Following on from our post last week
which focused on agency workers and apprenticeships
, here we discuss the use of interns and zero hour contracts.
No legal definition of an intern exists, although certain elements tend to characterise the arrangement. Internships provide an opportunity for people to gain hands-on work experience, often related to their area of study, and allow the firm to expand and add value to its day-to-day operations. This aspect is especially helpful for a small business, because it provides an effective way to take on bigger projects without increasing financial and administrative burdens.
The main concern for a small business employing interns is whether they’re classed as workers. If so, they’re entitled to the National Minimum Wage. The use of internships has expanded greatly in recent times, as have allegations that employers are using them illegally. Merely using the title of ‘intern’ or ‘volunteer’ or the fact that people are happy to do unpaid work can still mean that they’re workers for the purposes of NMW. A volunteer exception to the NMW applies to those working for charities and voluntary organisations, but most interns work within commercial organisations, and so this exemption doesn’t apply.
Interns are probably classed as workers for the purpose on NMW if one of the following applies:
The person is providing real work to the employer that a paid employee can do.
The person isn’t free to come and go as he pleases.
The person stays for the placement longer than a few weeks.
The person has been offered future work and is using his specific skills carrying out work for the employer.
Cases regarding internships and breaches of NMW show that the Courts or the Employment Tribunal look at the reality of the relationships; the fact that no contract exists, or no money is provided (except for expenses) can still mean that the intern is a worker.
To avoid an intern being classified as a worker, the person must fall within the work shadowing category of the NMW Act. This means that the intern is only observing or shadowing employees of the business and not undertaking work. In other words, you mustn’t relay on the services of the intern.
The concept of a zero-hour contract hasn’t yet been defined in law, leaving critics to say that these arrangements are abusive.
A zero-hours contract is a casual agreement where the employer isn’t obliged to provide work and the employee isn’t required to accept work; the employee is paid only for the hours he works and is usually required to work on short notice. In effect, no obligation exists on either side.
These agreements allow more flexibility in working arrangements for when you face a sudden increase in demand, seasonal changes, expansion into new markets or a need for emergency cover due to unforeseen circumstances. The main concern regarding these types of contracts is the use of ‘exclusivity clauses’, which restrict employees from working for other firms even if the employer has no hours to provide a particular time. The clause effectively requires a worker to be available at all times with no guarantee of work or payment. The Small Business, Enterprise and Employment Act, 2015 has now banned this type of provision.
Employment tribunals have found that people on zero-hours contracts can be ‘employees’, if a pattern to the hours worked exists and this has remained the same for particular period of time, with all the protections for the worker that status implies. In any event, zero-hours employees must be paid NMW rates for the hours they work and for any hours they spend hanging around in the workplace, waiting for work. In light of this, and the prohibition of the use of exclusivity clauses, explore all other options before settling on the use of zero-hours contracts.
This article is an extract from "Law for Small Business for DUMMIES
", written by LawBite chairman Clive Rich
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