Labour’s proposal to ban unpaid internships, with exceptions only for those integrated into educational or training courses, marks a significant change in the UK job market. 

For HR professionals, this reform is not just about compliance but also about promoting fairness and equality in the workplace. 

As the gatekeepers of talent and company culture, HR professionals play a crucial role in implementing these changes effectively while balancing the needs of the business.

The implications of unpaid internships

Unpaid internships have long been a contentious issue, criticised for preserving social inequality and exploiting young workers. 

According to a 2020 report by the Sutton Trust, around 39% of internships in the UK are unpaid, disproportionately affecting those from lower-income backgrounds. In cities like London, where living costs are high, the financial burden can be excessive. 

The Institute for Public Policy Research (IPPR) estimated that an unpaid internship could cost an individual up to £6,300 over a six-month period in London. This creates a barrier for those who cannot afford to work for free, limiting access to career opportunities and reinforcing socio-economic disparities.

Legal context and compliance

The UK’s National Minimum Wage Act 1998 mandates that all workers over the age of 16 receive at least the minimum wage, but there are exemptions for internships that are part of a higher education course, voluntary positions, and work experience placements lasting under one year. 

However, the legal landscape is evolving, and HR professionals must stay updated on these changes to avoid potential pitfalls.

An example of the legal implications for employers regarding unpaid internships is the case of “Vetta v London Dreams Motion Picture Limited”. In this case, an unpaid intern brought a claim under the National Minimum Wage Act. 

The Employment Tribunal determined that the intern, who had been working as an art department assistant on an expenses-only basis, qualified as a “worker” under both the National Minimum Wage Act and the Working Time Regulations. 

The Tribunal’s decision was based on factors such as the nature of the work performed, the method of recruitment, and the expectations associated with the role. This case highlights the importance for employers to carefully assess and correctly classify any roles that may involve work-related duties, ensuring compliance with employment laws to avoid legal complications.

Practical guidance for HR professionals

1. Review and revise internship policies: Start by reviewing your current internship programmes to ensure they comply with Labour’s proposed changes. This may involve updating job descriptions, contracts, and training materials to reflect the new requirements. Clearly define the scope of work for interns to ensure that it aligns with either an educational purpose or paid employment.
2. Budget for paid internships: The shift to paid internships may require adjustments in your budget. Consider reallocating resources to support paid internships, even if it means offering fewer positions. Quality over quantity is key—focus on providing meaningful experiences that justify the cost of paying interns.
3. Create structured learning experiences: To make internships more valuable, consider integrating structured learning experiences into the programme. This could involve setting clear objectives, providing mentorship, and offering opportunities for interns to contribute to significant projects. A well-designed internship can serve as a talent pipeline, benefiting both the intern and the organisation.
4. Promote inclusivity: Paid internships can be a tool for promoting diversity and inclusivity within your organisation. By offering fair compensation, you can attract a wider pool of candidates from various backgrounds. This not only enhances your talent pool but also supports corporate social responsibility initiatives.
5. Monitor and evaluate: Regularly monitor and evaluate your internship programmes to ensure they meet both legal standards and the organisation’s goals. Collect feedback from interns and supervisors to identify areas for improvement. This ongoing process will help you adapt to changing legal requirements and market conditions.

The broader impact on HR practices

The move towards banning unpaid internships reflects a broader trend in HR practices—an increased emphasis on fairness, diversity, and inclusivity. For HR professionals, this presents an opportunity to lead the charge in creating a more equitable workplace. By ensuring that all workers, including interns, are fairly compensated, HR can contribute to a culture of respect and value for all employees.

Moreover, paid internships can lead to better retention rates. Interns who feel valued and compensated are more likely to consider long-term employment with the organisation. 

Labour’s proposal to ban unpaid internships is a significant step towards promoting fair opportunities in the UK job market. For HR professionals, this is not just a compliance issue but an opportunity to enhance the organisation’s reputation and attract a diverse range of talent.