The legality of no-pay or low-pay internship
If you are thinking about offering or doing an internship, here’s a few things to look out for.
For workers and students, internship can be an excellent way to gain experience and new skills that lead to better career prospects. However, this is a grey area where some employers may, knowingly or not, break the law and be in a situation where the interns are exploited.
What is an internship?
An internship is period of paid or unpaid work experience. It can be compulsory or optional as part of a study programme, or simply a chance to gain relevant skills and experience in a particular field. Internships are also known as a summer clerkship, vacation work programme, work placement programme or practicum. Internship is used across different types of businesses, universities, not-for-profit organisations and government agencies.
Unpaid internship – is it free labour?
Internships are not defined in the Employment Relations Act – for an intern to be unpaid they need to be volunteers. A volunteer is not an employee and are not protected by employee rights. They are, however, protected under the Health and Safety at Work Act and the Human Rights Act.
It’s common to have unpaid internships among registered charities, non-government or voluntary organisations, or in some industries such as arts and media. If you are doing an internship as part of a degree course or you are contributing to civic engagement or community service, you may not receive any pay because you are considered working as a volunteer. In this case, you are the party that gets the primary benefit from the internship, not the organisation that you are working for.
If you are considering offering an unpaid work experience or internship, you need to:
- make absolutely clear (ideally in writing) that the position is a volunteer position and that there is no expectation of payment or other reward
- avoid getting an economic benefit from the work done by the intern (apart from registered charities)
- avoid having the intern do work that an employee would ordinarily do
- ensure that the internship is mainly about learning new skills and gaining experience
- limit the duration of work and the hours worked by the intern.
If you don’t follow this guidance, the internship may be considered a case of free labour or exploitation.
This statement sets out the Labour Inspectorate’s position on work in a business operation without payment of wages:
Paid internship and studentship – can the pay be below minimum wage?
If you are an employer offering a paid internship, you can use a fixed-term agreement. In this case, the employment law applies – you still need a genuine reason for the fixed term and the pay must be at least at the level of the minimum wage.
Studentship
The minimum wage doesn’t apply to studentship where students do a period of work experience in an academic department, such as helping researchers with their projects. A studentship is a type of scholarship (not a job), so it’s tax-free and not covered by the employment law.
Although the employment law doesn’t apply in a studentship, it is good practice to put in writing that the studentship is an arrangement on a voluntary basis. This means that in general, the work that students do is similar to that of a volunteer and the student benefits from the arrangement. The research work students do would not be the sort of work that would ordinarily be done by an employed researcher.
The payments offered in a studentship may vary, depending on budgets from different departments and the proposed duration of the research project. Most students feel that they gain valuable experience from their studentship, so the amount of a payment is not a big deciding factor.
However, it would be highly encouraged if universities offer their studentship payments to match at least the minimum wage and to recognise the valuable work and contribution of their students.
https://www.employment.govt.nz/about/news-and-updates/legality-of-no-pay-or-low-pay-internship/
