To pay or not to pay, that is the question....

Volunteers, interns, youngsters on work experience .... a great source of free labour, no need to worry about paying them the National Minimum Wage, right?

Wrong! There is considerable confusion among employers about when they do and don’t need to pay people they take on for “work experience” purposes.

Various schemes exist to help young people without any experience of the workplace to get a foothold in the employment market:

• school children are given “work experience” placements prior to their GCSEs and A levels
• students can opt for “sandwich courses” where they spend up to a year working with a relevant employer prior to graduating
• “modern apprenticeships” provide a grounding in a skill or industry
• jobless youngsters are encouraged to do voluntary work, or to sign up for the Government’s Work Fare scheme.

But the terminology can be confusing. What is an “internship”, how does it differ from “work experience” or an “apprenticeship” – and what about “volunteers”? And when is it lawful for an employer not to pay somebody for their services?

Let’s start with the clear cut cases:

• “Work experience” placements involving school children organised through the local authority are unpaid – although you are free to make a token payment if, as is often the case, they perform useful tasks such as filing or photocopying which would otherwise have to be done by paid employees
• Participants in the Work Fare programme are also unpaid (although they continue to be in receipt of their Job Seekers’ Allowance and any other State benefits). The hope is, clearly, that they will impress you and receive a job offer at the end of the 8 weeks, but there is no obligation on either party
• Sandwich course participants are sometimes paid a salary by their employer, but it’s not compulsory
• Apprentices on recognised schemes do have to be paid, but there is a special low rate of National Minimum Wage that applies, currently £2.60 per hour
• “Volunteers” of any age may be unpaid, but only if your organisation is a registered charity.

As far as “interns” are concerned, the situation is not so clear. There is no legal definition of an internship, so each case must be judged on its merits. The underlying principle is this: if the intern merely “shadows” one of your existing employees, watching and learning but doing no actual work, then you are not obliged to pay them. However, if the intern does anything that could be classed as work (e.g. data entry, answering the telephone, packing goods), then the obligation to pay the National Minimum Wage is triggered.

The National Minimum Wage rate payable varies with age. Current rates are £3.68 per hour for 16-17 year olds, £4.98 for 18-20 year olds, and £6.08 for those aged 21 and over. Rates are reviewed annually and any increase takes effect from 1 October. This year, the adult rate will increase but those for youngsters will be frozen, to encourage employers to hire more young people.