I have previously blogged on the issue of interns not being paid the National Minimum Wage (the "NMW") in circumstances where they should be. The Department for Business, Innovation and Skills (the "BIS") have now published new guidance entitled The National Minimum Wage: Work Experience and Placements which, according to BIS, outlines a new tough stance on employers who use interns to avoid paying the NMW.
When an individual truly is an intern and is not performing any work for the employer, but rather is work shadowing, they do not need to be paid the NMW. However some employers, while ostensibly describing an arrangement as an internship, have actually used the "interns" to do work for them but have then failed to pay them the NMW for such work (for example, I reported on such a case in 2010). As the guidance from BIS highlights, it is not what the arrangement is called that is important, but rather the reality of the contractual relationship with the employer.
The guidance from BIS explains the meaning of work experience, a volunteer and an internship to help employers understand what these arrangements actually entail. Also it outlines exemptions from the NMW legislation relevant to work experience.
It is certainly not always clear whether an individual is truly an intern or whether they are in fact a worker. Therefore the guidance outlines various practical examples of arrangements and explains whether the individual should be paid the NMW or not. Some examples of when the NMW is payable do not actually involve the individual carrying out work for the employer, such as where an intern is promised employment at the end of an internship (this is likely to be viewed as training as part of the employment); or payment of unspecified expenses, for example “travel expenses”, which are paid irrespective of whether the intern has incurred any travel costs (this is likely to be viewed as a financial reward for work done, and as such must comply with the national minimum wage).
The guidance also makes the important point that employers cannot evade paying the NMW by asking an individual to sign away their right to the NMW. Moreover benefits in kind will count as a reward for work done and therefore the individual will no longer be classed an intern or volunteer and will be due the NMW.
Finally, the guidance provides a list for employers of some things to consider when designing an internship scheme.
Although this guidance may not exactly demonstrate a new "tough" stance, it does provide useful and practical help to employers. I suspect though that in the vast majority of cases someone undertaking work experience described as an "internship" will not be minded to raise a claim to enforce their rights even if they suspect that they are entitled to the NMW given that they may well hope to obtain employment from the organisation providing the internship or at least a letter of recommendation. That said, there is, I think, an increasing awareness that there is an issue surrounding "internships" and the possibility that "interns" may require to be paid depending on what they are actually doing for the organisation. This may result in organisations reviewing their practices which will hopefully result in them deciding to pay the NMW, where appropriate, rather than deciding to scrap the "internship" scheme altogether.