If there is one trend which does not look like it is going out of fashion, it is the prevalence of internships and work experience placements in the fashion industry.  This has been exacerbated by the economic downturn and increased number of young graduates who are willing to work for free in order to get a foot in the door of the industry.  Whilst offering interns experience that will enhance their ability to gain employment, you have individuals who are on-hand to help without adding to headcount.  You may also benefit from being able to spot talented individuals in a process which is more effective than the traditional interview and CV/portfolio.

Having decided to offer internships, have you considered:

  • What employment rights, if any, interns have? 
  • Whether or not they should be paid the national minimum wage?
  • How you protect your designs, other intellectual property and confidential information?
  • Whether access to internships is fair or whether it could be vulnerable to an accusation of nepotism or worse?

What employment rights, if any, do your interns have?

As yet, there is no legal definition of the legal status of interns.  However, both case law and statute give guidance on which individuals can be regarded as “employees”.  Employees work under contracts of employment and, importantly, such contracts can be implied by law and they can be oral.  Employment relationships normally have mutuality of obligation (i.e. the obligation to work in return for the obligation to pay a wage) and a significant degree of control by the employer over the employee.

On the other hand, “workers” can work under either a contract of employment or some other contract which again may be implied by law and may be oral.  Such contracts provide for the individual to undertake work personally in return for pay.

Consequently, an intern could be either an employee or a worker if the characteristics above apply. 

If an intern is neither an employee or worker they will be a “volunteer”.  An intern who is a volunteer will undertake work for no financial reward or benefit, aside from reimbursement of out-of-pocket expenses and does not have to turn up for work if they do not want to. It is irrelevant whether the intern performs the work for altruistic or other reasons, for example to enhance the intern’s CV.  A volunteer will not have employment rights (although there is a case which has been referred to the Supreme Court which might establish that volunteers have the right not to be discriminated against).

The tribunal has, in a number of cases, implied that interns and volunteers (who are comparable to interns) who were paid expenses have, in fact, been paid reimbursement for work.  This has permitted the volunteers and interns the status of either “worker” or “employee”.  As an employee or worker, an intern will be entitled to the right not to be discriminated against, paid annual leave, and the right to be paid the national minimum wage.  As an employee, an intern will be entitled to the right not to be unfairly dismissed and the right to a redundancy payment if made redundant after two years’ service.

Should interns be paid the national minimum wage?

If your interns are not employees or workers, there is no entitlement.  If your interns do not receive monetary payment or benefits in kind (other than reimbursement for expenses either actually incurred or reasonably estimated as likely to occur) in return for work, they are not employees or workers and there will be no entitlement to the national minimum wage.  According to Government guidance, permitted expenses to volunteers are the costs of travel which occur in the course of volunteering (and presumably the same applies to interns).

According to Government guidance, simple work shadowing which does not involve an intern performing any particular work will not qualify an intern or individual on work experience for the national minimum wage.  However, a placement that may lead to an offer of permanent or paid work could qualify an intern for the national minimum wage.  The logic is that the promise of paid work is a reward for the work undertaken by the intern.  As soon as any internship or work experience tips over the line of obliging an individual to perform particular activities in accordance with your instructions, they risk being deemed a worker or employee and entitled to the national minimum wage. 

A clear and helpful exclusion is internships which are part of a further or higher education course which are of less than one year.  These are expressly excluded from the national minimum wage.  Similarly, work placements of individuals of compulsory school age are also not eligible for the national minimum wage.

There is an increasing amount of tribunal case law which has found that interns are entitled to the national minimum wage.

It would be helpful to establish that any intern is a genuine volunteer and outside of the scope of the national minimum wage by documenting the relationship.  It would ideally state:

  • the date of the placement;
  • suggested (rather than obligatory) hours of attendance; and
  • work-related expenses.  

How to protect design, other intellectual property and confidentiality

Any internship agreement should refer to matters regarding intellectual property. Unlike employees, intellectual property rights created by interns will not automatically vest in your company.  Therefore, a contract which requires individuals to assign any intellectual property rights that they might create could be very helpful, particularly in relation to any designs that an intern might create whilst on a placement.

In addition, it is advisable that the intern is contracted to adhere to confidentiality and intellectual property matters in order to protect sensitive commercial information and designs that might be helpful to any future work placement or job in which the intern may end up.

Recruitment of interns: nepotism or worse?

From a reputational and employee relations perspective, assigning internships on a nepotistic basis should be avoided.  In addition, if an internship is offered to the friend or relative of one employee, but not another, it can raise accusations of unequal or discriminatory treatment.

The issue of whether interns who are neither employees nor workers are covered by discrimination legislation is yet to be determined.  However, best practice until this issue is resolved is to ensure that a fair and documented recruitment process is adopted for interns as would be applicable to your employees.  You should document the criteria applied to applicants and how the applicants were assessed against those criteria.  This is particularly the case where an internship is competitive and could lead to employment.  If you reject an application, and there is no documentation as to why certain interns are chosen over others, it could lead to vulnerability in relation to any discrimination claim.

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