Government finally steps up on illegal unpaid internships

The government has finally launched a crackdown on Illegal and unpaid internships which often cost over £1000 per month in London, shutting many less advantaged youngsters out of the careers they aspire to work in, a study carried out by charity, The Sutton Trust, revealed last month.

How much does it cost and why?

Inflation has increased the cost of a month-long placement in the capital city to a minimum of £1,019, meaning that a six-month internship with no pay would cost at least £6,114.

In Manchester, the UK's second largest city where housing costs are considerably lower, a one-month unpaid internship would cost £827 a month with a six-month placement costing a minimum of £4,965.

The figures represent a 10% increase in the capital since 2014, when a month-long internship would cost a jobseeker £926 (£93 less) a month, or £5556 (£558 less) over six months in London.

In Manchester costs increased by £39 a month, or £234 over six months, during the same period meaning an increase of just under 5%.

Why are internships so popular and which industries are most affected?

Internships are becoming increasingly popular in a bid for candidates to stand out amongst the crowd in an aggressively competitive marketplace and are now often considered to be a requirement for a job, especially in industries such as journalism, fashion, and politics where the Trust reported a dramatic rise in the number of unpaid internships.

How many internships are unpaid?

The Sutton Trust estimates that 40% of 70,000 internships undertaken by young people are unpaid while an estimated 10,000 graduates are in internships six months after graduation, of which 20% are unpaid, though many more may do them at other points in their career.

Separately, research carried out for the Trade Union Congress found that 78% of 18-34-year-olds could simply not afford to live in London and become an unpaid intern.

How are unpaid internships illegal?

Legally, an intern who carries out work of value to their employer will qualify as an employee under UK law and is therefore entitled to minimum wage but this law is not practised nor enforced with no recorded charges in relation to interns and the NMW thus far.

Genuine volunteers are not entitled to the minimum wage, however, campaigners say that this is often used as a loophole by companies to avoid paying their interns.

While some employers are unaware that they should be paying their interns, some are clearly exploiting the lack of law enforcement to avoid this.

Interns can report their employers if they feel it is necessary, however, since they’re relying on their placement to break into an industry, it’s unlikely that they will risk losing access to contacts and references which they've tried so hard to build up through such placements.

What other problems are there related to internships?

Though the report, titled Internships – Unpaid, Unadvertised, Unfair, acknowledges that there has been some progress, with more employers now offering paid internships, there is still a lack of transparency concerning how placements are awarded since many are given informally through employers to friends and family of staff members, clients or important stakeholders rather than being openly advertised.

The Trust says that opportunities not being advertised properly can end up ‘locking out’ those who come from disadvantaged backgrounds and are less likely to have these connections.

Indeed, out of the minimum of 80,000 interns across the country, only 11,000 internships per year are formally advertised online although 6% of businesses providing some form of paid or unpaid internship, according to an annual survey undertaken by the Department for Education.

What is the government doing in response to this?

HM Revenue and Customs (HMRC) has sent warning letters to at least 550 businesses so far threatening action unless they review their practices and employers ensure that they are meeting their legal obligations, especially those who have been actively advertising these unpaid internships.

It will also issue guidance to employers spelling out when they are legally obliged to pay at least the national minimum wage to interns and enforcement teams are also due to be set up in a bid to tackle repeat offenders.

Campaigners would also like to make it easier to report unpaid internships to HMRC as well as introducing tougher penalties for those found breaking the law.

In response, the government has said that if their new approach does not work, they will review the existing policies and consider whether action needs to be taken to alter them in order to change the pattern of such behaviour.

What else needs to be done to stop this?

The Sutton Trust is calling for all internships over four weeks (£4976 in London, £3308 in Manchester) to be “ideally” be paying the Living Wage (£8.56 in Manchester and £10.20 in London.)

They also recommend that internships are advertised publicly and that recruitment processes for internships are considered the same way other jobs would be.