hands-holding-pile-of-clothesUnpaid internships are rife in the fashion industry and many consider these to be an essential rite of passage to a permanent position. However, this practice may become unlawful under prospective government proposals.  Will this affect your business and, if so, what can you do to manage the impact?

Why are unpaid internships a problem?

The government’s Social Mobility Commission has recently reported that the informal labour practice of providing unpaid internships is stifling social mobility in the UK. It estimates that at any given time there are up to 70,000 interns throughout the UK and that potentially a third of these are unpaid.

These coveted internships are often taken up by young people from wealthy or privileged backgrounds and the reasons for this appear twofold.

Firstly, access to internships is often through the parents of graduates or young people who already have a network of professional contacts.

Secondly, only those with independent financing (usually the Bank of Mum and Dad) can generally afford to take on work without pay for any significant period of time. This is exacerbated by the cost of living in metropolitan centres such as London, where the cost of living and travel means that many interns are in fact paying for the privilege of the work experience.

As diversity continues to be a focus for staff, boards and government alike, these unpaid arrangements are increasingly under scrutiny as a mechanism that is preventing those from less privileged or minority backgrounds from obtaining employment in competitive business sectors.

What is the current legal position on interns?

Unpaid interns have always been a grey area for employers and there is no formal legal definition of an internship. However, if your intern falls within the definition of a “worker”, he or she will be entitled to receive national minimum wage – irrespective of what they are called or how the work is described (e.g. as an “expenses only” role).

Government guidance on this issue makes clear that businesses should be checking whether their interns or volunteers fall into any exceptions under the national minimum wage rules.  If your intern is a worker, he/she will also receive additional entitlements such as paid holiday and protection from discrimination.

What is going to happen?

The Social Mobility Commission recommends introducing a formal definition of an internship and a ban on unpaid internships that last for more than four weeks. Those that continue for more than four weeks should pay at least national minimum wage.

At present the government does not seem to be taking much action. A House of Commons debate on a private members bill put forward by a Conservative MP was recently filibustered by government ministers, so that it won’t be taken any further. This step was apparently taken on the basis that the government is intending to make its own proposals, which are yet to be published.  This issue may now form part of the upcoming Taylor review into working practices.

Given the early stages of these discussions, Fashionista can only speculate on what this ban might include, but we suggest that it may well require businesses to advertise publicly internship opportunities and include anti-avoidance provisions to prevent companies from simply engaging individuals on a series of four week unpaid internships.

What can you do to prepare?

Until we know more on this proposal business do not need to take any formal action. However, HR should already be on top of whether your interns are “workers” and so already entitled to receive national minimum wage.

If they are not currently entitled, HR should start thinking about an audit of the number of unpaid interns that are taken on each year and how long the placements tend to last, as well as the value that is derived from interns. If the main value relates to longer-term recruitment, it may be desirable to put in place a more formal policy on internships to ensure wider access and fair selection.

By: Hannah Netherton
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