HMRC Investigating 100 Firms For Using Unpaid Interns

The UK Employment Relations Minister, Jo Swinson, has given HMRC a list of 100 companies accused of using unpaid interns.  The list, compiled by campaigning group Intern Aware, suggests that those ‘interns' are in fact workers and should therefore be paid the national minimum wage (‘NMW'). 

An Employment Tribunal will look past the wording of a contract to consider the reality of an employment relationship.  Save for very limited exceptions, any individual considered a worker or an employee is entitled to the NMW, regardless of whether they have the title, ‘intern' or are working under an internship agreement.  Factors that might indicate worker or employment status include requiring an intern to personally perform work, a high degree of control exercised by an ‘employer', a long duration of the arrangement and/or mutuality of obligations between the ‘employer' and the intern (to provide work and to accept work respectively).

The political mood is in favour of investigating these issues and naming and shaming companies found to be flouting the NMW requirements.  HMRC can, broadly, order employers to repay wage arrears and impose an additional penalty of 50% of the total underpayment of all relevant workers up to a maximum of £5,000.  Employers are therefore advised to carefully review any existing and future arrangements with interns to limit these risks.