Are you paying your graduates correctly? Property agents Savoy Stewart discuss several case studies and cover the frequently asked questions on this topic.

Picture the scene. You have just spent three to four years studying at university, spending thousands of pounds for your degree and now you’re to enter the world of work, with a degree that a million and one other graduates also have. Being a graduate is a fantastic position to be in, but unfortunately the value of a degree has somewhat de-valued, and everyone is now achieving the highest grades possible.

When looking for a job, unfortunately the reality is you need experience to get a job, but nowhere will give you that experience. So you’re stuck in a catch-22 situation. The nature of the beast is you will most likely have to work for free, despite working as tirelessly as the permanent employee who sits next to you. Sutton Trust recently found that there are approximately 21,000 unpaid interns currently working in the UK, whilst Crime Stoppers UK found that annually 850,000 people are victims of online job fraud.

Unpaid internships and placements is a particularly grey area for legal proceedings. In an effort to uncover some of the legalities of working for free, commercial estate agents, savoystewart.co.uk spoke to a number of graduates regarding their post-graduate experiences and potential exploitation working for free or being made to work for less money than legally allowed.

Job: Runner at a film studio

I had just graduated and needed some experience and money, whilst applying for full time jobs. I always enjoyed the idea of working for a production or film company, so I applied to be a runner. They asked me to come in for one week, which was absolutely fine. However, after the week was over, I asked if I would get paid and could extend my experience and they said no. I was back to square one.’

Was this legal? Unclear

According to governmental law:

• If a trial is agreed, the duration was must also be agreed upon
• The person who is looking for a job, must meet the eligibility conditions to work and therefore volunteer to work
• Once the trial is completed, the employer must pay the employee minimum wage at the least

Job: Editorial intern

‘After graduating, I was desperate to gain some experience as an editorial assistant at a high-profile magazine. I was not paid, but merely given £15 a day for lunch and travel expenses. I was a full-time member of staff for nearly six months, and carried out my own interviews, wrote articles and attended regular meetings with clients.’

Was this legal? Yes

The legality of this type of internship is problematic. But in the first instance, it would appear to be entirely legitimate as according to Gov.uk ‘an intern is classed as a worker and is due the National Minimum Wage if they’re promised a contract of future work.’ In this case, no verbal or written contract was promised, so the individual qualified under voluntary work / unpaid internship guidelines’. However, if an intern demonstrates they are personally providing a service, and working under a contract, whether implied or expressed, they are within their rights to ask to be paid. So when undertaking a lengthy period of work experience, be sure to know your rights.

Job: Marketing assistant
‘The role was advertised as an assistant, however when I arrived to the interview, the role turned out to be more sales related and door-to-door, which would only be paid based on commission. Despite being advertised as a job and at an assistant level, they often referred to me as the intern and would use every excuse not to pay me. The hours were very long and we never given a formal break. Even if we made a sale, we were never paid commission’.

Was this legal? No

UK Jobs Guide stipulates that ‘commission-only jobs are legal, as long as employers pay National Minimum Wage, or it is made up in the commission.’ The hours also exceeded six hours, which in legal terms, entitles every employee no matter the status to a break of at least 20 minutes. Even if you do not make a sale, this type of employment is known as ‘output work’, and UK Jobs Guide goes on to explain that the employers would be ‘legally obliged to ensure you receive at least the Minimum Wage for every hour you work.’

Commonly asked questions:

Is it ever legal to work for free?
Yes – working for free is only applicable when the job role is advertised as voluntary work

How and when should internships be paid?
If you are doing an internship and you have been promised a contract for future work or employment, then your employer is legally obliged to pay you at least the National Minimum Wage. You will also be entitled to pay if you have worked for longer than one year at the same company.

What is a pyramid scheme?

A pyramid scheme will require you to join with an initial fee, and the only way you will ever receive your money back is to persuade other people to join the same scheme and for you to take their fee. Each member is asked to sell products or a service through other members and the people at the top of the scheme are the only ones to benefit and make money off those lower down. It is an unsustainable model and is entirely illegal. According to actionfraud.police.uk, you should report your case immediately and terminate your contract with those who have committed fraud.