Interns entitled to payment

Many interns who work for free are actually entitled to payment, a new report has argued.

The Institute for Public Policy Research (IPPR), a leading think-tank, said that firms could be in breach of employment laws if they do not pay interns and could be liable to tribunal claims.

The assumption is that unpaid internships are legally acceptable provided both the business and the intern regard the arrangement as voluntary.

But the IPPR argued that this is not case as the right to payment comes under the national minimum wage rules.

The misunderstanding could lead to unpaid interns submitting back-dated claims for payment, the report insisted.

Surveys referred to by the IPPR revealed that only a half of organisations that offer places to interns paid them at least the minimum wage, while 28 per cent paid less than the minimum wage and 18 per cent paid nothing at all.

The IPPR called on the government to offer employers clearer guidance on the obligations they have to interns under employment law.

Kayte Lawton of the IPPR, and a co-author of the report, said: "Private companies will normally be under a legal obligation to treat people employed on internship programmes as workers and to pay them the appropriate minimum wage.

"Employers often mistakenly believe there is a grey area around internships in the national minimum wage legislation that allows them to take on unpaid interns as long as both sides understand it a voluntary position - but this is simply not the case."

Dom Potter of campaign group Internocracy, and the joint author of the report, added: "We now have entire industries that rely on the willingness of young people to work for free.

"In the long run this is bad for business because it damages the reputation of these industries and makes it difficult for them to recruit for the broadest pool of talent. It also means young people from well-off backgrounds or with good connections have an instant advantage when it comes to finding a permanent job."

Commenting on the report David Willetts, Minister for Universities and Science, said: "We will be considering the IPPR report carefully over the coming weeks.

"Young people have been the biggest victims of the recession. We are committed to helping them get into work and realise their ambitions. Internships can contribute to this, but the exploitation of interns is unacceptable and employment legislation must not be breached.

"Over the past 12 months, BIS has encouraged employers to offer graduate internships to help graduates develop their skills and boost their employment prospects. Over 22,000 internships have been advertised on the Graduate Talent Pool website, which is now open to 2010 graduates as well as those who graduated during 2008 and 2009. Nearly two thirds of these internships have been paid."