Many businesses offer internship programmes, also known as ‘work placements’ or ‘work experience,’ which are short-term structured work experience programs usually aimed at graduates or undergraduates. When managed appropriately, these programmes can be hugely beneficial for both the intern and the company. They offer practical, hands-on learning in a specific field or industry, giving interns many benefits, including increased employability. It is also a great way for an employer to assess potential future hires.
Interns differ from employees in that their roles are generally temporary, aimed at facilitating learning and skill development rather than contributing to long-term productivity. As a result, the expectations regarding their tasks differ, and they are entitled to a more limited range of benefits compared to regular employees.
If your business is taking on interns, it is essential to establish an internship agreement between the intern and your company that sets out the arrangement between the parties. Although there is no legal obligation to have a contract in place to engage an intern, there are several benefits to formalising the arrangement. A formal internship agreement can offer legal protection for both the company and the intern, as well as mitigate misunderstandings by specifying terms such as responsibilities, pay, confidentiality, intellectual property and termination.
In this guide, we explain how internship agreements work and highlight some legal considerations and best practices that employers should consider when hiring interns. We also provide a checklist of key elements to include in an internship agreement and address some frequently asked questions regarding internships.
How Do Internship Agreements Work?
An internship agreement serves as a legally binding contract between a company and an intern, detailing the terms, rights and responsibilities of both parties throughout the internship period. For instance, employers are required to provide a safe and supportive environment, offer meaningful work, provide guidance and pay the intern if they qualify as an employee or worker under the National Minimum Wage Act. Interns, on the other hand, are expected to perform their assigned tasks, maintain confidentiality and adhere to company policies while gaining experience and training. This framework establishes clear expectations and guarantees legal compliance.
Additionally, the internship agreement should set out the internship’s duration, which can range from one week to a full year, with the most typical lengths being a few weeks to a couple of months, often coinciding with the summer break.
It is advisable to seek advice from a legal expert to guarantee that the agreement is legally compliant and accurately reflects the intended relationship.
Legal Considerations for Internships Agreement in the UK
In the UK, the key legal consideration for internship agreements is establishing whether the intern is classed as an employee, worker or volunteer for the purposes of the law. This classification determines their rights to the National Minimum Wage (NMW) and other employment benefits.
Depending on the tasks assigned and the structure of the agreement, interns might qualify for worker rights, meaning they would be entitled to the NMW and certain employment rights. On the other hand, if they are just doing tasks for their own educational gain and not providing economic value to the employer, they could be seen as volunteers, which means they would not get paid for their work, only reimbursement for reasonable expenses.
Employment Status
An internship agreement should clearly outline the type of relationship, whether the intern is a worker, employee, or volunteer, and the purpose of the placement, as this helps clarify the intern’s status. However, the actual working conditions, not just the title of the agreement, will ultimately determine their legal rights.
An intern is likely considered a worker and thus entitled to be paid if they have set hours, are required to complete specific tasks, and are expected to show up for work. Similarly, an intern is classified as a worker if they are promised future work or if their contributions directly benefit the business rather than being solely for observation.
Interns with a more relaxed arrangement focused on learning, shadowing, or observing without any obligation to perform specific tasks may not be covered by worker protections. A genuine volunteer who willingly works for free and has no obligation to work is not entitled to the NMW.
The length of the internship is also a crucial element, as a longer placement with the company increases the likelihood that the intern will be classified as a worker or even an employee.
There are specific situations in which an intern is not entitled to NMW:
- Mandatory Student Internships: UK-based students are required to complete a placement for less than a year as part of a compulsory higher or further education course.
- School Work Experience: Where students of compulsory school age participate in work experience organised by their school.
- Genuine Voluntary Work: Where individuals work for a charity, voluntary organisation, or similar entity without receiving monetary compensation, only reimbursement for expenses incurred.
An internship that serves as a replacement for paid employment will not comply with the NMW, and misclassifying an intern to evade NMW obligations may lead to backdated pay and penalties.
Other Essential Clauses to Include in an Internship Agreement
The agreement must outline the duration, responsibilities, learning objectives, and anticipated working hours to confirm it represents a legitimate work experience rather than a concealed employment arrangement. It is important to ensure that the intern is acquiring skills and knowledge, rather than merely executing tasks typically performed by an employee. Additionally, refrain from promising future employment contracts if the intern is unpaid.
An internship agreement should also clarify the ownership of any work produced by the intern during the internship and incorporate clauses to safeguard the employer’s sensitive company information shared with the intern.
Do Interns receive Holiday Pay and Employment Benefits?
An intern’s entitlement to holiday pay and other employment rights is also contingent upon their employment status.
If they are categorised as an employee or worker, they are legally entitled to holiday pay (which will be pro-rated for short-term internships), paid rest breaks, and must also be provided with payslips. If the intern is participating in a work shadowing placement where no work is performed or falls under one of the aforementioned exemptions, they will not be eligible for these rights.
Likewise, if an intern is deemed an employee or worker, they may qualify for Statutory Sick Pay (SSP) after a waiting period of three days, and possibly contractual sick pay as well. However, they must earn above a certain threshold per week and have a consistent work pattern to be eligible for SSP.
If they are not classified as an employee or worker, they are unlikely to be eligible for sick pay, but they should still follow the company’s procedure for reporting absences due to illness.
