HR · 5 January 2018

Small business owners clash over ethics of unpaid internships

Shot of a young man using a digital tablet while sitting in a modern office
Some 80 per cent of the British public believe interships should be openly advertised

After a recent survey found that UK citizens overwhelmingly backed a ban on unpaid internships, we consulted a panel of employers to see where they stand in the debate.

Britain’s policy makers are currently looking at legislation proposing a ban on unpaid placements at workplaces lasting longer than four weeks, and research undertaken by YouGov saw the public express its opposition to unpaid internships.

YouGov’s survey findings found that, regardless of legal changes, 80 per cent of people believed employers should advertise internship placements openly, as opposed to arranging them informally.

To see where the country’s employers stand on the issue, we’ve spoken to a group of decision makers with diverse opinions on the matter – some have outlined the merits to companies, such as the chance to see how an inexperienced worker may fit, while others have opposed unpaid positions out of principle.

For unpaid internships

Drawing on her own experiences, Steph Fiala, chief operating officer (COO) of British Amazon rival Flubit, told us that unpaid internships were an ideal way for recent graduates to make themselves more attractive to companies when the relevant experience might not be there. 

“As somebody who worked their way up from unpaid internship to COO, I can only recommend them,” Fiala explained.

“As an employer, when you are bringing somebody on whose CV tells you very little about how they will actually be able to operate in a job, the ability to see if there is a fit can allow you to be less cautious and take a chance on somebody would you might have otherwise skipped over because of lack of experience.”

Fiala added that the advantages of unpaid internships for both employee and employer depended on the position being managed properly. In particular, making clear how long the internship will last for.

“One thing to remember it is illegal to promise a job at the end of an unpaid internship. If you are being promised a job then you are entitled to the national minimum wage. Unpaid internships should be applied where it makes sense for both parties, but they are not a replacement for probation periods,” she warned.

Business benefits depend on maximising potential

Further benefits were outlined by Robert Stone, head of talent at brand agency McCann London, who told us it was vital to have a strategy in place to ensure maximum effectiveness and potential of the programme. For Stone, treating an intern the same as any entry level employee was vital.

“Candidates rack up valuable working experience and get to see the workings of a company from the inside,” he explained. “Internships also allow candidates to explore different disciplines across different industries to help them make a more informed decision on where they want to work in the future.”

In terms of how employers stand to benefit from an unpaid work placement, Stone said it gave them the chance to “talk to and attract great talent before they’ve even started looking”.

“Interns are also another set of hands to help with the business,” he added.

“Companies which think interns have all they can handle making coffee and perching by the photocopier stand to lose out on what could be a real asset to their business – fresh and enthusiastic new blood. Interns should be allowed to do entry level work so can learn and add more value to the business.”

Against unpaid internships

If you intern works set hours and performs set tasks, they must be paid the minimum wage
If your intern works set hours and performs set tasks, they must be paid the minimum wage

Flipping the argument around, Michael Foote, owner of comparison site QuoteGoat, claimed unpaid internships took advantage of young people on the basis they are desperate for experience.

“It only gives those who can afford to work for free the opportunity to get experience,” he added.

Foote also raised that unpaid internships sent the wrong message to current employees. “A key part of motivating staff is leading by example and taking advantage of free labour is not example that I imagine many employees would be inspired by,” he explained.

“There will be those that say an unpaid internship gives a young person a chance to experience the office environment. However, if the business cannot afford to pay them I would have to question how much benefit a young person can extract from a business with an employer too busy trying to make their own company work to dedicate any time to the intern’s personal development.”

Legal implications

Detailing some of the employment law behind unpaid placements, Sophie Phillipson, founder of HelloGrads, which prepares students and recent graduates for life after university, urged employers to consider the legal implications.

“Whilst there is no legal definition of an ‘intern’, if you work set hours and perform set tasks, you should be classed as a ‘worker’ and must therefore be paid at least the minimum wage, whatever the length of your internship,” Philipson said.

Building on Foote’s assertion that unpaid internships unfairly favoured those in a financial position to work for free, Phillipson said employers could lose out from a wider talent pool by only bringing in those with parental support.

“It’s in an employer’s best interest to pick from a bigger pool of young talent by at least offering expenses, if not an hourly rate of pay,” she added.

“Internships should benefit both parties, and the employer benefit is in finding young talent before competitors, motivating and inspiring the future workforce and improving their employer brand. However, we’re still hearing stories of employers that use unpaid interns to plug gaps in their workforce without paying. This needs to stop.”

The law on hiring interns

Under the National Minimum Wage Act 1998, any employees qualifying as a “worker” are already legally entitled to either the minimum wage or living wage. However, many employers have been able to operate outside of the law any legal enforcement.

According to the act, a worker qualifies for the minimum wage if he/she is:

(a) is a worker;

(b) is working, or ordinarily works, in the United Kingdom under his/her contract; and

(c) has ceased to be of compulsory school age.

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

Has your business benefited from an internship programme? Do you agree with our panelists? Get in touch at editors@businessadvice.co.uk and let us know your position

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ABOUT THE EXPERT

Simon Caldwell is deputy editor at Business Advice. He has a BA in politics and communications from the University of Liverpool, and has previously worked as a content editor in local government and the ecommerce industry.

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