In focus: Internships
Published: 31 Oct 2012
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Spot the difference:
An uprising - as flame-wielding tracksuit-adorned youths take to the streets, screaming, shouting, gesticulating, creating despair and destruction.
An uprising - as flame-wielding tracksuit-adorned youths take to the streets, screaming, shouting, gesticulating, creating hope and enthusiasm.
Following the riots of 2011, the stock of the UK’s young people was in the doldrums. One year on, and the picture seems very different. One of the greatest realisations from the Olympic and Paralympic Games was the undeniable brilliance of the on-the-ground “Games Makers”. The integral involvement of 70,000 volunteers, mostly young people from local areas, has been described as the “lifeblood” of London 2012 and led Lord Moynihan, the British Olympic Association’s chairman, to call for the volunteers to be nominated for the BBC’s Sports Personality Team of the Year award for the vital role they played.
Two summers, two phenomena and two very different perceptions. Yet the socio-political discourse emerging from these events continues to revolve around one issue: the lack of employment opportunities for young people. This has resulted in a heightened focus on the need for this cohort to gain experience in the workplace, paid or unpaid.
Undoubtedly, volunteer schemes, work placements and internships are an effective way for young people to gain exposure to the workplace; to develop and refine employability skills, to gain deeper industry knowledge and build networks - experience which might prove a key differentiator for an employer between one applicant and thousands of otherwise near-identical alternatives. However, they also provide employers with cost effective access to fresh, enthusiastic and creative talent. For some, these are priceless opportunities for anyone seeking a career, particularly in the present economic climate. For others, such schemes simply provide fertile ground for employers to exploit the ambitious and desperate. Whatever your perspective, the issue can make for a lively debate on economic, sociological, political, moral and legal grounds.
The sports industry is no stranger to this conundrum, of course. Volunteers have been and always will be the heart beat of hundreds of local sports clubs up and down the country. Whether dedicating time to coaching juniors, preparing pitches or raising funds, they are irreplaceable in developing talent, widening participation and inspiring generations. Clubs depend on these people to survive. However, even in the commercial stream, the “state of survival” is all too familiar and has driven many sporting organisations to embrace the idea of internships and work experience schemes for the cheap labour they offer.
It is fair to say that if applicants were hard to come by they might be in a position to demand a higher premium, but marry the glamour and widespread appeal of sport with the reality of a global recession and it is easy to see why work placement opportunities within the industry are invariably over-subscribed. Faced with their own economic tribulations, it is also understandable that some organisations might seek to take advantage of the situation by keeping their employment costs as low as possible. But are the practices being deployed by some organisations lawful? We take a look at the legal considerations.
What is an internship?
The term “internship” is used widely to cover a variety of work placements. However, a true internship will be a specifically structured work place development programme, with clear learning objectives, goals and supervision. Internships are generally targeted at individuals who are part way through, or have completed further education, enabling them to gain experience before entering a particular profession. The organisation will provide valuable feedback and a reference detailing the work the individual has undertaken and the skills and experience they have acquired. Internships can often lead to an offer of permanent work on completion.
How does work experience differ?
“Work experience” is a less formal and more observational chance for an individual to increase their understanding of the work environment. Work experience should involve shadowing an employee, rather than undertaking a genuine economic activity. It is usually completed during school, as part of the national curriculum, or further qualifications.
True “volunteer” arrangements are typically characterised as having wider social benefits, such as for the environment, or for groups of individuals. The category is really reserved for charities and governmental organisations. The carrying-out of any work will be entirely at a volunteer’s discretion, with the ability to refuse tasks and choose when to work. However, the volunteer’s expenses will normally be covered by the ‘employer’.
What is the legal distinction between these categories?
The legal distinction will depend on the true factual nature of the particular working relationship, as this will determine whether the individual qualifies as a “worker”.
A “worker”, for the purposes of English law, is an individual who has entered into or works under a contract of employment, or any other contract whether express or implied and whether oral or in writing, pursuant to which he or she undertakes to personally perform any work or services for another party, where that party is neither a client or customer or personal service company.
The existence of personal service, together with mutuality of obligation (the requirement for the employer to provide work and the individual to accept it) and some form of control by the employer over the individual will almost inevitably lead to the individual being categorised as a worker or employee. Other factors may also be relevant though. For example, the longer the duration of a placement, the more likely that personal service and mutuality of obligation will be implied into the relationship.
Why does the distinction matter?
The distinction is important for a number of reasons, but especially so because it will govern whether the individual should be paid or not. It will also be relevant for determining whether the individual qualifies for other ‘employment’ rights and protections and for understanding the obligations to which the individual is subject.
How does this apply to internships?
A true internship will require the individual to enter into a contract to offer their personal services to the organisation, in return for their carrying out a specific project or projects. These arrangements satisfy the definition of a worker.
As a worker, the intern is entitled to payment of at least the National Minimum Wage (NMW) (currently £6.19/hour for those aged 21 and over) and should receive paid annual leave.
To undertake an internship within the UK an individual must have an EEA passport and/or valid UK work visa.
What about work experience schemes and volunteers?
Work experience participants and volunteers are not classified as “workers” and do not qualify for the NMW or certain other employment protection rights. Consequently they represent an attractive proposition for employers seeking cost effective staff resourcing and an also an opportunity to ‘badge’ a work placement as unpaid “work experience” or “volunteer” work.
Can organisations do this?
Many organisations do, but they shouldn’t if the reality of the relationship means the individual would – in fact – be classified as a “worker”.
In the case of work experience schemes, it is important that an individual’s activities do not extend materially beyond observing others in the workplace. Once an individual is given genuine responsibilities, the status of the placement will begin to morph from bone fide work experience into something more akin to an internship, with all the ‘worker’ obligations which are associated with that category
Does anyone really care?
Society might, but the government certainly does because the more organisations that abuse work placements, the less tax revenue it will ultimately collect. Consequently, it has been encouraging organisations to be alert to the difference between workers and non-workers, in particular with regards to paying interns. In addition, since last year, a taskforce at HM Revenue & Customs has begun to target sectors where internships are commonplace to ensure compliance and to recover from the unscrupulous, ill-informed and poorly advised, the income tax and national insurance which ought to have been deducted from wages which ought paid to have been paid to the workers. In such circumstances, the employers are likely to find themselves not only facing HMRC penalties, but also demands for back-pay, for which they are unlikely to have budgeted.