We recently blogged about the tribunal's decision in the Uber case and the finding that their drivers should be classed as workers and therefore entitled to certain employment rights, including the national minimum wage (NMW). The rise of the so called "gig" economy has presented many challenges and questions over employment status and the government has committed to investigate such arrangements as part of its review of modern working practices.

The government is also considering the issue of unpaid internships after a draft bill proposing to ban them was talked out in parliament. At the moment whether an intern is entitled to the national minimum wage depends on their employment status and whether one of the specific exemptions applies.

When will an intern be entitled to the NMW?

If an intern is an employee or a worker, then they will be entitled to the national minimum wage (unless one of the exemptions applies - see below). As the Uber case demonstrated, it is not always easy to ascertain employment status. It will depend on the individual facts and how the working relationship is structured. The government guidance on the National minimum wage: work experience and internships gives some helpful examples.

The main requirements for an employment relationship are that there is mutuality of obligation; personal service; and sufficient control over the individual's activities.

For an intern to be engaged as a worker, there would need to be at least a contract to do work or provide services personally (or with a limited right to send someone else) and a degree of mutuality of obligation.

Any attempt to label an intern differently, and avoid the obligation to pay the NMW, will not be successful if, legally, their status is that of employee or worker.

When will an intern not be entitled to the NMW?

There are certain circumstances in which an intern, or someone on work experience, will definitely not be entitled to the NMW because they fall within one of the following exemptions:

  • School work experience placements: a student in full time education under the age of 16 undertaking work experience does not need to be paid the NMW.
  • Student internships: students who are on placement for less than one year as part of a higher education or further study course do not need to be paid the NMW.
  • Work shadowing: someone who is work shadowing and simply observing the activities of other members of staff will not qualify for the NMW.
  • Voluntary workers: workers aren't entitled to the NMW if they're working for a charity, voluntary organisation, associated fund raising body or a statutory body; and they don't get paid except for limited benefits (e.g. reasonable travel or lunch expenses).

What are the current NMW rates?

The NMW is paid at different levels depending on the worker's age as detailed below:

  • Workers aged 25 and over - £7.20 per hour (also known as the "national living wage");
  • Workers aged 21 to 24 - £6.95 per hour;
  • Workers aged 18 to 20 - £5.55 per hour;
  • Workers aged 16 to 17 (who are not apprentices) - £4.00 per hour;
  • Apprentices who are under 19 or are aged 19 or over in their first year of an apprenticeship - £3.40 per hour.

The above rates are set by the Low Pay Commission. There is also a voluntary UK real living wage, set annually by the Living Wage Foundation (currently £8.45, or £9.75 for those living in London). Many businesses choose to pay the real living wage but they do not have to.

If you have any questions about the employment status of your staff and the requirement to pay the NMW, please get in touch with a member of our team.

Contributor

Will Rollinson

Senior Associate