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.