Government action on unpaid internships

 

TIGA is the network for games developers and digital publishers and the trade association representing the video games industry. This publication provides TIGA members with an update on the UK Government’s approach towards unpaid internship.

In its official response to the Taylor Review, published in February 2018, the Government announced measures to “stamp out illegal or unpaid internships”. It criticised unpaid internships for being exploitative and hindering social mobility.

Matthew Taylor, Chief Executive of the Royal Society of Arts, was commissioned by the Prime Minister to carry out an independent review of modern working practices. The review was commissioned in response to the rise of the ‘gig economy’, digital platforms, and new working models. It also looked briefly at the rise of unpaid internships throughout various sectors of the UK economy.

The Review was published in July 2017 and provided the Government with 53 recommendations.

What are internships?

Internships are widely used throughout various sectors in the UK economy. They are typically undertaken by students and graduates looking to gain relevant skills and experience in a particular field for a fixed period of time.

However, an employer cannot avoid paying someone the minimum wage simply by calling them an ‘intern’ or saying that they are doing an internship. Determining whether an individual is ‘working’ is based on the presence of multiple factors. There is not a single determining feature of a worker.

Whether an individual is a worker will depend most importantly on whether they have a contract to provide work for the relevant employer, in return for something of value from the employer.

This could be: monetary payment (i.e. cash or other forms of financial payment); a benefit-in-kind such as vouchers or merchandise (not simply the reimbursement of genuine ‘out-of pocket’ expenses); or anything else which is of value, such as training which has a value to the individual beyond what is immediately needed for the internship, the promise of a contract, future work, or preferential access to interviews or graduate schemes.

Additionally, being subject to sanction for not arriving to work at an agreed time is another indication that an individual is a worker and entitled to the NMW. If an internship were terminated after an intern failed to arrive at work for a period, this might indicate that the intern had agreed to provide work, and should therefore receive the NMW. An employer would be less likely to terminate a purely voluntary arrangement for the same reason.

On the other hand, genuine volunteers are not entitled to the NMW. Volunteers benefit from the general experience they gain through being in a working environment, but are not legally required to turn up, are free to leave at any time, and they do not have a contract, so would not expect any monetary payments or benefits in kind for their volunteering duties.

Taylor review recommendation

The Review recommended that:

“The Government should ensure that exploitative unpaid internships, which damage social mobility in the UK, are stamped out. The Government should do this by clarifying the interpretation of the law and encouraging enforcement action taken by HMRC in this area.”[1]

 Government response

 The Government accepted this recommendation in its response to the review, published on 7 February 2018. It stated:

“Exploitative unpaid internships should not exist and we will work to eradicate these. We will take action to improve the interpretation of the law and the enforcement action taken by HMRC in this area to help stamp out illegal unpaid internships.”[2]

It added:

“The law is clear that interns who are classed as workers must be paid at least the National Minimum Wage / National Living Wage. An employer cannot avoid paying someone the minimum wage simply by calling them an ‘intern’ or saying that they are doing an internship.”[3]

The Government will also:

“take further steps to engage with sectors where unpaid internships are prevalent and with bodies that represent interns, such as university careers services, to uncover good practice examples that should be highlighted and proliferated. We will also seek to raise awareness of existing legislation amongst both employers and workers through better information, and by updating the guidance in this area.”[4]

Next steps

TIGA will continue to monitor developments in relation to internships and keep members informed. Should any members wish to discuss this issue, please do not hesitate to get in touch.  Please contact Suzi Stephenson: suzi@tiga.org

[1] Good work: the Taylor review of modern working practices, 11 July 2017, link

[2] Government response to the Taylor review of modern working practices, 7 February 2018, link

[3] Government response to the Taylor review of modern working practices, 7 February 2018, link

[4] Government response to the Taylor review of modern working practices, 7 February 2018, link




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