Banning unpaid internships

Emma Gross at Spencer West LLP explains how regulatory changes could promote fairer opportunities in the UK job market

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

Unpaid internships have long been a contentious issue, criticised for perpetuating social inequality and exploiting young workers who contribute valuable labour without receiving financial compensation. The Labour Party’s reform aims to tackle these issues by ensuring that all work is fairly compensated, thereby promoting accessibility to career opportunities for individuals from diverse socio-economic backgrounds.

The current state of unpaid internships in the UK reveals a troubling picture. A study by the Sutton Trust in 2020 found that around 39% of internships in the UK are unpaid, with many of these positions concentrated in highly competitive industries such as media, fashion, and politics.

The financial burden of undertaking an unpaid internship can be prohibitive, particularly in cities like London, where living costs for an unpaid intern can reach approximately £1,100 per month. The Institute for Public Policy Research (IPPR) further estimated that unpaid internships could cost an individual up to £6,300 over a six-month period in London. These figures highlight the significant barriers to entry faced by individuals from lower-income backgrounds, who may be unable to afford to work without pay, thus exacerbating economic disparities.

The legal framework surrounding unpaid internships is complex. The UK’s National Minimum Wage Act 1998 mandates that all workers over the age of 16 receive at least the minimum wage.

However, the Act includes exemptions for internships that are part of a higher education course, as well as voluntary positions and work experience placements lasting under one year. In the landmark case Hudson v TPG Web Publishing Ltd [2011], the employment tribunal ruled that an intern who had been unpaid during her internship was entitled to back pay because she had performed tasks that would typically be done by a paid employee. This case highlights the fine line between legitimate work experience and exploitation, and illustrates the challenges of enforcing legal protections for interns.

Labour’s plan to ban unpaid internships is centred on the principle that all work should be fairly compensated. The crux of the proposal is to prohibit unpaid internships unless they are part of an educational or vocational training programme, ensuring that internships are either part of a structured learning experience or paid in accordance with the National Minimum Wage Act.

The exceptions to this rule—internships that are part of a recognised educational course, such as those integrated into university degrees or vocational training programmes—are intended to ensure that students can still gain valuable work experience as part of their formal education without imposing additional financial burdens on employers.

One of the key motivations behind this policy is to address socio-economic inequality. By banning unpaid internships, Labour aims to level the playing field, making it easier for individuals from all backgrounds to access career opportunities. This move could lead to greater diversity within industries that have traditionally been dominated by individuals from more affluent backgrounds.

Furthermore, the policy aligns with broader efforts to ensure that all workers, regardless of their career stage, receive fair compensation for their labour. This could help reduce the exploitation of young workers who are often pressured into accepting unpaid roles in the hope of securing future employment.

However, the policy also presents challenges for employers, particularly in terms of increased costs. Many employers, especially small businesses and start-ups, may struggle to afford to pay interns, potentially leading to a reduction in the number of internship opportunities available.

To adapt to this change, employers may need to re-evaluate their internship programmes, focusing on providing more structured and meaningful experiences that justify the cost of paying interns. This could result in a shift towards fewer but higher-quality internships, which would benefit both interns and employers in the long run.

Despite these challenges, the reform could yield significant benefits. With paid internships becoming the norm, employers may be able to attract a more diverse range of candidates, leading to a richer talent pool. This diversity could bring fresh perspectives and ideas to industries that have traditionally lacked representation from certain demographic groups.

Additionally, paid internships could encourage more serious investment in training and development, as employers recognise the value of nurturing talent that could become future employees. This could lead to stronger relationships between interns and employers and contribute to a more skilled workforce over time.

Legal considerations will play a crucial role in the success of this reform. Strengthening the existing legal framework will be necessary to ensure compliance and close any loopholes that might allow employers to circumvent the ban. This could involve clearer definitions of what constitutes an educational or training course and stricter enforcement of the National Minimum Wage Act.

Future case law, building on precedents such as "Hudson v TPG Web Publishing Ltd," could further clarify the boundaries of unpaid internships and set important precedents that protect young workers from exploitation.

Beyond the legal implications, Labour’s proposal could contribute to a broader cultural shift towards valuing and compensating all forms of work. This shift might also spark further discussions about other forms of unpaid work, such as volunteer positions and internships in non-traditional industries.

If successful, the UK’s approach could serve as a model for other countries grappling with the issue of unpaid internships, potentially leading to a global movement towards fairer labour practices for interns and early-career professionals.

Labour’s plan to ban unpaid internships represents a significant step towards promoting fair opportunities and reducing socio-economic inequality in the UK job market. By ensuring that all work is fairly compensated, this policy has the potential to create a more inclusive and diverse workforce, benefiting both individuals and industries.

However, the success of this reform will depend on its implementation, enforcement, and the willingness of employers to adapt to these new standards. As the UK continues to grapple with the challenges of unpaid labour, this policy could mark a turning point in the ongoing effort to create a more equitable and just society.

Emma Gross is Employment Partner at Spencer West LLP

Main image courtesy of iStockPhoto.com and FangXiaNuo