HR · 4 October 2016

Hiring an intern: Everything a small business owner needs to know

intern
If you do not intend to pay an intern the National Minimum Wage, you should ensure that they have no personal responsibility within the business

Recruitment expert Margaret Keane looks at what a business owner must consider before bringing an intern into a working environment.

Experience is what counts when employers make decisions about who to employ. This can sometimes result in a “chicken and egg” situation, because you need a job in the first place to gain experience!

One way of getting around this is for students, graduates, or indeed anyone else, to complete a period of work experience to try to give themselves a competitive advantage for themselves over others. This is where an internship can prove beneficial. The intern is therefore the person who carries out an internship, which is a period of work experience and training offered by an employer to give the individual exposure to the working environment relating to the candidate’s field of study, or the direction they want their career to go in.

Internships can vary in length and the duration is usually agreed by both parties prior to commencement. They can also be paid or unpaid depending on whether the individual is a worker or not.

In some instances, hiring an intern means an employer can assess the intern’s suitability for possible permanent paid employment, although this is not the case for all internships.

Internships originated in the US, where employment status rights are minimal in comparison to ours.

Understand your legal obligations before hiring an intern

The National Minimum Wage Act in the UK states that workers are entitled to be paid the National Minimum Wage (NMW), provided that they have reached minimum school leaving age and work, or ordinarily work, in the UK. Therefore, assuming the intern meets these criteria, the requirement to pay the intern will depend on whether the intern is a “worker” or not.

A worker includes any person who works under a contract of employment or any other contract, whether express or implied, and (if it is express) whether oral or in writing, whereby the individual “undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual”.

So, under an agreement with the business where the intern is contractually obliged to perform work for it personally, the definition is likely to be satisfied and they will be entitled to the NMW. Likewise, a placement that may lead to an offer of permanent, paid work could result in the intern being deemed to be a worker, because the promise of paid work is a benefit for the work undertaken by the intern.

A worker is also entitled to a number of other employment rights not just the NMW. However, if the intern is only voluntarily observing or shadowing another employee in order to gain experience of the working environment, without actually undertaking any work themselves (performing very basic tasks under supervision should still be acceptable), they are unlikely to be classified as a worker and therefore will not be entitled to the NMW.

An employment tribunal will look at the work or duties that you give the intern and whether or not the intern has a contractual obligation to personally perform them. If you do not intend to pay an intern the NMW, you should ensure that they have no personal responsibility within the business, are not required to deal directly with clients or customers, and are placed under no obligation to perform any work or tasks on an unsupervised basis. You should also ensure you do not deal with them in the same way as you would your other staff. As soon as an internship tips over the line of obliging the individual to perform particular activities during set hours of attendance in accordance with your instructions, they risk being deemed to be a worker and entitled to the NMW.

Although “voluntary workers” are exempt from the right to receive the NMW, this does not cover most interns in commercial organisations. This is because, to be a voluntary worker you need to be employed by a charity, voluntary organisation, associated fund-raising body or statutory body and not entitled to receive monetary payments or benefits in kind, except for reasonable expenses arising from duties, or accommodation and subsistence.

Even where an intern is prepared to work unpaid to gain work experience, if they qualify for the NMW, they must be paid it and you cannot agree with the intern that the placement will be unpaid, or that they will be paid below the relevant NMW rate. Any such agreement will be void and ineffective and the intern could still bring a claim against you regardless of their prior agreement

Confidentiality and Intellectual Property also need to be considered

If you are thinking about hiring an intern, you may also want to consider intellectual property. Unlike employees, intellectual property rights created by interns will not automatically vest in the business. You may therefore wish to ask interns to sign an agreement that requires them to assign any intellectual property rights they might create whilst on a placement.

Interns should also be contracted to adhere to confidentiality matters in order to protect your sensitive commercial information. This is particularly important because they may later secure permanent employment with one of your competitors.

So there are some important facts to consider if you want to take on an intern within your company, but doing so can bring significant benefits to both the individual and the business.

Find out the secrets to hiring your first employee.

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ABOUT THE EXPERT

Margaret Keane is the managing director of Outsourcing HR, an HR consultancy that helps businesses succeed by providing practical, cost-effective human resources management and recruitment services. In addition to being an experienced HR professional, Margaret has a successful track record in general management roles. As a result, Margaret is focused on ensuring that HR contributes to the bottom line.

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