I must first ask for forgiveness for using such a terrible pun in the title – I simply could not resist! But despite the jest, the topic of unpaid internships is reaching critical mass. A string of tribunal cases and two very high-profile cases should have HR managers everywhere asking – “Are unpaid internships really worth the risk?”
Naturally, in the cases we are about to discuss, the employers believed the answer to that question was a firm “Yes”. However, the answer really should have been a resounding “No”. We’re about to find out why.
Consent and the law
The National Minimum Wage Act 1998 (henceforth, NMWA) created a statutory minimum wage which employers must pay to all workers and employees.
The NMWA is, like any other piece of law – whether that’s the law on assault, traffic offences, or licensing – is law and no consent can negate its action. This is the principle laid down in the legal case of Brown (the facts of this case are not for the faint hearted!)
The lesson to be learned here: No matter what an intern agrees to do for free, if they are entitled to the National Minimum Wage they must be paid. Their consent to work for free is irrelevant.
The case of Nicola Vetta
In 2008, Nicola Vetta responded to an advert from London Dreams Motion Pictures Ltd looking for interns to work on the set of the production Coulda Woulda Shoulda. The advert was an expenses only vacancy and she agreed to those terms when she started.
When London Dreams Motion Pictures Ltd refused to pay her expenses, she initially made a claim to the County Court for breach of contract over non-payment of expenses. Little did she know, this was the first stepping stone for the recognition of the rights of unpaid interns.
Working with BECTU, she was advised to make her claim to the employment tribunal for a breach of the NMWA instead.
In 2009, despite agreeing to work on an expenses only basis, she was successful and walked away with a sum in excess of £2000 (National Minimum Wage back-payment plus holidays accrued). I bet that was a blow to London Dreams Motion Pictures Ltd, huh?
The case of Nick Thomas-Webster
Nick Thomas-Webster, a Harvard Law School Graduate, is a very interesting man. He took on several unpaid positions as an extra in film productions and agreed to do them unpaid. However, after the shooting had finished, he invoiced each of the companies with whom he had agreed to work for free.
Guess what happened? All but one responded to the invoice with payment. And the one that didn’t?
It ended up in the Employment Tribunal – the case was Nick Thomas-Webster v Press On Feature Limited. He won £500.10.
The interesting thing about Nick Thomas-Webster is he intentionally worked for free with the aim of invoicing for the work done at a later date.
If you’ve had unpaid interns who were performing the role of a worker, that is akin to having a ticking time-bomb in your HR records. Can you really afford to have that risk looming over your business in the long term?
Although the maximum time to claim in the Employment Tribunal is 3-months after the alleged offence, disgruntled interns can always go to the Civil Courts to enforce their rights.
Talkback Thames and Arcadia
Nicola Vetta and Nick Thomas-Webster set the scene for interns to enforce their irrevocable right to National Minimum Wage, but the parties they took to court were insignificant in the grand scheme of things.
What really needed to happen is a really big and well-known employer to be required to pay. This is what happened in May-June this year.
Although the details are sparse – there is no recorded court case, and we’re not entirely sure why the payments were made – in May-June 2012, Talkback Thames (X-factor) and Arcadia Group (Burton, Topshop, Dorothy Perkins, etc) made back-payments to an undisclosed number of hitherto-unpaid interns.
In November 2011, HMRC promised to crack-down on the fashion industry’s use of unpaid interns. This may be as a result of the crack down – or it may be genuine altruism on behalf of Talkback Thames and Arcadia. I would place my bets on the former, but we’ll never know.
The lesson to be learned is: the tides are inTURNING on unpaid internships, and they’re being paid for it too. If I ask one thing of you after reading all this: Don’t become the next employer I read about in the news; pay your interns.
With the burden of proof on you to prove in court you paid the National Minimum Wage: Is it really worth the risk that they take you to court, name and shame you in the press, and you face a fine of up to £5000 (before they take that wage and holiday entitlement too!)?
I wouldn’t say so!
Points to take away
1. You cannot opt-out of receiving National Minimum Wage if you’re entitled to it – consent of an intern is no defense to the law.
2. Don’t expose your business to unnecessary risk – I bet none of the employers above thought they’d be taken to court until it happened.
3. Not only will you be required to offer back-pay of National Minimum Wage, but if you agree to pay expenses you’ll be required to provide those in full, holiday back-pay and could receive a fine of up to £5000.
4. The burden of proof in court or tribunal is on you to demonstrate you paid the National Minimum Wage, not on the intern to prove they were not paid it.
5. Ultimately, you’ve got to ask yourself: What successful company can’t pay the wages of its employees? If budget really is a problem, there are other ways and you should see our brief: Guide for Employers
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