Should internships be paid or unpaid?

This is a question which comes up a lot – and the answer depends on what the intern will be doing and for how long.

Unpaid work experience placements which are short-term are common and usually unproblematic. For example, businesses often have school age students undertake work experience. They spend a week or two shadowing employees and learning more about the business so they can decide whether or not they would like to pursue a similar career. Such placements are usually unpaid but some businesses offer expenses or modest remuneration.

If the internship is longer term and the individual is effectively doing the work of an employee, it’s worth giving more consideration to the pros and cons of paying or not.

We suggest considering the following:

• If the individual is carrying out the work of an employee, they could argue that they are employed and entitled to the mandatory National Minimum Wage (which is £7.83 per hour for those age 25 and above, it’s less for under 25s). As well as any shortfall due to the individual, failing to pay the minimum hourly rate can be a criminal offence and employers can be fined up to twice the total wage shortfall, subject to a maximum of £20,000 per person.
• There is an increasing backlash against the use of unpaid interns, especially in industries which are considered more desirable to young people such as media and fashion. The argument is that competition in such industries is so fierce that individuals are willing to work for free (and businesses are happy to make the savings on pay) but it is really only those from wealthier backgrounds who can manage to work unpaid. Here is a recent article but there are many more: Unpaid internships and living costs ‘prevent’ social mobility. As set out in the article, some politicians have called for a ban on unpaid internships which are over a month long, but at present they are not unlawful.
• For reputational reasons employers may prefer to pay. It need not be much but it could be valuable in terms of projecting the business as a good/fair place to work.
• If the internship is short-term the risk of a challenge is likely to be low or it may be more appropriate to not pay.
• The risk of a dispute can be managed by having a clear internship agreement in place, which sets out the parties’ understanding and obligations.