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Government to Crack Down on Unpaid Internships

In a bid to appeal to younger voters, the Conservative government under Theresa May recently announced plans to crack down on unpaid internships. These schemes are considered by many as exploitative with little to no hope of a job afterwards, and a way for businesses simply to reduce the wage bill and not as on-the-job training schemes that they are supposed to be. In the last few months, HMRC has written to around 500 businesses regarding the practice.

 

Minimum Wage Applies to Interns Classed as Employees

HMRC’s step in writing to the firms is only the first salvo. The government reiterated its desire to reduce exploitation by reminding companies of their duty to pay a minimum wage in most cases. This came as a result of a government review of present working practices known as The Taylor Review. Published in 2017, it examined the new developments in the “gig economy”, concerning part-time and flexible working practices.

One of its major areas of concern was student unpaid internships, calling them “exploitative” and damaging to “social mobility in the UK." It recommended stamping out the practice of not paying interns. Last week, the government announced it accepted the review and would be taking further action in due course.

 

Internships Are Not a Grey Area

They’ve always been seen as a grey area by students and employers alike but the law is clear: interns classed as workers, even temporarily, are legally required to receive the National Minimum Wage or National Living Wage. A worker is somebody with an employment contract that stipulates a number of things, amongst them is the prospect of sanctions for not turning up for work, turning up late, and so on. Volunteers do not have a contract and not subject to sanctions for lateness or missing a shift.

The organisations that HMRC previously contacted were advertising unpaid internships. The letters were designed to remind them of their responsibilities under the law, not to treat unpaid interns as employees. But recently, the HMRC has sought to further clarify that this is not a grey area. Efforts in the past three months have focused on eliminating unpaid internships altogether.

 

Cross-Party Support

While recognising the valuable experience that such internships can provide, there have been calls within Parliament to ban unpaid internships that last more than a month. Government is now preparing to ask HMRC through formal channels to focus efforts in 2018 on organisations using unpaid interns as a matter of course. They will be expected to use " intelligence-led enforcement" against the problem. If this campaign does not work in eliminating them, the existing policy will be reviewed to consider other steps.

In January, The Sutton Trust a charity dedicated to improving education and social mobility claimed around 40% of 70,000 internships nationwide are unpaid.