beyond pure employees and, as a result, may catch those such as summer interns and casual workers whose true employment status might not otherwise be clear cut.
Workers have more limited statutory employment rights than employees, but these do include the right to National Minimum Wage (or National Living Wage), holiday pay, the right to pension contributions under the auto-enrolment scheme and the right to bring whistleblowing and discrimination claims. Some workers may also be entitled to statutory sick pay if they meet certain conditions.
Is a student who is undertaking work experience entitled to be paid national minimum wage (“NMW”)?
In most cases, probably not. However, this will depend to a large extent on the arrangement the individual in question has with the organisation. Work experience students will not be entitled to receive NMW if they are:
- voluntary workers, provided certain conditions are met (note that this applies to charities, voluntary organisations, associated fund-raising or statutory bodies only and the individual must not receive any payment other than expenses incurred);
students under compulsory school leaving age (see further below); or
- a higher or further education student who, as part of their course, undertakes a work placement of up to one year.
Additionally, Government guidance states that a person who is simply job shadowing (i.e. observing but not undertaking any work themselves) will not be entitled to NMW. Furthermore, NMW will not apply to those who genuinely volunteer their services to any organisation, although the question of whether someone is a genuine volunteer has been the subject of judicial consideration, which has highlighted the importance of looking at the overall arrangements with the individual rather than the label attached to their role.
If none of the above exemptions apply and a person qualifies as a "worker" (which for NMW purposes includes employees) he or she will be entitled to the NMW, and will have other statutory employment rights.
What if they are undertaking an internship?
The term "internship" is often used to describe time spent working for an employer without pay, with the goal of getting experience of a particular workplace or role. Internships are typically associated with university students or graduates, in some cases with the potential to be offered a permanent paid position. However, there is no legal definition of "intern" and interns have no distinct employment status.
As such, whether or not they are entitled to be paid NMW will depend on whether they fall within the definition of a “worker” for NMW purposes and any of the specific exemptions outlined above that might apply. If they are workers for NMW purposes, they will at least be workers for other statutory employment rights purposes (although not necessarily employees).
What is the NMW and what happens if I do not pay it?
The current NMW rates (as of April 2017) are:
- £7.50 per hour for people aged 25 and over (NB: this is the "National Living Wage" rate);
- £5.60 per hour for people aged 18-20; and
- £4.05 for those aged under 18 (and above compulsory school age).
Employers cannot avoid paying NMW by stating that it doesn’t apply, or by attempting to contract out of it. Those found not to have been paying NMW may be required to make backdated payments, can face potentially significant penalties (these can be as high as 200% of the total underpayment to a particular worker, subject to a maximum penalty of £20,000 per underpaid worker), and could even face criminal action. In addition, the organisation may be publicly named on the Government website and it can be a PR disaster for an organisation to attract the attention of an aggravated intern or a campaigning organisation.
Claims for unlawful deductions from wages or breach of contract can also be brought by the individual worker or employee in an Employment Tribunal or in court.
What employment rights do fixed-term summer staff have?
If a business employs staff directly on a fixed-term basis for the duration of the summer, these employees have the same rights as permanent employees. In addition, they have the right not to be treated less favourably due to their fixed-term status. However, even though they have the same rights as permanent employees, the nature of fixed-term employment means they may not accrue sufficient service for certain claims, e.g. the two years needed in most cases to bring an unfair dismissal claim.
What if you engage staff through a temporary work agency?
Hiring temporary summer staff through an agency has the benefit of removing the responsibility of running the recruitment process and payroll and gives the flexibility of bringing in or dispensing with staff on demand.
Whilst this means that in most cases the staff will not be employees or workers of the hirer, most temporary staff engaged through an agency will have the benefit of certain rights under the Agency Workers Regulations 2010 ("AWR") from day one of their placement, which are the responsibility of the hirer. These include the right to use staff facilities, such as a canteen or child-care facilities, and the right to information about any job vacancies.
If temporary workers continue to work in the same role for twelve weeks, under the AWR they become entitled to receive the same basic working and employment conditions as equivalent staff members employed by the hirer directly. These conditions encompass pay and bonuses, working hours, holiday and any rest periods or rest breaks. Providing this to the temporary staff will be the responsibility of the agency, but the cost of this is usually passed on to the hirer.
Can we employ someone on their school holidays?
For legal purposes, there is a distinction between a child – someone under compulsory school age – and a "young person" – someone under 18 but over compulsory school age. In England, a person is over “compulsory school age” on the last Friday in June in the school year in which he or she becomes 16.
Generally speaking, you cannot employ a child under 14. However, there may be local exceptions to this rule and we recommend that you speak to your local authority ("LA") to confirm.
Whilst you may be able to employ a child aged over 14 but under compulsory school age, complex rules apply and breaches can result in criminal penalties. The applicable rules are made up of statutory provisions and local byelaws, meaning that the rules change from place to place, although many LAs have adopted Government model byelaws - the relevant LA byelaws are those made by the LA in which employment takes place.
In addition, employers face the burdens of being required to obtain a permit, and there are also strict requirements in place in relation to hours and time of working, as well as the types of work that a child can carry out. There may also be safeguarding issues and employers could be required to undergo Disclosure and Barring Service checks on supervising employees, depending on the activities and level of supervision they are providing.
Whilst employing a child can be complex to navigate, it is more straightforward to employ a "young person". Note, however, that specific protective rules apply in relation to their working hours and that there is a "young workers'” rate for NMW purposes for those aged under 18 and over compulsory school age.
What if it's a work experience scheme?
If you are approached about the possibility of providing work experience to a child, we suggest that as a first step you find out whether the work experience is organised by the school or not as qualifying work experience schemes will fall outside some of the rules on child employment where the scheme is organised by the child’s school or LA. The child's school or the LA will be best placed to advise whether the proposed work experience is caught by this exception.
This would apply to children within their last two compulsory years at school, and the strict rules in relation to working hours and types of work undertaken by the child would still apply.