19 May 2011
Unpaid intern wins minimum wage claim
Lawrence Graham employment and pensions partner Helga Breen looks at the use of interns following a recent decision by an employment tribunal. She said: "Keri Hudson, 21, an unpaid intern who worked for a publishing company, has won her employment tribunal claim for unpaid wages and holiday pay. Ms Hudson worked for the My Village Website for two months. Despite the fact she worked each day from 10am to 6pm and had been personally responsible for and in charge of a team of writers, for training and delegating tasks, collecting briefs, scheduling articles and even for hiring new interns, the company had told her she was not eligible for any pay because they considered her an intern.
"Although Ms Hudson did not have a written contract, the employment tribunal found that she was a "worker" and so was entitled both to be paid the national minimum wage and to holiday pay. The case follows a successful tribunal claim by a film extra who won a claim for unpaid wages.
"The NUJ who backed Ms Hudson's claim has warned media employers to 'pay interns or face the consequences'. However the decision may have wider implications for all employers who offer work experience, offer unpaid internships or use volunteers.
"Should interns be regarded as providing their labour free in return for work experience and the prospect of future job opportunities or do they have a right to pay and other employment protection rights?
"While there is considerable case law on the employment law status of employees, workers and volunteers, there is as yet no legal definition of "intern". Their right to receive the national minimum wage will depend on whether they are classed as "voluntary workers" (who do not qualify for the minimum wage), "workers" as in the case of Ms Hudson or somewhere in between. Charities and other not for profit organisations may be able to rely on the voluntary worker exemption provided their volunteers are entirely unpaid apart from expenses.
"HMRC has the power to take enforcement action against employers who fail to pay the minimum wage including imposing fines and naming and shaming persistent or serious offenders.
"As this case demonstrates, however, even unpaid volunteers may be classed as employees or workers and so qualify for wider employment protection rights. Just as employment status confers rights on the individual, it also imposes obligations on the employer who can be held vicariously liable for the unlawful acts of employees. Employers will find complaints of discrimination, bullying or harassment made against interns particularly tricky to defend where they have exercised the minimum of control over the activities of the intern and not given them a contract of employment.
"The use of interns is widespread, ranging from MPs, the media, arts and the world of fashion through to the financial services sector. If the Government's new strategy for social mobility gets off the ground more employers may be encouraged to open their doors to interns. However, employers in all sectors would be well advised to make policy decisions about the legal status and pay of interns and not automatically treat them as a source of free labour."