Last reviewed 27 June 2018

There was a time when young people leaving university, with the shine still on their new degree certificate, felt like they could walk into the graduate job of their choosing. However, there are indications that graduate employment is not quite as robust as it once was. One result of this, it has been said, is the practice of asking graduates to work for free to gain experience to get a paid job. While this is not a new practice, the Taylor Review has recently brought the whole issue into sharp focus says Gudrun Limbrick.

The drive towards unpaid working

There are reports that graduate employment is not rising as fast as non-graduate employment among the working age population (2016/17, ONS) and that recent graduate unemployment (2017, ONS) is low largely as a result of graduates entering further studies rather than going into the jobs market. It is also reported that the proportion of graduates in non-graduate level jobs is approaching one in every two.

With these changes in graduate employment and the fact that half of employers say that graduate applicants have little to no hope of securing an actual job without relevant experience (Institute for Public Policy Research (IPPR), 2018), graduates are turning to internships.

In 2010, the government of the time estimated that there were between 50,000 and 70,000 internships in the UK. The IPPR estimates that this number has now risen by 50% — to between 75,000 and 100,000. Of these, it estimates that 10,000–15,000 are unpaid. In some industries, unpaid internships have become the main route to employment for the 500,000 new graduates potentially entering the labour market each year.

What is an internship?

Internships, at the most basic, are simply an opportunity for an inexperienced person to gain experience in a particular role or field. There is no set period of time for internships — they are regularly as short as a week or as long as a year. They can last longer. There is no set supervision or level of experience, or exposure to different work practices that an intern can expect. There is no set ratio of training versus doing the job and no guaranteed mentoring. Critically, there is no set level of pay or set entitlement to holiday pay or other rights. This has led to a wide difference in the experiences that interns have from their placements.

This is not to say that all internships are necessarily bad. For some young people, they have offered invaluable work experience and an entry into a field or a specific company which may have been exceedingly difficult any other way. Graduates are regularly told in the recruitment process that they have excellent qualifications but too little experience and thus represent a risk to employers which not all are willing to take. And while the intern gains experience, the employer can benefit from a low-cost, enthusiastic worker who is eager to please and eager to learn. These young people can also bring a fresh perspective that may be beneficial to a longer-standing staff team.

What is wrong with internships?

From the intern’s perspective

  • The intern may not be paid as much as other team members regardless of the level at which they are working.

  • The intern is very unlikely to earn as much as they may have anticipated for a graduate-level job.

  • In absolute terms, an internship may not bring in sufficient money to cover basic living costs, particularly in London.

  • Because of the costs involved in taking on an internship, they may be out of reach for many people.

From the employer’s perspective

  • Interns generally need extra supervision, training and monitoring.

  • Having a lower paid individual in the team can unbalance a team who may feel their own position is threatened by a lower paid individual.

  • Interns may not be as reliable as employees on permanent contracts.

  • Interns may only be attractive if they are unpaid.

Some companies have alleviated these disadvantages by offering unpaid internships which people have taken up in their thousands.

Are unpaid internships legal?

By law, all employees must be paid the minimum wage appropriate to their age. However, the law surrounding internships is arguably not as definite as perhaps it should be and employers have attempted to circumvent this by using terms such as work placements, work experience or volunteering to describe these short-term opportunities and arguing that the individuals are not actually workers. Others suggest that interns are self-employed and thus do not qualify to receive the minimum wage.

In reality, there are very few legal routes to not paying an intern. The primary exceptions are young people under the age of 16 who are working for a registered charity and students who are undertaking work experience as a specific part of their studies.

In realisation of this, some former unpaid interns are now successfully claiming the money they should have been paid (under the minimum wage legislation of the time) from the companies with whom they were working. Even if they signed agreements at the time stating that they would work for nothing, they still, in many cases, have a legal entitlement to retrospective reimbursement.

What the Taylor Review had to say

The Taylor Review into Modern Working Practices, which reported in 2017, made a recommendation that the issue of unpaid internships should be tightened up with interns classified in legal terms as workers thus clarifying their entitlement to the National Minimum Wage (NMW) and the ability of HM Revenue & Customs (HMRC) to enforce this. The Unpaid Work Experience (Prohibition) Bill is currently going through Parliament. If successful, it would amend the National Minimum Wage Act 1998, so that the Act applies to individuals “participating in a scheme designed to provide work experience for a continuous or non-continuous period which exceeds four weeks”. Individuals undertaking work experience with the same employer for more than four weeks, who are above compulsory school age but under the age of 26, would receive the rate of the NMW in accordance with their age. The Bill would clarify the definition of “employer” in the Act to include “any organisation which provides an individual with work experience”. The Bill defines “work experience” to mean “observing, replicating, assisting with and carrying out any task with the aim of gaining experience of a particular workplace, organisation, industry or work-related activity”.

This would clarify the position on interns and go some way towards protecting them from not being paid the money they are due. However, where does this leave internships? There is undoubtedly a demand from young people to gain experience “on the job” and there is a demand from employers to receive workers who have relevant experience and a track record outside of their studies. But can either side afford to make this a reality? Young people are already struggling to meet living costs on a low wage without parental help and many employers have already proved themselves reluctant to pay even the minimum levels the law requires. With a crackdown on unpaid internships, what will the future hold for this already tenuous relationship? We wait to see if the Bill is brought into law and, when it is, if it carries sufficient weight to get rid of unpaid internships and whether, without some financial help for internships, companies will keep offering them.