Although minimum-wage legislation makes many unpaid internships illegal, the Government recently admitted that so far, there have been no prosecutions – which leaves both the business community and our young people exposed.
In an attempt to end any exploitation, the Government have announced a crackdown on unpaid internships as part of its radical overhaul of modern working practices, with immediate effect. In a statement, HM Revenue & Customs said it had written to more than 550 companies reminding them that interns classed as workers must be paid at least the National Minimum Wage (NMW).
The National Minimum Wage for workers over the age of 25 is £7.50.
This is due to be raised to £7.83 in April 2018.
The Government will also issue guidance to employers spelling out when they are legally obliged to pay at least the National Minimum Wage and stated that it would be forming ‘enforcement teams’ to ensure this was complied with as there had been some confusion over implementation.
Recent figures, published by the Sutton Trust Charity suggest that as many as 40 per cent of 70,000 internships undertaken annually are unpaid. The Government said: “Exploitative unpaid internships should not exist and we’re working to eradicate these. We’re taking action to improve the interpretation of the law and the enforcement action taken by HMRC in this area to help stamp out illegal unpaid internships.”
The news forms part of the Government’s response to the Mathew Taylor Review of modern employment practices. Among the reforms, the Government also aims to deliver basic workers’ rights – such as holiday and sick pay – to all employees, including those working in the gig economy. Zero-hours workers will also be given the right to request a more stable contract.
If you need help with staff payroll or are uncertain if your internship policy is compliant, please contact Jeff.Atkinson@affordbond.com for further details, or complete the Contact Us form here on our website. Afford Bond Chartered Accountants have offices in Nantwich, Wilmslow and Chester – our key competences are accounts, audit, taxation, payroll and corporate finance and we see constant overlap in the delivery of these services demonstrating the need for qualified and experienced advisors.