The People Bulletin

With many young people taking up internships now the summer term has come to an end, the spotlight has come back on interns now that the Low Pay Commission (LPC) is to review whether internships should be paid.

In her article ‘Interns or Slaves?’ Lorraine Owens observes “The current economic climate results in challenging conditions for businesses and also for the young people trying to get a foot, or perhaps just a toe, on the employment ladder” and goes on to explain the rules surrounding the National Minimum Wage.[1]

Brief to the LPC

The government has now written to the LPC setting out its remit for the 2012 report, the 2011 one having been published in April 2011[2]. 

The LPC will report to the Prime Minister and the Secretary of State for Business, Innovation and Skills by the end of February 2012.  Employment Relations Minister Edward Davey said: “The government is committed to the National Minimum Wage as it provides the much needed protection for low-paid workers and encourages those out of work, back into the labour market. We have asked the independent LPC to monitor the impact of the NMW, consult with employers and employees, and to make recommendations for the government to consider next year.”

In the 2012 LPC remit, the government is asking the LPC to monitor, evaluate and review the NMW rates and make recommendations, plus consider three issues of particular relevance this year:

• Continue giving particular consideration to young workers, including those in apprenticeships and internships, to reflect on-going concerns about the position of young people in the labour market.
• Consult and make recommendations on whether the NMW regulations can be made even simpler and easier to administer. As part of this simplification agenda, the government has proposed the abolition of the Agricultural Wages Board (AWB). The LPC is invited to consider the implications of this potential change.
• Consider the best way to give business greater clarity on future levels of the NMW, alongside considering if any recommendations could be introduced more promptly.

The National Minimum Wage

When the minimum wage was launched in 1999, the main rate was £3.60. It is now set at £5.93 per hour. On the 7 April 2011 the government announced the new NMW rates that will come into force on 1 October 2011.

• The adult rate will increase by 15p to £6.08 an hour.
• The rate for 18-20 year olds will increase by 6p to £4.98 an hour.
• The rate for 16-17 year olds will increase by 4p to £3.68 an hour.
• The rate for apprentices will increase by 10p to £2.60 an hour.

A year ago, the Institute for Public Policy and Research (IPPR) examined this issue in a leading policy paper, Why interns need a fair wage.’[3] It raises concerns that while internships remain unpaid, this compromises equal opportunities as the positions are not formally advertised and there is no recruitment process. It reminds employers that while there is no legal definition of internships or an intern, the key issue is whether or not they are entitled to the National Minimum Wage and that depends on whether they are classified as a ‘worker’ under the National Minimum Wage Act 1998.  As Lorraine Owens reminded readers in her article (see note 1) the Act has some specific exemptions:

• people doing government accredited apprenticeships and some work based training schemes;
• students undertaking first UK based degree course or teacher training course who are working for no more than 12 months as part of their UK based degree;
• voluntary workers employed by a charity, voluntary organisation or statutory body;
• a few other minor groups such as homeless people working in return for shelter; and

• work shadowing; that means and intern trailing someone else who is working but not actually undertaking any work themselves.

Whatever the LPC comes back with it remains to be seen how it balances the need to give young people access to employment and training prospects with the basic right to be paid for a day’s work. Here at The People Bulletin, one reporter has a daughter currently doing a six-week internship at a fashion house.  She is having the time of her life, is learning a huge amount and was delighted to have the opportunity.  But she lives at home, needs the occasional hand-out and has lined up some paid temporary work (paying the National Minimum Wage) straight afterwards. 

[1]  www.apbusinesscontacts.com/the_people_bulletin-pb_6/Interns-or-slaves.aspx 

[2]  www.lowpay.gov.uk 

[3] www.ippr.org/index.php?option=com_ippr&view=publication&id=1788&Itemid=55