Two London Fashion Week employers forced to pay their interns by HMRC

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Interns are to get more support to protect their right to fair pay, as the government launches new advice for young people and cracks down on unfair practices.

At Edinburgh Napier University today (11 November 2013), Employment Relations Minister Jo Swinson will unveil guidance produced by the Department for Business, Innovation & Skills (BIS) offering internships and apprenticeships for young people looking for a career in the creative industries.

The new video and posters will clearly explain to people leaving education and making their first step on the career ladder what their rights are in relation to being paid the National Minimum Wage (NMW), where to go for more information and what action they can take if they feel they have been exploited. Information available to young people will also be boosted online and through social media such as the NMW Facebook page.

Alongside the new guidance, HM Revenue and Customs (HMRC) who enforce NMW on behalf of BIS, will be sending out letters to 200 employers who have recently advertised intern opportunities and unpaid work. The letters will alert businesses that HMRC will shortly be carrying out a series of targeted checks to make sure employers who have advertised internships are paying all their workers the correct NMW rate.

HMRC also revealed today the results of enforcement activity focused on London Fashion Week as the fashion industry often takes on a high number of interns.

HMRC checks made sure that all businesses now pay proportionate expenses and enforcement action identified 2 employers not complying with NMW law and unpaid wages being repaid to 2 workers involved.

HMRC’s Assistant Director of National Minimum Wage Michelle Wyer said“HMRC’s London Fashion Week campaign significantly raised awareness of the legal requirement to comply with the NMW in a sector which has often ignored it in the past.

“Any employer not playing by the NMW rules needs to put things right now. Those that don’t can expect a visit from HMRC – which could result in a penalty, payment of arrears, being publicly named and shamed by BIS or a prosecution.”

The campaign, in collaboration with the British Fashion Council, began during fashion week in 2012 to raise awareness of NMW with employers in this sector.

Revisiting many of the employers in Spring this year, HMRC found that there was a significant change in behaviour with nearly 80% of businesses involved in the campaign.

This included adopting NMW guidance on the use of interns and payroll, maintenance of payroll and associated record keeping which helps HMRC with future investigations to make sure businesses are paying NMW.

Interns and potential interns will also benefit from a concise guide on what to expect from a high-quality internship, and what interns’ rights are with regard to pay. Published by Intern Aware and Bournemouth University on behalf of the Gateways to the Professions Collaborative Forum, and supported by BIS, this has been developed as a supplement to the Common Code of Best Practice for Internships.

But Ben Rosen, CEO of Inspiring Interns, argues that some unpaid internships are beneficial to both parties:

“As we have seen from both widespread studies and first-hand evidence, internships are a vital component in the transition from education to the world of work. Where they are done properly, internships help young people develop new skills and create new jobs – as evidenced by the fact that 66% of Inspiring Interns’ candidates stay on permanently with the company where they were interning.

“Unfortunately there are some employers – most notably in oversubscribed industries such as media and fashion – who use internships to gain cheap labour and flout National Minimum Wage laws. For too long these sorts of exploitative practices have been allowed to taint internships. We welcome the Government’s new campaign and hope that this fresh action will further reduce abuse of the system.

“I would, however, remind the Government that some unpaid internships are very beneficial for both employer and intern. Many organisations offer unpaid internships that are genuine learning experiences, are time-limited, and help a candidate significantly improve their employability skills. These internships, which largely do not fall under NMW law, would disappear if a blanket ban on unpaid internships were introduced – denying thousands of young people the chance to break into work and ensuring work experience returns to being the preserve of Nick Clegg’s ‘sharp-elbowed middle classes’.

“BIS and HMRC are to be applauded for their efforts to stamp out malpractice within internships; let’s make sure we do not throw the baby out with the bathwater.”

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2 Comments - Write a Comment

  1. No one is forced into an Internship and you know the situation from the outset. As an individual you have to balance what you get from the relationship in terms of experience, acquired knowledge and value to your CV against the lack of financial reward. You then determine whether you consider this to be fair.
    If not then dont take the opportunity–your choice.
    Simples.

  2. Peter wrote – “No one is forced into an Internship and you know the situation from the outset. As an individual you have to balance what you get from the relationship in terms of experience, acquired knowledge and value to your CV against the lack of financial reward. You then determine whether you consider this to be fair.
    If not then dont take the opportunity–your choice.
    Simples.”

    Unfortunately, it is not “simples”. On the basis that any monies paid to interns are tax deductible in any event… and the current education and financial climate, those offering internships could and should be better.

    Even up until a few years ago, students graduated from university with nothing like the kind of debt they face today. For A’ level students, the pressure to start earning is all the greater as their parents earnings are stretched, assuming that the parents are working.

    Yes, there are certain merits to internships however, some very worthwhile youth have to forgo internships and possibly a longer term role with the employer if they perform well, simply because they cannot afford even the travel and lunch costs that they may have to pay for themselves.

    The old model of internships is no longer effective.

    Aren’t there also grants companies could apply for in order to help pay for interns? Or is that only for apprenticeships?

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