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No NMW 'loophole' for interns

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4th Aug 2010
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Employers are breaking the law by taking on unpaid interns and the practice should be banned in the political arena in order to set an example, according to policy researchers.
 

A report published by think-tank the Institute for Public Policy Research (ippr) and social enterprise organisation Internocracy revealed that too many employers, particularly in fields such as politics, media and the fashion industry, today mistakenly believed there was a ‘grey area’ around providing unpaid internships in National Minimum Wage (NMW) legislation.
 
As a result, they thought it was permissible take on interns on an expenses-only basis as long as both sides were aware that it was a voluntary arrangement.
 
In practice, however, the law was very clear and such a situation was “simply not the case”, the report said. The NMW Act 1998 stated that anyone doing work for an organisation must be paid at least the minimum wage regardless of how the job was advertised, what the job title was or whether there was a contract in place. While charities, voluntary organisations and statutory bodies could employ unpaid volunteers, private companies could not.
 
Kayte Lawton, report author and research fellow at the ippr, said: “If an intern is doing work for a company, then they need to be paid – it’s as simple as that. In practice, this isn’t what happens because employers don’t understand the law and enforcement agencies are turning a blind eye.”
 
Therefore, it was important that government, unions and employers’ organisations provided clearer guidance as to their legal obligations, she added. The Low Pay Commission has already asked the Department for Business, Innovation and Skills (BIS) to come up with an awareness-raising strategy by summer 2010.
 
It likewise said in its 2010 report that HM Revenue & Customs, which is responsible for enforcing the NMW Act, should be more proactive in investigating cases where terms like ‘intern’ and ‘work experience’ were used.
 
But the researchers also proposed that the banning of unpaid internships in Parliament and MP’s constituency offices as part of the Independent Parliamentary Standards Agency’s consultation on MP’s expenses.
 
Dominic Porter, report co-author and director of Internocracy, said: “We now have entire industries that rely on the willingness of young people to work for free. In the long-run, this is bad for business because it damages the reputation of these industries and makes it difficult for them to recruit from the broadest pool of talent.”
 
It also meant that young people from affluent backgrounds with good family connections had an instant advantage over less wealthy candidates when trying to get a permanent job, he added.
 
Meanwhile, the qualification age for the adult minimum wage will drop from 22 to 21 as of 1 October, while the wage itself will rise to £5.93 per hour from the current level of £5.80. The change, which will affect 85,000 21-year olds, is expected to cost employers £48 million, according to BIS.
 
Workers aged from 18 to 20 will also see their hourly pay rates boosted from £4.83 to £4.92, while wages for under 18s will increase to £3.63 from £3.57. A new apprenticeship wage of £2.50 per hour will likewise be introduced for those under the age of 19 and for people in their first year of their apprenticeship.
 

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