Best Practices for Employers Offering Internships
To ensure a fair and legally compliant internship, employers should ideally offer paid positions that involve meaningful work, providing authentic learning experiences rather than merely focusing on tasks. It is important to avoid misclassifying an intern as a volunteer, as the context of the situation, not just the label, will determine whether an intern is classified as a worker or an employee, thus entitling them to receive the NMW. Utilising unpaid interns to carry out regular duties or to fill staffing shortages constitutes exploitation and may result in legal claims in a tribunal.
Internships should be openly advertised to guarantee equitable access and attract a diverse pool of candidates, rather than relying solely on informal networks for recruitment. Furthermore, the selection process should be merit-based, applying the same standards of fairness and transparency as would be used for other job applicants.
If your programme falls under one of the exceptions that legally permit you not to pay the intern, it is essential to be transparent about the unpaid nature of the position and to clarify how the program will function and what the intern can expect to learn.
It is vital to establish a well-defined structure for the internship programme, with specific goals and responsibilities clearly outlined for the intern. Each intern should be assigned a dedicated supervisor to offer guidance and support, along with a well-organised onboarding process and regular feedback.
Lastly, businesses should regularly evaluate their current internship practices, stay informed about legal changes regarding potential restrictions on unpaid internships, and seek legal advice when uncertain about their obligations.
What Interns Should Be Aware of Before Signing an Agreement
Before entering into an internship agreement, interns must understand their rights and obligations, along with their anticipated working hours and eligibility for remuneration or reasonable expenses.
Essential contract elements to check include the intern’s responsibilities, start and end dates, pay, working hours, intellectual property rights, confidentiality obligations, and termination conditions. This ensures that the agreement meets their expectations and safeguards their interests.
A clear understanding of these provisions helps to avoid miscommunication and unforeseen responsibilities, ensuring that the experience serves as a mutually advantageous learning opportunity. Should an intern find any term unclear or confusing, it is vital to seek clarification from the employer.
Additionally, it may be feasible for an intern to negotiate more favourable terms than those outlined in the agreement; however, to achieve this, it is essential to have researched industry norms and be ready to effectively communicate the value they bring before suggesting specific, well-informed alternatives to the initial terms.
Internship Agreement Checklist
We have compiled a list of essential elements to incorporate into an internship agreement to prevent misunderstandings and to guarantee that both parties possess a clear understanding of the expectations during the internship:
- Party Details: including the complete names and contact information for both the intern and the organisation
- Nature of the Internship: explicitly articulate the primary aim of the internship (for instance, to offer work experience and educational opportunities) and specify whether the intern is an employee, worker or a volunteer.
- Role and Responsibilities: outline the intern’s job title and tasks they will undertake, and identify who will supervise them
- Duration of the Internship: set out a defined start and end date
- Proposed Working Hours
- Learning Objectives: including a structure for providing feedback
- Compensation: indicate whether the internship is paid or unpaid. If it is paid, ensure it complies with the NMW. Additionally, outline any expenses that will be reimbursed to the intern, such as travel costs.
- Intellectual Property: incorporate clauses concerning the ownership of any intellectual property developed by the intern during the internship
- Confidentiality: include a clause to safeguard confidential information and trade secrets that the intern may encounter.
- Termination: detail the conditions and procedures for ending the internship, including any necessary notice periods.
Finally, ensure that the agreement is signed and dated by both parties and provide a signed copy of the agreement to the intern for their records.
Next Steps
Our employment law team has extensive experience in drafting contracts and can help ensure that your internship agreement complies with all current legal standards and effectively protects your business. Contact us today on 0300 303 2071 for a free consultation or email us.
FAQ
What should an internship agreement include?
An internship agreement should include the duration of the internship, the duties involved, the hours of work, and any pay or expenses. It should clarify that the relationship is educational rather than employment-based and address matters of intellectual property, confidentiality, and data protection.
How much should I pay an intern?
If the internship entails performing actual work instead of merely shadowing, you are required to pay the intern at least the National Minimum Wage, which varies based on their age.
How many hours can an intern legally be expected to work?
An intern classified as a ‘worker’ or ‘employee’ under the law can be obliged to work a maximum of 48 hours per week in accordance with the working time legislation. For interns who are young workers under the age of eighteen, the limit is more stringent, set at 40 hours per week and 8 hours per day. There is no strict legal cap on hours for an intern who is a genuine volunteer; however, if an intern is expected to work specific hours or perform designated tasks, they are likely to be regarded as a worker and entitled to employment rights.
Is there a minimum legal holiday entitlement applicable to interns?
If an intern qualifies as a worker or employee in accordance with the employment legislation, they are entitled to a statutory minimum of 5.6 weeks of paid holiday annually, calculated on a pro rata basis for the duration of their internship.
Is an employer required by law to provide pension provisions?
An employer is legally required to offer a pension to an intern if the intern is classified as a worker and meets the age and earnings criteria for automatic enrolment. This includes being aged twenty-two up to the state pension age and earning a minimum of £10,000 per year. However, in practice, most interns do not reach the earnings threshold, but employers are still required to evaluate their status and eligibility.
What is the notice period for an intern?
The notice period for an intern is contingent upon what is outlined in the internship agreement. If the agreement does not specify otherwise, and the intern has been employed for at least one month, they should receive a minimum of one week’s notice.
Should I insist that my interns sign a separate Non-Disclosure Agreement?
It is advisable to request interns to sign a separate NDA to safeguard a company’s confidential information, particularly if the intern will have access to proprietary data, trade secrets, or client information. While a confidentiality clause can be incorporated into a broader internship agreement, a dedicated NDA can provide more extensive protection and emphasise the significance of confidentiality to the intern.
