The small business owner’s guide to employment status and benefits for interns and volunteers
In February 2021 the Supreme Court declared once and for all that Uber drivers are workers, not self-employed contractors. And now that the media and courts have cracked down on Uber, it’s more important than ever that you understand employment status and the benefits your low-paid workers and interns deserve.
But the law is confusing and frustrating at best.
Whether your staff are workers, employees or contractors isn’t a decision that’s in your hands or down to a contract of employment.
You have to assess the reality of your working relationship with your staff to see what their employment status should be.
And the legislation doesn’t even mention interns, so applying employment laws to them is often a game of guesswork when you don’t have an HR team.
It’s important to seek legal advice when you’re uncertain about employment rights and status for your staff.
Is an intern considered an employee?
There are three different employment statuses to get your head around. They’re the employee, worker and contractor.
The type of employment that your offer your interns and the nature of your relationship should be what you look at to determine their employee status.
The category you assign your staff will change what kinds of benefits they’re entitled to, so it’s important to get this right!
- Employees – work only for you. You have control over how, where and when your employees work.
- Contractors – are generally self-employed and can often have their own business. They have control over what work they take on and how they do it.
- Workers – are in the middle of this. This is where you would usually place an intern. They will have a contract and will have to work for you. They will have little control over their work or the contract terms.
As the term ‘intern’ has no legal status, it would be unsurprising if you’ve considered your intern to be an employee or contractor in the past. But interns in the traditional sense tend to be given the worker status.
But your interns might actually be voluntary workers or undertaking work experience as part of their education.
Can I hire an intern as an independent contractor?
We would always recommend avoiding classifying interns as contractors. This is because it’s unfair to expect a junior to sort out invoices and their own taxes when they’re so inexperienced in the workplace.
What you need to pay
Are unpaid internships legal?
Employees and workers are entitled to the National Minimum Wage.
As we recommend classifying your interns as workers, we also recommend that you pay them. This is for many reasons, but running unpaid internships is a quick way to upset your candidates and go against the law.
We recommend paying your staff more than the bare minimum though. The Real Living Wage is only a little bit extra and it ensures that your staff earn enough money to pay their bills.
Paying at or slightly above the National Minimum Wage is a risk.
Deductions or periods of unpaid working time – for example staff coming in early to set up for their shift – will add up.
There’s little wiggle room when you pay exactly at or just above the minimum. So it’s best to pay a little extra per hour to give yourself some breathing room.
Unpaid internships can be legal, but in our opinion really shouldn’t be. Work shadowing placements don’t fall under National Minimum Wage legislation.
Should you pay volunteers?
You need to be 100% sure that a person is a genuine volunteer when deciding if National Minimum Wage applies.
The job title you give isn’t what’s important – you’ve got to look at your working relationship to get the full picture.
- Can come and go as they please
- Don’t need to provide services or perform specific duties
- Are not sanctioned if they don’t perfom well
If you promise anything of value to a volunteer or intern – for example future work – you enter a contract and have to pay the National Minimum Wage at least.
However you can perhaps offer some reimbursement of expenses.
Be very sure if you’re not going to pay someone, whether they’re an intern, volunteer or trialist.
Paying young workers National Minimum Wage
The National Minimum Wage brackets are absolute. So if you’re paying at or only very slightly above the legal minimum, you can get in trouble if you forget to take staff birthdays into account.
This kind of slip-up is much more likely to happen with interns as the National Minimum Wage brackets vary so much for those between ages 20 – 23.
It’s always a good idea to increase the rate you pay to give yourself some breathing room in case the worst happens and you miss the window to increase your staff’s wages.
When taking on a fresh graduate or younger employee this is something you can’t afford to forget.
National Minimum Wage brackets
- For those aged 18-20 the rate is £6.56 an hour
- For those aged 21-22 the rate is £8.36 an hour
- And for those aged 23+ it’s £8.91
The employment status that you assign will change the employment rights and benefits that your intern is entitled to.
If your interns are classified as workers, they’re entitled to:
- The right to be paid National Minimum Wage
- Protection against unlawful salary deductions
- Holiday pay
- Rest breaks
- The ability to opt-out of working more than 48 hours a week
- Protection against discrimination
- Protection for whistleblowing
- The right to not be treated less favourably for working part-time
- Sick, maternity, paternity, adoption and shared parental pay
Employees are entitled to:
- The same rights that workers have
- Statutory sick, maternity, paternity, adoption and shared parental leave
- Minimum notice periods
- Protection against unfair dismissal
- The right to request flexible working
- Time off for emergencies
- Statutory redundancy pay
Your volunteers aren’t legally entitled to any benefits unless you classify them as a worker or employee. But you can reimburse them for expenses.
Where can you hire top interns?
There are lots of challenges to be considered if you’re looking to hire a talented intern or long-term employee.
But if you don’t want to faff around with the hiring dirty work like advertising, sorting through CVs and screening applicants, DigitalGrads is the place to go.